November 2010

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(CNN) — The midterm elections made it clear that Americans want a government that works for the people.

The 112th Congress will be faced with a choice: Work with the president and the people to deliver results, or pursue an obstruction agenda that will leave individuals and businesses with an even less sustainable economy and future than they face today.

If Congress chooses the collaboration path, members can tackle one issue that will enhance our national security, create jobs and help stabilize the climate –an issue with bipartisan roots that touches every corner of this nation: clean energy.

Our nation’s energy challenges are pressing and immediate. Unlike countries in Asia and Europe, the United States has neglected to join the global clean energy marketplace. We have no long-term clean energy plan, and so we have few domestic clean energy technologies or industries. While the world surges ahead, we risk being left behind, dependent on yesterday’s energy solutions to solve today’s energy challenges.

We know what steps to take. We must reduce our dependence on oil. The transportation sector alone is 95 percent dependent on oil. American taxpayers spend from $500 million to $1 billion a day on foreign oil, 39 percent of which is imported from “dangerous or unstable” nations, according to a Truman National Security Project report.

We must redouble our efforts to pass national clean energy and efficiency standards to meet our energy needs using homegrown, low-carbon sources. In turn, these actions will lower costs to consumers, create jobs, and spur an export market for innovative energy technologies.

We must use public dollars and the government’s credit enhancement power wisely, to leverage private capital for clean energy research, development, production, transmission, storage and deployment.

We must confront climate change, which jeopardizes our economic prosperity by leaving us acutely vulnerable to increased water shortages, widespread drought and floods, and food insecurity.

We can solve these problems. If the United States adopts a progressive energy strategy that combines market creation, financing for new industries and technologies, and infrastructure development, we can end our dependence on dirty fossil fuels, protect public health, and provide a solid foundation for economic growth and prosperity.

Even without comprehensive climate and clean energy legislation, the next Congress can take concrete steps to strengthen the U.S. market for clean energy, providing critical stability and certainty for investors, business, and consumers. These polices have all previously been introduced in the House or Senate, with bipartisan and business support. None will contribute significantly to the federal deficit.

Congress can:

— Spur clean energy innovation, manufacturing, deployment, and export through an ambitious renewable electricity standard, extensions of the successful Treasury grant program (1603) and Section 48c manufacturing tax credit, and by establishing a Clean Energy Deployment Administration (CEDA, or “Green Bank“) to leverage private sector investment for the deployment of clean energy.

— Encourage home and business owners to invest in energy efficiency and boost employment in the beleaguered construction sector by passing HOME STAR and Building Star. Those programs would reward consumers for installing energy-efficient equipment.

— Increase the $75 million liability cap for offshore oil damages, and pass other measures to enhance the accountability of oil exploration companies and give these companies an incentive to conduct their operations more safely.

The United States can and must also act on the international stage to limit the consequences of climate change and enhance our national security. Congress can show a commitment to the U.S. goal of reducing greenhouse gas emissions, take concrete steps to reverse widespread deforestation that contributes 18 percent of these emissions globally, and provide short-term financing to allow the poorest countries in the world to adapt to the impacts of climate change.

This is not a partisan agenda. The midterm elections reaffirmed that the clean energy agenda is a positive political agenda. In California, voters overwhelmingly supported the nation’s only cap-and-trade policy even in the face of a well-financed attack led by a coalition of out-of-state fossil fuel industries. In defeating Proposition 23, California voters across the political spectrum forcefully chose new technologies and new jobs over a retreat to last century’s polluted air and fossil fuel dependence — showing broad bipartisan support for the most comprehensive emissions reduction measures the country has ever seen.

Co-chairman of the “No on 23” campaign, former Secretary of State George Shultz said it best: “Those who wish to repeal our state’s clean energy laws through postponement to some fictitious future are running up the white flag of surrender to a polluted environment.”

In Michigan, voters elected Gov. Rick Snyder, who campaigned as a “good green Republican” who believes that “Michigan needs to be a leader in the innovative movement toward alternative and cleaner energy.”

The clean energy economy is here for the long term. This Congress must decide if America will lead it.

The opinions expressed in this commentary are solely those of the writers.


Don Wehby, Guest Writer

Bill Clinton last week reinvigorated the public discourse on the use of renewable energy in Jamaica. Solar energy, of which Jamaica is in abundant supply, is particularly important if we are to diversify away from imported sources of energy and become energy self-sufficient.

