Opinion

The tax cut N.C. Republicans rejected

The solar array at Wake Tech's Public Safety Education Campus is producing power that Duke Energy will purchase.
The solar array at Wake Tech's Public Safety Education Campus is producing power that Duke Energy will purchase. (Raleigh) News & Observer file photo

As much as North Carolina’s Republican leaders talk about cutting taxes to create jobs and as much as they worry about the state’s rural-urban economic divide, they should have loved the state’s 35 percent tax credit for investment in renewable energy. The tax break has generated a solar power boom that has created jobs and added value to rural land.

Instead, they decided to let the credit expire the end of this year.

Spurred by federal and state tax credits and requirements that utilities use more renewable energy, solar power has grown in North Carolina from a fledgling, balky, expensive energy source to an expansive and increasingly cheaper one. North Carolina now is one of the top four states in installed solar capacity and second behind California in large, utility-scale projects.

In 2014, the tax credit for renewable energy claimed by the state’s businesses and residents totaled $126 million, but it generated $717 million in spending, according to data from the N.C. Department of Revenue.

Meanwhile, technology keeps making solar power panels cheaper and scientists are making great strides in battery technology to cure solar energy’s one drawback – how to store solar energy for use when the sun isn’t shining.

Some states see the emerging clean energy future and are using policy to hurry its arrival. In California last week, Gov. Jerry Brown signed legislation that will require state-regulated utilities to get 50 percent of their electricity from renewable energy by 2030.

In North Carolina, the boom in solar power has had a secondary effect of helping farm owners as companies lease farmland for solar-panel arrays. In Columbus County, for instance, nearly a dozen solar farms have opened or are underway in the last three years and another dozen or so are in the planning or permitting phase.

Given how solar energy has flourished in North Carolina and the trends in technology and policy, it would seem that lawmakers would want to keep the tax credit. But the credit’s opponents said it was time for the solar power industry to stand on its own.

Rep. Larry Pittman (R-Concord) said the very success of solar farms was reason enough for ending the credit. “There’s a lot of good farmland being used up for these solar farms,” Pittman said. “If they can pay so much more money for that land, they don’t need our help.”

That sounds like a free market position, except ending the credit will benefit one of the most heavily subsidized and monopolistic businesses in the economy – electric utilities. In this case, removing an incentive to build solar projects may slow the erosion of the customer base of the nation’s largest utility, Duke Energy. It also helps the fossil fuel industry as represented by the Koch brothers and their advocacy group, Americans for Prosperity.

Ironically, Duke Energy has itself built extensive solar energy projects and is the biggest beneficiary of the rewable energy tax credit. In 2014, it spent nearly $280 million on renewable projects and claimed a $63.9 million tax credit. But the utility is also worried that a growing number of homes and businesses using solar power could leave it with fewer customers to support its grid and plants that use fossil fuels. Duke was officially neutral in the tax credit debate, but the absence of its open support likely doomed an extension of the credit.

Fortunately, the fossil fuel industry was unsuccessful in killing the other leg supporting North Carolina’s solar power boom, the Renewable Energy Portfolio Standard. That law currently requires that 6 percent of electricity sales in North Carolina come from renewable energy – or be replaced by energy conservation. The requirement is slated to rise in stages to 12.5 percent by 2021.

The Republican leadership is starving state services to give tax cuts to big corporations because they say that “business friendly” approach will encourage job growth. But when a tax credit – essentially a targeted tax cut – produces the job growth and rural benefits that the broader tax cuts have not, they let it expire. The confusion in this approach was evident in the execution of it. The House voted overwhelmingly to extend the credit. Then, under pressure from senators opposed to incentives, renewable energy or both, the House reversed itself and agreed to let the credit end.

The contradiction of Republican aims for the state economy and their actions on solar power is compounded by the irony of the context. The state has been struggling with how to clean up Duke Energy’s coal ash storage pits that have polluted ground water and it’s facing new EPA standards limiting power plant carbon emissions. But given the chance to encourage expansion of clean energy, the Republicans said no.

And given the chance to create jobs in the energy source of the future, they said no. Given a chance to help struggling rural counties benefit from a profitable new use for open land, they said no.

In this case, the value of a tax credit for investment in renewable energy is as obvious as the sunrise, but lawmakers who put ideology and powerful political interests before the state’s economy decided to let the credit sunset.

Barnett: 919-829-4512, or nbarnett@newsobserver.com

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