A U.S. Congressional bill that lifted a 40-year-old ban on crude oil exports but extended tax credits for solar and wind is a clear win for renewable energy, according to analysis by Bloomberg New Energy Finance.
“Combined, the extensions will spur more than $73 billion of investment and supply enough electricity to power eight million U.S. homes,” Bloomberg reports. BNEF analysts say the five-year extension will fund 20 new gigawatts of solar—more than the total installed capacity in the U.S. up to the end of 2014—and 19 new GW of wind.
“The tax credits, valued at about $25 billion over five years, will drive $38 billion of investment in solar and $35 billion in wind through 2021,” Randall writes. And “this is exactly the sort of bridge the industry needed. The costs of installing wind and solar power have dropped precipitously—by more than 90% since the original tax credits took effect—but in most places coal and natural gas are still cheaper than unsubsidized renewables. By the time the new tax credit expires, solar and wind will be the cheapest forms of new electricity in many states across the U.S.”
Solar energy stocks rose sharply on news of the decision—SolarCity by 34%, SunEdison by 25%, and SunPower by 14%.
Reaction from Senate Democrats mirrored the mixed reaction in the wider climate and energy community.
“There is a lot to be said, pro and con, about this agreement, but I believe the extension of tax credits for solar and wind energy is a game-changer,” said Sen. Barbara Boxer (D-CA). “Extending the wind and solar tax incentives for five years would eliminate over 10 times more carbon emissions than lifting the oil export ban would create.”
“Today is a great day to be an oil company in America,” countered Sen. Ed Markey (D-MA). “It will be a disaster for our economy, for the climate, for our national security, for our consumers.”
Yet “it’s hard to count this is as a clear Republican win,” comments InsideClimate News correspondent John H. Cushman Jr. “Basically, the Democrats were putting their money on an up and coming industry, and the Republicans on one that looks down and out.”
The tax credit extensions were not the only good news in the omnibus budget bill: it included crucial authorization for the U.S. contribution to the United Nations’ Green Climate Fund, as well as a host of other environmental measures and rejections of anti-environment policy riders.
Council on Foreign Relations analysts Michael Levi and Varun Sivaram called the legislation a net win for the climate. “Extension of the tax credits will do far more to reduce carbon dioxide emissions over the next five years than lifting the export ban will do to increase them,” they wrote.