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Race for the Renewable Energy Pay-Off: Recent State Actions

June 30, 2010

Over the past few months, several states have announced efforts aimed at reducing the nation's dependence on oil. While the importance and urgency of such efforts is perhaps magnified in the wake of one of the worst U.S. environmental disasters, the shift to a renewable energy-focused economy also brings with it the expectation of job creation, new product development, and increased revenue for states struggling in the aftermath of the Great Recession.

Governors in Arizona and Rhode Island recently signed legislation supporting renewable energy R&D and offshore wind development, respectively. In California, a measure requiring electric utilities to generate one-third of the state's power from renewable sources is being floated, and in Utah, Gov. Gary Herbert announced a formal planning process to create a 10-year clean energy initiative for the state.

Gov. Jan Brewer recently signed into law HB 2370 establishing individual and corporate income tax credits for R&D, production and delivery system costs associated with solar liquid fuels. The measure, which is in effect from 2011 to 2026, specifies that qualified research includes only research conducted in the state.

Solar liquid fuel refers to the process by which concentrated solar energy is used in conjunction with carbon dioxide and water to create hydrocarbons, according to an Arizona State University press release. It is used to create combustible fuels such as methanol and ethanol and additional processing potentially can yield more traditional fuels such as gasoline, diesel and jet fuel.

A bill making its way through the Committee on Natural Resources in the California legislature would increase the state's renewable portfolio standard to require utility companies to procure at least 33 percent of electricity from renewable sources by 2020. Although this standard already is in place following an executive order issued last September by Gov. Arnold Schwarzenegger, future governors are not bound to the standard (see the March 17, 2010 issue of the Digest). Gov. Schwarzenegger supports the proposed bill (SB 722).

At the same time, an effort is underway to suspend the state's Global Warming Solutions Act, which set the 2020 greenhouse gas emissions reduction goal into law. Enacted in 2006, the law directs the California Air Resources Board to develop actions to reduce greenhouse gasses and prepare a scoping plan to identify how best to reach the 2020 limit. Reduction measures to meet the 2020 target date would be adopted at the start of 2011.

The measure to suspend the Act qualified for the November ballot last week. If passed, the state would be required to abandon implementation of the program until the unemployment rate drops to 5.5 percent or less for four consecutive quarters. Backers of the initiative say implementing the mandates now will result in increases in certain consumer goods during a time of high unemployment.

Rhode Island
Legislation to facilitate construction of an offshore wind project seen as key to Rhode Island's economic development and renewable energy agenda was signed into law earlier this month by Gov. Donald Carcieri. The legislation (H8083/S2819) "clarifies the General Assembly's original intent to encourage and promote clean, independent, renewable energy in Rhode Island through a demonstration sized, offshore wind project," according to the governor's press release. Specifically, the legislation directs the Rhode Island Public Utilities Commission to revisit the contract between wind farm developer Deepwater Wind and National Grid that it rejected in April, reports Providence Business News. The commission must render a decision within 45 days. Deepwater also is required to pay for a consultant to study any economic benefits of a wind farm, the article reports.

The Block Island Project, which is expected to cost about $200 million, would present economic advantages for the state such as attracting jobs and investment dollars of offshore wind turbine manufacturers, blade manufacturers and related businesses, according to the governor's office. Read the press release.

Gov. Gary Herbert announced earlier this month the formation of a working group to develop a 10-year clean energy plan for the state, an initiative outlined during his State of the State Address. The plan, which is due by the end of the year, will focus on creating energy-related manufacturing jobs, developing cutting-edge technologies that combine traditional fuels with renewables, modernizing infrastructure, promoting energy efficiency, and enhancing partnerships between industry, universities, governments and communities to address energy opportunities. Gov. Herbert also asked the advisory group to consider how the state can best deal with nuclear issues, including the generation of power and disposal of waste.

The governor tasked the group with accomplishing the goals without the use of tax incentives, according to an Associated Press article. An outline of the initiatives and objectives is available at: http://www.utah.gov/governor/docs/Energy-Initiatives-Imperatives.pdf.

Arizona, California, Rhode Island, Utahenergy