President May Have Exaggerated Role of Stimulus in Clean Energy, Experts Say

Source: By CORAL DAVENPORT and DIANE CARDWELL, New York Times • Posted: Thursday, January 14, 2016

Natural gas being burned at a plant in Garden City, Texas, in 2015. The U.S. is the leading natural gas and oil producer. Credit Spencer Platt/Getty Images 

WASHINGTON — President Obama, in his final State of the Union address on Tuesday night, boldly proclaimed the successes of what he called “the single biggest investment in clean energy in our history,” the 2009 economic stimulus that pumped $80 billion into clean and renewable energy projects.

“In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power,” he said. “On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills and employs more Americans than coal — in jobs that pay better than average.” He added that “we’ve cut our imports of foreign oil by nearly 60 percent and cut carbon pollution more than any other country on Earth.”

“Gas under $2 a gallon ain’t bad either,” he concluded.

Those facts are accurate. But, experts say, many of the changes had little to do with the stimulus law, occurring instead through government policies, market forces and private sector activities.

“That paragraph as it relates to energy and climate issues — I thought it was the most troubling paragraph of the whole speech,” said David Victor, an expert on energy policy at the University of California, San Diego. “It’s very hard to attribute the bulk of what’s happening now in terms of bending the emissions curve and increasing renewables specifically to the stimulus.”

Whatever the cause, Mr. Obama can claim a number of energy successes. During his seven years in office, the United States has cut carbon pollution more than any other country, and it has reduced its dependence on foreign oil. In 2008, the United States imported nearly 60 percent of its oil, but by 2015, that number fell to 24 percent.

Oil and gasoline prices are at their lowest in more than a decade. Production of wind power has nearly tripled, from supplying a little more than 1 percent of the nation’s power to about 4 percent. Solar capacity is more than 22 times what it was at the end of 2008, and such energy now accounts for a bit more than 1 percent of the country’s power. In some regions, wind and solar are now cheaper than power produced by coal or natural gas, which are more polluting.

But the energy component of the stimulus law remains a source of intense debate. Republicans call the clean-energy effort a boondoggle, exemplified by Solyndra, a solar panel company that went bankrupt and cost the government more than $500 million in loan guarantees.

Energy policy experts praise some of the stimulus spending, such as the $400 million that funded the creation of an Energy Department laboratory, modeled after Pentagon research labs, that is devoted to finding breakthroughs in clean technologies. Lawmakers of both parties have praised the program, known as the Advanced Research Projects Agency-Energy, or ARPA-E. And wind and solar producers say that stimulus funding helped keep them afloat through the financial meltdown.

Private oil and gas companies, however, were a driving force behind the most important changes in the United States’ energy landscape over the past seven years: lower fossil fuel emissions and a reduction in dependence on imported oil. Using an extraction method known as hydraulic fracturing, or fracking, the companies made the United States the world’s leading producer of oil and natural gas.

A glut of domestic oil has helped lower prices and imports. The new supply of domestic natural gas has helped lower greenhouse gas emissions. Electric utilities have traditionally relied on coal as the cheapest fuel source, but turned to natural gas as it became cheaper.

“The results that the president trumpeted were driven in part by government action but were at least as much a result of market forces,” said Michael Levi, an expert on energy policy at the Council on Foreign Relations. “The president didn’t get in the way, but that doesn’t mean he made these things happen all by himself.”

Mr. Levi said that it was a different Obama policy — a set of Environmental Protection Agency rules — that required a sharp increase in vehicle fuel efficiency and helped lower oil demand.

Wind and solar energy producers say that two policies have long powered their industry. One is a set of state laws, now enacted in more than 30 states, mandating the use of renewable electricity. The other is production and investment tax credits.

The most important factor behind the growth of the solar industry is an eight-year extension of a federal investment tax credit, approved by President George W. Bush in 2008, said Rhone Resch, the chief executive of the Solar Energy Industries Association, the main trade group.

“We were such a small industry, it provided that stability so that we could bring forward all sorts of new styles of solar projects — we really hadn’t done utility-scale solar projects in any kind of meaningful way up until that point,” he said.

Mr. Obama’s economic stimulus included provisions to extend those tax credits, and it made the money available for wind and solar projects as cash grants.

The federal loan guarantee program — created under the Bush administration but infused with billions under the stimulus — had several high-profile failures, but it has had many more successes, including Tesla. The failures cost taxpayers $780 million, the Energy Department said, representing a little more than 2 percent of the $34.2 billion it issued in loans. The agency has recouped the losses through interest payments.

Still, experts said that while some programs funded by the stimulus have borne fruit, they have not done so at the scale Mr. Obama signaled in his speech.

“The stimulus program subsidized a lot of things that would have happened anyway, or that shouldn’t have happened,” Mr. Victor said. “But it also funded a handful of important things that wouldn’t have been funded. Exhibit A is ARPA-E, which is innovating important new energy technology. There were huge amounts of money sloshing around, and some droplets sloshed into important places.”