In the November 2008 BCP R&E Newsletter, we discussed a few areas of future growth and research & development in the energy industry – namely Distributed Energy and Carbon Management. With the current Obama-Biden Economic and Stimulus Plan likely to pass, there are several key components related to R&E that you should keep on your R&E radar.
Clean Energy Economy
The Stimulus Package calls for Government investment of $150 billion over 10 years to accelerate the development of the clean energy economy. This includes investments in areas such as the next generation of biofuels and fuel infrastructure, the development of commercial scale renewable energy, low emissions coal plants, and transitioning to a new digital electricity grid.
Electric utilities will have little choice but to be on the forefront of innovation and developing new methods and capabilities to integrate these innovations into the existing grid system.
Renewable Portfolio Standard
The Stimulus Package calls for the creation of a federal Renewable Portfolio Standard (RPS) that will require 25% of American electricity be derived from renewable sources by 2025 with an interim requirement of 10% by 2012.
While there is much opposition to the creation of a nationwide RPS, if this requirement is put into place, Electric Utilities will need to develop new means of achieving this standard. This will require many Electric Utilities to invest in research and development; and to develop new processes and technologies to achieve this standard.
Cap and Trade Program
The Stimulus Package also calls for the implementation of a cap and trade program to reduce greenhouse gas emissions by 80%.
This combined with the other aforementioned mandates, could create a significant financial incentive to research, invest and build pollution reducing and clean technologies. If properly constructed, it will give incentives to innovate to find the least-cost solutions for pollution controls.
Make the Research and Development Tax Credit Permanent
If the R&D tax credit is made permanent, then Electric Utilities should be able to begin factoring in these benefits into long-term planning. Additionally for companies involved in CAP, this may be a welcomed improvement.
