Green Energy Scores Big In Obama's Stimulus Plan

President Obama says his $825 billion economic stimulus plan includes tens of billions of dollars to remake the country's electricity industry into a greener enterprise.

Obama said Monday that the plan would put 460,000 Americans to work on energy projects and double the amount of alternative energy produced over the next three years. In the short term, the plan would provide funds to "weatherize" 2 million homes by improving things such as insulation and leaky windows. The government also would improve the efficiency of 75 percent of federal buildings.

Another provision would pay for 3,000 miles of transmission lines to move electricity from wind farms and solar installations, many in the West and Southwest, to consumers in the rest of the country.

Advocates of green energy welcomed the prospect of billions of federal dollars for an industry that has been reeling from the economic downturn.

Malcolm Woolf, the chief energy administrator for the state of Maryland, says the stimulus package could boost his budget at least tenfold and put thousands of people to work on weatherizing homes. "The initial investment, by having folks get trained to put in insulation — that pays dividends today because it employs people," Woolf says. "And it pays dividends down the road because those homes therefore use less energy and are saving those families money."

Solar and wind energy developers are happy about proposed language in the stimulus package that would change the current system of tax credits for investing in alternative energy projects.

"The challenge is that most developers don't have large tax bills, and thus they can't use the tax credits themselves," says Arno Harris, chief executive officer of Recurrent Energy of California, a solar developer. "As a result, in order to finance the projects, they have to go find a bank or other partner with a large tax bill and basically put together a financing partnership."

These days, since the recession has begun to bite, many banks don't have big profits and tax bills and aren't very interested in partnering to get tax credits. So money to invest in alternative energy has dried up. Language in the stimulus package would shift federal money directly to developers, in addition to keeping the original tax break.

Wind farm developers are pleased with language that would extend a tax credit for every kilowatt-hour of electricity they produce. Until now, the credit expired every year and investors were reluctant to put money into projects that could lose their favored tax status in a matter of months. That credit would be extended for up to three years.

Weatherizing homes and changing tax credits should quickly help to stimulate the economy, energy experts say. Building new transmission lines will take a lot longer, however.

Developers will have to get permits and rights-of-way to build lines across private property, for example. And the stimulus package doesn't address one big obstacle for green energy: the comparatively cheap cost of burning coal to make electricity. Green energy advocates are trying to persuade Congress to put a carbon price on carbon-heavy fossil fuels that contribute to global warming.

Congress is expected to take the issue up for debate later this year.