The world is suffering through a debilitating pandemic: non-essential businesses are out of commission, academic institutions have shifted online, and families are scrambling to protect themselves and their loved ones. As we rush to minimize damage in the face of an existential threat, the need for drastic action is evident. The United States undeniably fumbled its response to COVID-19, resulting in the greatest number of cases in the world despite months to prepare from the examples of Italy and China. Even as we saw countries like South Korea flatten the curve with remarkably extensive testing and citizen compliance, the United States has failed to secure enough testing, personal protective equipment for medical staff, and a cohesive response to enforce social distancing. We’ve made the issue partisan instead of heeding expert public health advice—similar to our response to another crisis.
Reactions to the pandemic mirror our nation’s response to climate change on a vastly accelerated timeline. Initial denial and rejection of scientific recommendations coupled with conspiracy theories about China, subsequent criticism of solutions as too expensive, and finally—foreseeable in climate change but not yet actualized—lack of preparation that threatens to overwhelm the system when the problem inevitably materializes. As a psychologist who studies the spread of misinformation quotes, “We went through the stages of climate change denial in the matter of a week.” This rapid scale of crisis should inspire us to take the climate problem more seriously than ever. Implementing unprecedented and drastic social distancing measures has saved lives by flattening the curve in the novel coronavirus crisis. Preemptive action to mitigate the worst effects of climate change will also protect against massive loss of life.
One critical component of mitigation is the wide-scale transition to clean energy. The IPCC, a global coalition of scientists modeling climate effects, released forecasts that renewable energy must range from 70-85% of the electricity share in 2050 to avoid the worst of climate change. For comparison, the share of renewables in global electricity generation was 26% in 2018, with growth driven primarily by solar PV and wind installations.
Some American Congressional leaders have blocked attempts to include any “green” appeals in the stimulus package. The $2.2 trillion “Coronavirus Aid, Relief, and Economics Security Act”—also known as the “CARES Act”—budgeted $500 billion for corporate bailouts, including relief funds for companies like Delta and Boeing. However, Congress rejected requests from renewable energy companies along with demands like airline accountability for carbon offsets. The solar and wind industries that were already struggling from disruptions to supply chains in the trade war with China are now faced with deadlines that they can’t meet.
These industries are seeking extensions of the solar Investment Tax Credit (ITC) and wind Production Tax Credit (PTC). The ITC and PTC are critical federal tax credits with strict construction deadlines—they’ve proven to be instrumental incentives for renewable energy growth in the US. The current ITC is a 26 percent tax credit for solar system projects that begin construction in 2020. However, the credit decreases to 22 percent for projects that begin construction in 2021. Similarly, the PTC provides a tax credit of 1.5 cents per kilowatt-hour for a decade for wind projects commencing construction this year. The problem is that many projects are at risk of not starting construction as planned in 2020 due to labor disruption from social distancing mandates, delivery delays caused by China’s economic shutdown, and serious financing concerns.
In an industry with already slim margins, the economics of installation vary greatly between the 26 percent tax deduction of a solar system in 2020 versus a 22 percent tax deduction of a system in 2021. Delaying to the following year and losing that 4 percent in tax credits could derail thousands of planned wind and solar projects. Investors are spooked and hundreds of thousands of jobs are threatened, while sidetracking tens of billions of investment dollars.
The Potential Solution
Speaker of the House Nancy Pelosi is calling for a fourth stimulus plan addressing infrastructure. Seeing as the solar industry alone injects $19 billion annually in infrastructure investments across America, this would be a second chance for lawmakers to support the clean energy industry that employs nearly 3.3 million Americans. Extending ITC and PTC tax credit deadlines that would have applied in 2020 to the following year is imperative.
The COVID-19 pandemic sheds light on the need to take scientists’ recommendations quickly and early, to prepare for the worst outcomes, and to take drastic measures in the face of an existential threat. To promote a reduced-carbon future, we must—at a minimum—maintain the trajectory of projects already set in motion before this crisis. Any postponement of transitions to clean energy means less actionable mitigation before the climate experiences feedback loops that we can no longer control. Given the importance of renewable energy to energy independence, job growth, and climate change mitigation, Congressional extensions of ITC and PTC financing options are essential inclusions in the next COVID-19 stimulus bill.
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