Oregon reins in tax credits for clean energy

Oregon reins in tax credits for clean energy

Oregon reins in tax credits for clean energy

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by Associated Press

kgw.com

Posted on June 25, 2012 at 1:11 PM

Updated Monday, Jun 25 at 1:21 PM

BEND, Ore. (AP) — Clean energy companies in Oregon are finding lawmakers more reluctant to give them tax credits.

Tax credits for clean energy companies ballooned from about $100 million in 2006 to more than $300 million in 2010, according to Legislative Revenue Office figures.

That prompted lawmakers facing troubled budgets to rein in the credits, The Bend Bulletin reported Sunday (http://bit.ly/MIeY7o ).

From 2005 to 2009, Bend fuel-cell maker IdaTech tapped Oregon's Business Energy Tax Credits program eight times, securing $10.7 million in tax credits for research and development.

But when the company asked for an additional $5 million in 2010, the state balked.

BETC was revamped last year, with caps on the amount of money that could be spent and stricter job-creation requirements for companies that apply for credits.

Officials with some Central Oregon energy companies said they might not be around to keep developing new technology if not for the state and federal support they've received.

In IdaTech's case, the dried-up market for tax credits was discouraging, said Hal Koyama, IdaTech's president and CEO. But it did lay the groundwork for IdaTech to produce its ElectraGen hydrogen fuel-cell systems. About 800 of the models have been installed in more than 30 countries.

"The incentives that were there helped create an anchor, but they haven't been there for a while. We've been pushing on, and we're going to continue to push on," Koyama said.

However, IdaTech laid off 50 of its 140 worldwide employees earlier this month.

Gov. John Kitzhaber energy policy adviser Margi Hoffman says the economy has changed since the first tax credits were put in place, and now the state is operating in a very resource-constrained environment.

We spend billions of dollars every year on energy we're purchasing from out of state," Hoffman said. "We have a lot of renewable natural resources in our own backyard that would help increase our property tax base, and put people back to work," Hoffman said. "Clean energy is not just about creating healthier communities. It's a smart business decision for the state."

For Paul Israel, president of Sunlight Solar Energy, the argument that public money shouldn't be invested in non-traditional energy sources doesn't ring true.

After all, oil, coal and natural gas were once considered new forms of energy. They also received their share of incentives over the years, Israel pointed out, and still do.

Those three, traditional energy sources received about $594 billion in federal incentives between 1950 and 2010, according to a 2011 study by Management Information Services, a Washington, D.C. research firm that specializes in energy and environmental issues.

About $335 billion of that has come from tax breaks, according to the report.

For Sunlight Solar, a few thousand dollars in Business Energy Tax Credits, and about $31,000 in ARRA funds for a solar array in Astoria, gave Israel's company a pair of much-needed shots in the arm during the recession.

This week, Sunlight Solar crews installed solar panels on South Salem High School. That job was part of the state's policy requiring 1.5 percent of new construction costs on public buildings to be spent on solar energy.

Last year was a strong one for Sunlight Solar, Israel said. He's got 46 employees, and four offices in three states. He hopes to keep growing the company.

"Taxpayer money is utilized to spur new industries," Israel said. "That's the way it should be."

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