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Articles - June 2014
Thursday, May 29, 2014

LESSON 2: It’s hard to get incentives right.

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Roger Lee, executive director,
Economic Development for Central Oregon

“I’m not typically an advocate of the government telling us what to do,” says Roger Lee, executive director of Economic Development for Central Oregon. A regional economic development agency, Bend-based EDCO uses its knowledge of tax incentives, real estate opportunities and business fundamentals to support business growth in Central Oregon. It has named renewable-energy development as one of seven industry sectors it is targeting. Excess regulation can drive out businesses, Lee says, whereas the right incentives can more effectively change behavior. “I’m a fan of the carrot, not the stick.”

But he warns that it’s hard to get industry-targeted incentives right. Lee points to the controversial Business Energy Tax Credit program, which gave away millions of dollars in green-business-focused tax subsidies but yielded little measurable result. In fact, a 2010 Oregonian investigation revealed several abuses of the BETC program: Walmart netted an $11 million profit by trading energy tax credits without making green investments; an ethanol plant got $12 million in tax subsidies, then declared bankruptcy and shut down; a Boardman business got $3.4 million to support tire recycling — even though it did not recycle tires. “BETC is a good example of an experiment that could have set us back, in terms of economic development policy,” Lee says.

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Portland Mayor Charlie Hales

Yet the Northwest Food Processors Association, a Portland-based trade group that advocates for food manufacturers in Oregon, Washington and Idaho, would like to see the return of BETC-like credits. “Many of our members used the Business Energy Tax Credit to make environmental improvements,” says Pam Barrow, director of energy and sustainability at the group. “It got out of hand, but legislative reforms were far too cumbersome. A program like BETC can help companies overcome barriers to making environmental improvements. Businesses already need to be in compliance with regulations, but with the right incentives, many companies will go beyond ‘compliance.’”

Charles Wilhoite, who has examined the finances and business choices of companies across the U.S. as managing director of Portland-based Willamette Management Associates, says his views on incentives are colored by his experiences on the Portland Development Commission and the board of the Nature Conservancy — although he did express surprise at being contacted for a story on “green business.” Subsidizing and actively recruiting environmentally focused businesses comes with political risks, he says. Not every startup will succeed, and when a taxpayer-backed solar business goes bust, skeptics are quick to cry foul. But Wilhoite believes these politically risky incentives can pay off over time. “Whether it’s battery innovations, renewables, electric cars, wind and solar businesses, we have seen opportunities and we are trying to encourage growth across the state,” he says. “To motivate businesses to drop anchor in the region, or to expand here, there have to be incentives.”

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Pam Barrow,
director of energy and sustainability,

Northwest Food Processors Association

Deckert at the Oregon Business Association says he agrees in principle that incentives can play a crucial role in supporting risky yet vital business investments. But he also believes that green incentives should not come at the expense of other economic-development efforts. “We have other clusters. Advanced manufacturing is taking off in the state. We have huge workforce needs. We are building the next ships, airplanes, exporting products, and we can’t find qualified workers in the state of Oregon. That’s a big deal, and we need to make sure we don’t lose sight of that when we focus on green-business incentives.”

In short: there’s consensus that incentives can be an effective way to boost green investments and encourage environmental decision making — but little agreement on which incentives work best.



 

Comments   

 
Guest
0 #1 ownerGuest 2014-06-09 21:19:23
It is interesting that public giants like Nike and Intel refuse to participate. More alarming is the pollution Intel put upon us here in Oregon. Nike does it through the jet stream from China in various forms including acid rain that comes here daily. Conformed reports show 30% of the daily air pollution in Oregon comes from Asia and most of that China.
Of course the governors offices in China even if they had any never are going to be green leaders nor is the gov't of China going to get their pollution corrected and over seen by what we have here like the EPA.
The sky over Oregon is not confined in a bubble.
It is made up of everything moving thru it from wherever and easily charted daily.
That sky pollutes everything called Oregon from air to and to water and all habitats human,natural and animal and vegetable.

So Why Not begin like folks in Montana call their BIG SKY and define Oregon's Big Sky and really make things happen.

Last week I signeda petitin to force the labeling of foods that use GMO's

Well how about labels for anything that is produced outside of Oregon that comes here riddled with pollution both in actual product and the air that carries it sooner and in an open form that causes at this time far more damage.

Putting a label on what folks like Nike and Intel and others create here inOregon will at least make the public aware of what they are supporting with their purchasing dollars.
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