Energy

As Obama Attempts A Global Climate Deal, U.S. Solar Industry To Lose Its Key Subsidy

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Steve Birr Vice Reporter
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President Barack Obama kicked off the Paris climate summit by blaming Washington for its alleged role in global warming and advocating for investment in green technology, despite the likely abolishment of the U.S. solar industry’s key subsidy.

Green energy is struggling in the U.S., expanding but only with the help of government subsidies. The industry relies on the 30 percent investment tax credit given for green installation, reports Financial Times, but experts are questioning the value of the subsidy as alternative energy options such as shale drilling become much cheaper.

“Here in Paris, let’s secure an agreement that builds in ambition, where progress paves the way for regularly updated targets,” Obama said during his speech in Paris. “That’s what we seek in these next two weeks — not simply an agreement to roll back the pollution we put into the skies, but an agreement that helps us lift people from poverty without condemning the next generation to a planet that is beyond its capacity to repair.”

Solar installations can cost more than $20,000 and only five percent of solar buyers have incomes below $40,000, reports Pittsburgh Post-Gazette.

Green Energy is also tremendously unreliable, especially during peak grid hours, reports the Energy Information Administration. According to the EIA, the U.S. got only 0.4 percent of its electricity through solar power in 2014, leaving the question as to how the president plans to dramatically shift America’s fragile energy industry towards green technologies.

Previous government investments in green companies have failed, like the infamous and embarrassing demise of Solyndra. Obama can now add Abengoa Solar, a Spanish solar company, to his list of green energy investment failures, reports The Corner.

Abengoa has entered into the first stages of bankruptcy proceedings, squandering $1.45 billion in U.S. loans to build four solar plants in California and Arizona. While the plants were built, they are generating only half the power they promised upon receiving the loan, and the company itself is in no position to repay the loan, reports PV Magazine.

“When you have a company that is based on subsidies, it is no surprise they run into financial trouble because their business model isn’t based on economics; it’s based on politics,” Daniel Simmons, vice president for policy at the Institute for Energy Research told The Washington Times. “What is troubling is that if there are large projects that private-sector people think they’ll be able to make money on, there’s no need to take those projects to a government. That’s where these projects go wrong: thinking governments will necessarily make good investment decisions.”

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