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Tuesday, February 22, 2011

Senate Democrats' Agenda Aims to Invest in Energy Innovation

Originally posted by Sara Mansur at the Breakthrough Institute

Last week, a group of Senate Democrat leaders unveiled their plan to build off of the innovation-centered budget proposal released by the President two weeks ago, including several important energy innovation investments. Senate Majority Leader Harry Reid introduced the proposal as an effort to simultaneously "create jobs, promote growth and help America win the future by making smart investments in education, innovation and infrastructure while cutting spending to live within our means."

The Senate Democrats' plan to judiciously invest in innovation while cutting wasteful spending stands in sharp contrast to the Continuing Resolution bill passed by the House this weekend. The House bill budget would recklessly cut more than $60 billion from the federal budget to fund the government through FY2011, slashing several important energy innovation initiatives.

Instead, the Senate Democrats' agenda will focus on pushing investments across the energy innovation cycle, from R&D to manufacturing to deployment. Below are some key components of the plan:

R&D Tax Credit: Senate Democrats will seek to make permanent the income tax credit for research and development, which acts as an important incentive for private companies to invest in early-stage R&D.

Establish a Clean Energy Deployment Administration: Senate Democrats will aim to develop a Clean Energy Deployment Administration (CEDA), whose purpose would be to provide financial support to the riskiest clean energy technologies, helping them move from the laboratory to commercialization. Without creative public-private partnerships, these capital-intensive, high-risk technologies are at great risk of getting stuck in the commercialization "valley of death," an innovation fate that can spell doom for the widespread deployment of potentially critical clean energy technologies.

Expand the Build America Bonds Program: Democrats will focus on extending and expanding the Build America Bonds program, which lowers the cost of borrowing for municipalities to support new infrastructure projects and create jobs.

Extend the 48C Advanced Energy Manufacturing Tax Credit: The Senators will aim to further the Advanced Energy Manufacturing Tax Credit, which offers a 30 percent credit for domestic companies to build new clean energy technologies. This tax credit is an effort to boost domestic clean energy manufacturing and compete with China.

These measures, among others, are vital to encouraging American competitiveness in the clean energy sector. By establishing a policy environment conducive to innovation, the US will attract the entrepreneurs, industry, and private capital necessary to encourage a thriving clean energy sector.

The Senators' plan for a selective and targeted approach to clean energy investment will post a much higher return than the House's proposal to carelessly slash programs that are most vital to American growth. Senate Democrats have realized this fact, but it remains to be seen if Senate Republicans can get on board.

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