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Subsidies dry up for green business

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Tuesday, September 14, 2010

By Jacq Lacy

Legislators presented a doom and gloom message to Oregon green business leaders last week: The Oregon general fund continues to plummet. State subsidies, once readily offered through tax credits to green businesses, will now be more difficult to obtain.

A briefing Sept. 8, hosted at Schwabe, Williamson and Wyatt’s Law Firm, aimed to open a new clean energy discussion between the public and private sectors. The Business Leaders for Climate Solutions network gathered to hear about promoting clean energy; instead, attendees learned about the unsustainable funding practices behind the recent prosperity of clean energy and the projected demise of funding.

“In some respects, we are victims of our own success. Four years ago, Oregon didn’t have Solar World. It didn’t have Sanyo. It didn’t have Solex, Solexant, RCC Solar, or Solar City. All of these companies have arrived in our state in large part because of the incentives we gave to attract them,” Glenn Montgomery, executive director at Oregon Solar Energy Industries Association, said.

The Business Energy Tax Credit (BETC) enticed solar and wind companies to invest millions in Oregon and boosted the electric vehicle industry, but the program was also widely abused and expensive.

More than three of the legislators shared that unlike the national government, Oregon cannot run a deficit.

“We will have a $3 billion deficit next session. We will not be able to do everything. Some of the things are going to have to drop off in all areas: health care, education and corrections. We’re going to see some necessary structural changes,” Senator Ginny Burdick said.

Senator Burdick does not discount the boost BETC gave to Oregon’s national reputation in clean energy. Even so, she desires sustainable subsidies. In March, House Bill 3680 constructed limits on the BETC. The program still needs retrofitting, Burdick said.

“The tax payers pay 100 pennies to the dollar, but the beneficiaries only get about 65 or 70 cents at best on the dollar, because the tax credits are sold,” Burdick said.

Burdick hopes to create a refundable tax credit that would prevent the selling and transfer of tax credits, creating a more efficient system. All 100 cents on the dollar would go straight from taxpayers to energy efficient businesses.

But minor revisions to subsidy programs will not solve the funding challenge. Green business leaders and legislators must look elsewhere for funding as structural cuts eliminate money supply lines.

The state needs to look at new sources of funding, including federal funding and maximizing our public private partnerships, Senator Jackie Dingfelder said.

“We are investigating alternative funding mechanisms, looking at what other states are doing, even considering a Carbon tax,” Dingfelder said.

Dingfelder also wants to set up a Clean Energy Commission with more citizen oversight and coordination between different state agencies. The final format of this commission is yet to be determined.

As money tightens legislators will only grant tax credits to businesses providing jobs to Oregonians. Burdick and Senator Diane Rosenbaum both believe unemployment will color the entire budget discussion in the 2011 legislative session. Companies must tie their ventures to jobs and to actual value added for the taxpayer. Those programs will have the best chance for funding, Burdick said.

One such promising project is Cool Schools, Representative Jefferson Smith’s energy efficiency initiative to hire contractors to make all Oregon public schools energy efficient in ten years. Rosenbaum and Dingfelder have both offered support for Smith’s new bill. Smith says he will look to traditional funding sources for the new project, such as capital bonds.

When Oregonians commit to the Cool Schools objective, options for funding and new jobs will present themselves, Smith said.

Jacq Lacy is an associate writer for Oregon Business.


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