While much has been said about solar electricity over the past few years, actual usage has been slow to spread because of the large initial investment required and the scarce availability of financial incentives.

It currently costs somewhere between J$2 million to J$3 million to fully equip a three-bedroom house with solar-generated power. This puts solar systems out of the reach of the majo-rity of Jamaican homeowners.

4kW Aerial Shot
4kW job in Kingston. Jamaica

Although the upfront expenditure is burdensome, solar panels have a lifespan of 25 years or more and a minimum battery life of seven years. They are built to withstand 125-mile-per-hour winds and will start losing power after about three days of overcast conditions.

The payback period for solar investments is typically 6-8 years and can be sooner, depending on rising fuel costs, taxes on electricity (currently 10 per cent GCT in Jamaica) and foreign-exchange movements.

Despite these benefits, there are few incentives to invest in solar technology in Jamaica.

Currently, solar systems – including panels, batteries and inverters – are exempt from GCT and import duties.

The National Housing Trust (NHT) also offers low-interest “solar panel loans” of up to J$1.5 million for individual applicants and J$3 million for co-applicants. The interest rate ranges from 1 per cent to 7 per cent, depending on your weekly income, with a repayment period of 15 years.

The NHT also offers a solar water heater loan of up to J$250,000 at 3 per cent for 5 years. These loan options should be more aggressively marketed so that more Jamaicans are aware of their existence.

On the commercial side, the National Export-Import Bank of Jamaica has implemented a special credit line for manufacturers and agro-processors to establish alternative- energy systems at relatively low interest rates.

While these incentives are commendable, they are not enough to fuel a solar energy revolution in Jamaica. In fact, Barbados is the leader in the Caribbean in terms of structuring incentives to drive renewable energy adoption.

Homeowners receive significant income tax deductions for investing in systems and equipment that make their homes more energy-efficient and/or generate electricity from renewable sources.

Along similar lines, I recommend that the following provisions be added to Jamaica’s income tax code to encourage solar energy adoption among both commercial and residential property owners:

An individual owner of residential property who spends, inter alia, on energy saving or water-saving devices be entitled to a maximum deduction from yearly taxable income of up to J$1,000,000.

Up to J$250,000 can be deducted for expenditure related to a home energy audit and the purchase of any conservation materials or systems recommended in that audit. A home energy audit is defined as an evaluation by an authorised energy auditor of the energy consumption in a household to determine ways in which energy can be conserved.

Up to J$750,000 can be deducted for expenditure on the purchase or installation of ‘environmentally preferred products’. ‘Environmentally preferred products’ means pro-ducts that cause significantly less harm to human health or to the environment than alternative pro-ducts that serve the same purpose; or products, the consumption of which contributes significantly to the preservation of the environment.

A tax policy for commercial enterprises should also be implemented based on the following guidelines:

Up to 30 per cent of the capital cost of investing in renewable energy technologies can be deducted from profit before tax, with a maximum claim of J$20 million; and

Accelerated depreciation on qualifying environmentally preferred assets – for example, depreciation of up to 50 per cent of the asset in one year.

These tax incentives will drive adoption of solar technology at both the residential and commercial levels, helping to move Jamaica towards becoming self-sufficient in energy.


Finally, we need to reach a consensus with the domestic power company on the issue of net metering.

Net metering allows an electricity customer’s meter to run backwards if the electricity he or she generates is greater than that consumed, effectively banking the electricity until it is needed by the customer.

This provides the customer with full retail value for all the electricity produced and is used in more than 30 states in the US and widely throughout Europe.

Under Jamaica’s proposed net billing policy, an additional meter will have to be installed at the customer’s expense, and a much lower ‘avoided cost’ value is placed on surplus electricity despite it being generated in a more environmentally sustainable way. This is a financial disincentive.

Net metering will make the payback period on deploying solar technology shorter and is a matter of priority if we are truly serious about energy self-sufficiency.

At approximately J$25 per kWh of electricity, Jamaica’s energy costs are among the most expensive in the world – with adverse effects on our standard of living and productive capacity.

Let us use the reinvigorated public discussion to effect real change in how we incentivise renewable energy use.

Don Wehby is group COO of GraceKennedy Limited.

Jamaica Gleaner