Asking the hard questions

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There was a lot of discussion last week regarding Oregon’s Business Energy Tax Credit (BETC) as the Oregon House of Representatives passed amendments that will scale back the scope of the program. During OPB’s Morning Edition recently, the commentator said that the problem with BETC is that it has proven “too successful” and that’s why the program’s costs are growing too quickly.

Why are we measuring the success of a tax incentive by how much taxpayer money we’re able to spend? What are the implications of such thinking for efforts to build a sustainable economy in Oregon?

In November, The Oregonian reported that while many factors influence project developers’ wind farm siting decisions, Oregon’s tax credits appear to be at the bottom end of the list.

Oregon, Washington, and California all rank in the top six states for wind power generation and construction. Yet California and Washington do not have a tax credit comparable to Oregon’s BETC. What the three states do have in common are renewable energy mandates that will require the siting of tens of thousands of MWs of new generation over the next two decades. Given transmission constraints to the East, there is a clear incentive to site this generation in the states themselves.

I don’t have a particular opinion regarding the effectiveness of the BETC in encouraging more local investment and job generation than otherwise would have occurred. But the questions raised by The Oregonian and others are questions we should be asking for any tax incentive or spending program, including “green” ones. To not ask whether public spending programs are achieving their intended objectives inevitably leads to money being wasted, regardless of the merit of individual programs.

Should the BETC be held to a lower standard of scrutiny because it’s “green”? It’s certainly easy to assume that anyone questioning the performance of green initiatives must somehow be anti-green. But in addition to basic fiscal responsibility as discussed above, I would argue there are two other reasons for those of us in the green camp to strongly support the practice of asking the hard questions about the BETC’s results.

First, resources for sustainability-oriented programs are limited, and we need to target those resources as effectively as possible. That, in turn, requires actively tracking what works well and what does not.

Second, there is already suspicion regarding green programs, ranging from corporate initiatives that are labeled greenwashing to carbon markets that are labeled shams. Those with an interest in promoting a sustainable economy should be the first in line to question the effectiveness of green initiatives, since we have the most interest in protecting their long-term credibility.

We should not fall into the trap of giving green initiatives a pass on critical analysis, or assuming that spending more taxpayer money on green programs is synonymous with their success.

Dr. Mark C. Trexler is Director of Climate Markets and Strategies for Det Norske Veritas, a leading global risk management firm. He has specialized in climate change since 1988, and can be reached at mark.trexler@dnv.com.