Policy uncertainty hamstrings U.S. clean power development, says report

Wind, solar and other renewable sources are expected to account for about half the new electricity capacity installed worldwide over the next several years, but lingering uncertainty around U.S. energy policy is making the situation more difficult for domestic companies operating in those sectors, according to a report released today.

The Pew Charitable Trusts' report estimates that clean energy development will generate $1.9 trillion in revenue worldwide through 2018, with about $269 billion of that coming in the United States, said Dexter Gauntlett, an energy research analyst with Pike Research, which helped compile the report.

The report is optimistic about renewable energy's growing prominence in energy markets and expects that trend to continue, but it notes that growing international competition -- especially from China -- is reducing the leading role the United States once played in driving clean energy development.

Discussions that Pew convened with business leaders revealed an overarching concern about the lack of a comprehensive policy aimed at promoting renewable energy in the United States. Business leaders said the on-again, off-again nature of U.S. policies has inhibited growth in the sector; that situation was exemplified by last year's costly and time-consuming lobbying push to extend the production tax credit, which was given a lifeline in this month's "fiscal cliff" deal just as it was expiring.

"I can't tell you how strongly we heard that," Phyllis Cuttino, director of Pew's Clean Energy Program, said of the industry's dissatisfaction with a lack of policy certainty.

The report recommends a "relatively narrow, straightforward, and mutually reinforcing policy agenda" to promote continued development of wind, solar, biomass, geothermal and other renewable sources.

It recommends creation of a national clean energy standard -- proposals for which were floated but ultimately failed to gain traction in the last session of Congress -- as well as an extension of renewable energy tax credits through the end of the decade, increased investment in research and development, the return of a clean energy manufacturing tax credit, and policies to price environmental externalities and eliminate existing tax incentives for fossil-fuel-based energy.