Schwarzennegger Urges Bush to Extend Solar Tax Credits

California’s Governor, Republican Arnold Schwarzennegger, went on record last week as a supporter of the energy bill making its tortuous way through Congress by appealing to President Bush to support solar tax credits. The energy bill has already run into a roadblock in the Senate, and the President has repeatedly threatened to veto the bill in the form passed by the House on December 6th.

In a letter to the President, Schwarzennegger described at length the programs under way in his state and pointed out how important tax credits would be to keeping them on track, not only in California but also in the country at large. He cited this year’s California Solar Initiative, under which 3,000 megawatts of solar projects would be installed to offset growing electricity demand, as well as the Solar Water Heating Efficiency Act due to launch next year.

The Governor’s letter spelled out the environmental, job-creation and economic benefits of these programs, and pointed out that they would be in jeopardy without federal tax credits.

“California,” the letter runs, “and other states cannot succeed in developing solar projects without the tax incentives until the industry has reached a critical scale of production and deployment and can compete with traditional utility energy services.”

An important need highlighted in the Governor’s letter is for tax credits to be extended for multiple years, because the larger projects can take several years from concept to building; investors need to know that the economic formula on which a project was based will still apply when the project qualifies for credit.

In closing, Schwarzennegger made reference to the fact that California had enacted an aggressive renewable portfolio standard (RPS) to increase the proportion of clean energy in the resource mix. This may have been a deliberate way of communicating to President Bush that his own opposition to a national RPS in the Congressional Energy Bill is ill-founded.