Government policies can support green initiatives

Mar 16, 2010 — Pittsburgh Post-Gazette

Bill Toland

Mar. 16, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- The private sector is the innovating force behind all manner of green technologies and sustainable-living strategies. But Kathleen McGinty, who has worked on both sides of the government-business divide, knows it's the public sector that often bends the market to allow these technologies and campaigns to take root.

As a major purchaser, state and local governments can substantially alter demand for, say, hybrid cars. As a recruiter of businesses, government can play a major role in importing green energy companies, as was the case in 2004, when Gov. Ed Rendell announced that a Spanish wind energy company would build its American headquarters in Pennsylvania.

And because government has the ability to set policy goals, it can dictate procurement (how much of its electricity comes from renewable resources, for example), or how much funding is available for research and development.

"The key is to put in place policies that put in long-term, consistent signals to the marketplace," said Ms. McGinty. She headed Pennsylvania's Department of Environmental Protection for five years before moving on to the private sector, consulting for clean technology companies and serving as a partner at Element Partners, a private equity team that invests in wind power and other clean energy firms.

Temporary tax credits toward, say, construction of a wind power plant are good as far as they go, she said. Problem is, they don't go very far.

Renewable energy tax credits "have been very short-term in duration, and are pawns on various political chess boards. ... To build an industry [is] a billion-dollar proposition, that can't be sustained with that kind of turn-it-on, turn-it-off approach."

Via the 2009 American Recovery and Reinvestment Act, and other pieces of legislation, homeowners were able to claim tax credits toward new, energy efficient appliances and windows. The act also included a three-year extension of the renewable energy production tax credit, allowing the wind energy production credit to run through 2012, and a separate production credit on hydropower and bio-fuels to run through 2013.

But the lack of a long-term commitment from the federal government means a lack of willing, long-term risk-takers on the private industry side, Ms. McGinty said. (The recession of 2008 and 2009 illustrates that -- fewer companies sought the energy production tax credits than was hoped.)

The federal government, naturally, has the largest influence on sustainable policy and green energies. With a single signature, the president can direct billions of dollars toward, say nuclear energy production. That's what happened last month, when President Barack Obama offered $8.3 billion in loan guarantees to break ground on a new nuclear power plant being designed by Cranberry-based Westinghouse Co.

The stimulus act also directed $17.8 million to two Southwestern Pennsylvania wind farms, the Gamesa Wind USA site in Cambria and Blair counties, and Iberdrola Renewables' site in Fayette County.

While the federal government drives big-picture strategies and multi-billion-dollar energy investments, ground-level sustainability issues fall to the local government level.

Don't confuse ground level with small potatoes, says Pittsburgh City Councilman Bill Peduto. Sustainability -- especially in an city like Pittsburgh, with its aging buildings and infrastructure -- "encompasses everything that local government is created to deliver. Land use, economic development policy ... we need to incentivize ways to reuse land, to be able to either improve or adapt present infrastructure," and make it worth an investor's time and money to make earth-sustaining decisions.

Sounds like a perfectly liberal mindset, but Mr. Peduto says he views it as a fiscally conservative model. "You're basically using what you already have."

As long as the region's population remains stagnant, "If we continue to build new, our taxes will continue to go up, [because] we still have to maintain our infrastructure. You can't roll up roads or sewer lines" and move them, he said.

But land reuse policy can be difficult to enforce when only one municipality is on board, and Southwestern Pennsylvania's fractured governmental apparatus can mean that when one town is offering tax abatement to reuse a brownfield, another municipality a few miles away is offering up fresh hillsides and abundant parking.

Mr. Peduto, who also sits on the Southwestern Pennsylvania Commission, notes the same conflicts arise in transportation planning. "We have fantastic documents that look at a vision of what our transportation model should be in the next 20 years. But we never stick to it because there are so many limited priorities that take away from major developments."

Sometimes it's easier to tackle smaller issues. If you can't build a light rail system from Downtown to Oakland to Hazelwood, for example, you can at least make existing modes of transportation more palatable -- which is why the Environmental Protection Agency gave $3.49 million to Allegheny County to reduce diesel fuel emissions released by public buses and trains.

The city and the county have also agreed to purchase increasing amounts of electricity from generators that use clean energy, while the city is looking into installing long-lasting light-emitting-diode street lights. The energy savings seem small, but multiplied across cities and states, they add up, and affect the markets for these products.

And when you create a market for certain products and energies, said Ms. McGinty, "you back out some of that market risk," music to the ears of any manufacturer or investor.

Bill Toland: btoland@post-gazette.com or 412-263-2625.

Newstex ID: KRTB-0159-42923831