A green job jewel in the spending bill dust heap

A little-known provision in the compromise spending bill signed into law this weekend will help some threatened Recovery Act-funded clean technology projects breathe a sigh of relief and move forward in bringing green jobs to their respective regions.

You’d think that cleantech projects that received loan guarantees, tax breaks and other funding from the DOE would be churning along nicely by now. But an arcane rule in the Energy Policy Act – and how narrowly the DOE interprets it – cast a cold chill on many DOE award recipients.

To put it simply, cleantech companies that receive DOE loan guarantees must first pay a risk-based credit subsidy fee, which can amount to a whopping 20% or more of the loan amount… unless their projects actively generate renewable energy or produce biofuels.

In other words, solar, wind and hydro energy companies get a free pass, while energy efficiency and waste heat recovery companies get stuck holding the bill. Section 1705 of the Energy Policy Act waives subsidy fees for companies that manufacture renewable energy products that generate electricity or thermal energy. The loosely defined criteria in the bill provided the DOE broad flexibility to extend fee relief to many more loan recipients. But they didn’t, and as a result some projects were suddenly in jeopardy.

At a time when the Obama administration is strongly promoting energy efficiency technologies as the fastest, most cost-effective path to U.S. energy independence, this rule is not only counterintuitive, it is economically stifling for many of our most promising new cleantech companies. You can’t float them a loan guarantee, charging them tens of millions in subsidy fees for the “honor,” and then expect them to become the new engines of our green economy. Some award recipients have already withdrawn from the loan program, and countless potential applicants have chosen not to apply for participation in the program.

The good news is that, despite all the cuts to energy efficiency programs in the compromise spending bill, the bad policy was upended.  Thanks to hard-fought negotiations by Minnesota’s legislative delegation in particular, the spending bill now includes terms that allow energy efficiency technology companies to avoid payment of those subsidy fees.

A smart policy rewards – not penalizes – our best entrepreneurial cleantech companies, which are those that will help us reduce reliance on fossil fuels, increase the use of renewable energy, cut carbon emissions and generate urgently needed jobs.

{DISCLOSURE: A Brodeur/Beaupre client benefited from the spending bill provision}