Should David Always Defeat Goliath?--Individual Rights vs. Collective Good In Developing Sustainable Projects

Recently there have been several cases of neighbors raising objections, valid or invalid, to green projects. 

There was the Northland Pines case where community members challenged the LEED certification of a local high school.  Recipients of smart meters sued the utilities claiming the smart meters wrongly measured their electricity use.  Neighbors held up the Cape Wind offshore wind energy project for years. Neighbors even object to the placement of solar panels, most famously on Al Gore's mansion in Tennessee.

Now, a 24 hour solar and biomass large scale renewable energy plant in California has been scrapped due to the objections from neighbors.  According to the New York Times:

Although local residents and regulators had raised issues about the proposed solar farm’s water consumption and other impacts, it was the project’s plan to operate around the clock by burning biomass that proved problematic, according to energy commission records.  

The neighbors were apparently concerned about the added air pollution from trucks hauling biomass.

The question for policy makers, is, of course, how to balance individual rights with the collective need to develop renewable energy sources and allow for green building technologies. 

This is a tough nut to crack, particularly in the United States where individual property rights are a sacred cow that no politician wants to slaughter.   Evidence of this can easily be found in the aftermath of Kelo v. New London, wherein the Supreme Court decided that private property could be taken for economic development.  In the wake of the decision and popular outrage that individual property could be taken and given to another private party, states and municipalities throughout the country passed laws significantly curtailing eminent domain powers.

Policy makers need to take into consideration some or all of the following: 

  1. Weigh the value of the project have towards meeting environmental goals--This may seem like an obvious consideration, but the value of a large scale solar project to the greater community trying to come off foreign power sources should be given greater latitude than a small project that will have limited impact, but causes significant distress in the community. But, large projects usually cause more handwringing than small ones. So...
  2. Consider ways to minimize the impact--Are there ways to do the project differently so that individual concerns are minimized? Could the California renewable plant have used alternative fuel trucks which caused less pollution? But...
  3. Give the community a voice--There may be valid concerns with the project.  If neighbors have a voice in the process, they might raise legitimate issues, and feel empowered as part of the decision making process. But...
  4. But limit the pretextual objections--My husband likes to call needling neighbors BANANAs--Build Absolutely Nothing and Nowhere Anytime.  Do the neighbors object to any projects, no matter how beneficial to the community? If so, there has to be policy in place to air valid concerns and resolve them, without endlessly delaying good projects.

In order to stay the same, things need to change.  We need to reduce our energy usage and convert to renewable sources to retain our standard of living.  Policymakers need to balance the valid claims of individuals with our collective pursuit of new energy sources.

The Renewable Energy Tax Code Wilderness--Production, Investment and Grants OH MY!

I will make an admission.  I took tax in law school, and, it was the academic equivalent of having my left arm sawed off without anaesthesia.  Why? Mostly because things which should have been clear seemed hopelessly obscure.  Now I deal with advising clients on incentives available for sustainable projects, and the tax code and I have had to battle to a stalemate.  At least, I battle, and the tax code just sits there impentarably.

One of the features which is particularly difficicult is the relationship between 26 USC 45, which deals with tax credits for producing renewable energy (the "production tax credit" or PTC), 26 USC 48 which deals with tax credits for investing in renewable energy equipement (the "investment tax credit" or ITC) and the Renewable Energy Grant created by the ARRA.  All three of these relate to businesses which have installed renewable energy technologies, like solar, wind and geothermal.  It should be clear and easy to understand which ones apply to your business and what the incentive will be.  As with all things related to the tax code, however, it is not.

I am going to attempt to clear up some of the obscurity, but, as with all information on this blog, it is for informational purposes only, not legal advice; and you should consult your legal and financial advisor to provide you with proper advice for your business.

