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August 18, 2022

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Federal loan program is working in Nevada

Last month, the Energy Department helped Nevada move closer to becoming the clean energy capital of the United States. The department finalized a loan guarantee for the Crescent Dunes Solar Project near Tonopah, one of four projects in Nevada to receive such guarantees. This innovative solar facility, which recently broke ground, is creating 600 construction jobs and thousands of supply-chain jobs, and it will produce enough energy to power 75,000 homes.

The renewable energy loan-guarantee program, created by the 2005 Energy Policy Act and funded by the 2009 American Recovery and Reinvestment Act, was designed to help large-scale clean energy projects like Crescent Dunes move forward by providing government-backed loans for innovative technologies. By protecting investors’ risk, the loan program helps promising technologies overcome the “commercialization gap,” moving them from the lab into commercial use. Congress has similarly protected risky investments in the nuclear power industry, indemnifying them in the event of nuclear accidents since 1957, and more recently creating a loan-guarantee program for new nuclear plants.

Although the $35 billion loan-guarantee program sounds big, it is a small, temporary tool to move the clean energy industry forward. This tool is small in comparison to the history of financial support the federal government has given the energy industry as a whole.

According to a recent report from venture capital firm DBL Investors, “What Would Jefferson Do? The Historical Role of Federal Subsidies in Shaping America’s Energy Future,” Washington has traditionally taken heavy-handed measures to help new energy industries. It gave away free land, transportation systems, protective tariffs and reduced tax rates to the timber and coal industries in the 1800s.

In order to stimulate oil and gas extraction nearly a century ago, Congress gave tax incentives that remain fixed in our tax code today, despite the industries’ long-time maturity. Meanwhile, tax incentives for renewable energy have expired multiple times, and reinstatements often only come in one- or two-year periods, which “led to boom and bust cycles in renewable energy development,” according to the report.

Congress continues unbalanced tax policies favoring the oil and gas industries, giving them the kind of certainty denied to clean energy investors. The authors of the DBL report calculate that as of 2009, the oil and gas industries received, on average, $4.86 billion in yearly federal subsidies, compared with $3.5 billion for the nuclear industry and a measly $370 million for renewable energy.

This means the total taxpayer support of the oil and gas industry has been $446.96 billion compared with $5.93 billion for renewable energy.

In light of these facts, we can’t say how profitable those polluting fuels ever truly were, or if they could have enjoyed success without the taxpayers’ generous assistance. We can, however, marvel that with loan guarantees and a modicum of assistance from Congress, the clean energy industry is rapidly catching up to polluting fuels on cost, overcoming barriers, and creating a vibrant new industry in Nevada.

Lydia Ball is the executive director of the Clean Energy Project, which is based in Las Vegas.

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