This Washington

Democrats and Enviros Clash on Renewable Energy Tax Break

By Josh Feit March 9, 2010

He said-She saids aren't my favorite, but I'm pretty mesmerized by this one.

As we reported over the weekend, environmental advocates in Olympia are at odds with the Senate over the fate of the renewable energy tax incentive—one that's worth about $7.8 million to the state.

The Senate rolled back the incentive so alternative energy projects only get the deal (a sales tax exemption) for power sold in Washington state. (The House, as we noted in today's Morning Fizz, included the full exemption for all renewable projects in its budget.)

Senate Democrats spokesman Jeff Reading explained the Senate Democrats' seemingly anti-Green position:
"The policy question would be 'Why should Washington taxpayers be making up the difference on tax receipts lost to project developers who will be selling their power to Californians?' And the policy answer is 'Washington tax breaks should help Washingtonians, not Californians.'

The intent of [our vote] is to limit the tax break to projects produced by Washington utilities or under contract to sell the power to Washington utilities—in other words, provide the tax incentives only for power sold to Washington rate payers."

Jessica Finn Coven, policy specialist with environmental non-profit Climate Solutions doesn't buy it:

"Whether the power is sold in state or out of state, the benefits to Washingtonians are still very real. We don’t offer Boeing tax breaks only for planes that fly within Washington’s borders because we see benefits to keeping Boeing operating within the state, regardless of where they sell their product.

Also, Washington wind projects that create jobs for Washingtonians, yet sell their power to California, still increase clean energy and reduce fossil-based energy, which is in everyone’s interest."

And sounding a little bit like a Boeing lobbyist herself, Coven details the benefits of tax breaks for business (the alternative energy business, in this instance):
"In 2009 alone, Washington’s wind farms created over $8.9 million in tax revenue. This is money that went to improve our schools, fire districts and libraries (among other things), especially in the rural counties that most need new economic development opportunities. Attracting more wind projects to the state will increase these tax revenues, all while creating jobs and putting clean, renewable energy on our grid."

It is that last point about "clean, renewable energy," though, where Coven stops sounding like your traditional business lobbyist defending a traditional tax break. (Lobbyists for TransAlta's coal-powered energy plant, for example, and the tobacco industry—both victims in this year's revenue budgets—talked about jobs, but not societal benefits like renewable energy).

Coven siezes on that difference:
"When the state continues to offer tax credits to well established, high-polluting industries [like for aluminum smelting and oil refineries], why would we cut the one small incentive for a clean energy industry that is ...  reducing pollution? Bringing new wind projects to our state helps all Washingtonians, and increasing Washington-produced clean energy helps all Americans—as it reduces our dependence on fossil fuels and helps curb global warming."

I'll give Reading the last word. First, he addresses Coven's point about giving tax breaks to some companies, polluting industries, but not to wind power.
"The Senate wants a comprehensive evaluation of all tax incentives, and [we want to] place the burden of proof upon each recipient ... to justify anew the reasons for receiving beneficial support in our ... system. Incentives will be best defended in the Legislature on their own social, economic or other merits, not in relation to other incentives."

[Editor's note: the Senate did, in fact, vote to repeal a $4 million coal industry tax break, but others, like the breaks for aluminum smelting and oil refineries still stand.]

Second, Reading defends the In-state vs. Out-of-state concept:
"Washington hydro power is already danger of finding a bigger market in California because we don’t recognize it as renewable and California does. Do we really want to incentivize our wind power to have a bigger market in California too? The intent this year was to not only make the wind incentive work for the Washington wind industry, but to make it work for the Washington taxpayer and ratepayer as well."

Again, reporters are supposed to sort through these He saids-She saids, but I'm stuck.
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