Title Applies to Amount of Incentive
Production Tax Credit
  •  Wind
  • Biomass
  • Geothermal
  • Solar
  • Small Irrigation
  • Municipal solid waste
  • Hydropower
  • Marine and Hydrokinetic
 1.5 cents per kW of power generated at a qualified facility for the 10 years beginning on the date the facility was placed in service AND sold to an unrelated person during the taxable year
Investment Tax Credit
  •  Solar for heating, cooling, hot water, illumination or solar process heat
  • Fuel cell
  • Microturbine
  • Geothermal
  • Combined heat and power (cogeneration)
  • Small wind
  • Ground water thermal
 30% of the cost of the "energy property" for solar and small wind, 10% for geothermal and other renewable sources
Renewable Energy Grant  Applicable property under Section 45 or 48  10% or 30% of the basis of the property, depending on the type of property placed in service during 2009 or 2010 or after 2010 if construction began on the property during 2009 or 2010 and the property is placed in service by a certain date known as the credit termination date

The incentives are mutually exclusive--The PTC and the ITC cannot both be taken, and they can be swapped for the REG, but you cannot take the PTC/ITC and the REG.

In plain english, it appears that the PTC is designed for renewable energy sources where the power is designed to be sold to others as a Renewable Energy Credit, and the ITC is designed for renewable energy sources where the power is used on-site.  The Renewable Energy Grant allows companies which have invested in either type of renewable energy capacity to receive cash, as opposed to a tax credit, which is helpful particularly if the company has no tax liability or a tax loss. 

 There are some resources available to help you sort through this morass.  The DSIRE database has quick summaries of available state and federal incentives.  The Utah Clean Energy site has a nice summary of the renewable energy features of the ARRA.   The DOE site has a useful summary of renewable energy incentives for businesses as well.

What The Christie Election Means For Green Building In New Jersey

On Tuesday, Chris Christie (R) was elected as Governor of New Jersey.  His predecessor, Jon Corzine (D), instituted a number of programs through the state's administrative agencies to promote sustainable practices and green building.  So, what does this change in administration mean for green building in New Jersey, a leader among states in promoting green practices? 

Christie campaigned hard on issues like "controlling spending" and lowering New Jersey property taxes. He also proposed:

  • Immediate freeze on proposed new agency rules and regulations.
  • Sunset provisions for all new programs after 4 years. 

This will mean that anything in the pipeline of the administrative agencies will be frozen, and new green programs will be automatically sunsetted.

Christie seems to be pro-renewable energy, campaigning that he will:

  • Renew NJ and the Choose New Jersey Energy Campaign. Consolidate all renewable energy manufacturing efforts and have New Jersey undergo a brand makeover to market and sell New Jersey’s resources to energy producers, innovators and developers.
  • Incentivize energy manufacturing with tax credits. 100% of the corporate business taxes or the insurance premium tax for any wind turbine and manufacturing facility that locates in New Jersey.
  • New Jersey will create higher-paying clean energy production jobs in the next four years. Commit to a 5/1 ratio of higher-paying, clean energy production jobs to lower paying, efficiency jobs. While New Jersey has one of the strongest renewable portfolio standards in the country, according to the US Energy Information Administration, the state actually ranks 43rd when it comes to generating renewable energy. 

The most interesting of these is "Commit to a 5/1 ratio of higher-paying, clean energy production jobs to lower paying, efficiency jobs." 

It is energy efficiency jobs which are predominantly blue collar, easy entry to work jobs.  And according to a recent McKinsey study, the economic and job vaue of energy efficiency has huge potential:

[B]etween 2009 and 2020, energy efficiency retrofits could generate between 500,000 and 750,000 direct, indirect and induced jobs through 2020.

Moreover, the low hanging fruit for energy savings and environmental stewardship--not to mention social equity--comes from energy efficiency, not renewable energy. According to the CleanTechies blog:

 A study done by a Lawrence Berkeley National Laboratory scientist claimed that commissioning all of the nation’s commercial buildings would yield the greatest energy savings per dollar spent of any option, including wind and solar energy production. Commissioning involves fine tuning a building’s existing energy systems to improve performance and eliminate wasteful energy use.

 Hopefully, a candidate who campaigned on the concept of fiscal responsibility will realize the value of investment in energy efficiency programs before putting all of New Jersey's eggs in the renewable energy incentive basket.  Stay tuned...