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Europe was hit by extreme temperatures. Above, the ruins of smoking houses in Wennington, England.
Leon Neal/Getty Images
Senator Joe Manchin has dropped out of talks to pass climate change legislation, meaning Congress has run out of options to pass legislation at any time as the effects of climate change continue to intensify. In parts of Europe, temperatures have recently reached record highs, and heat waves and wildfires are spreading across the United States. Some senators are calling on President Biden to declare a climate emergency and take action at the executive branch level to fight climate change.
But executives at companies that benefit from federal clean energy subsidies say the executive order will do little to stimulate the industry. “Anything you can do with an executive order is going to be of little benefit,” said John Berger, CEO of Houston-based Solar Developer.
Sunnova Energy International
(Ticket: NOVA) in an interview on Tuesday.
Sunnova
,
One of the few large companies helping homeowners put panels on their roofs, it has more than 200,000 customers.
The problem, Berger says, is that Biden hasn’t diverted enough funding or tax support to the industry. “The power of the purse rests with Congress.”
The House passed legislation calling for $555 billion in spending, including climate-friendly energy programs like solar, wind and carbon capture—the process of keeping carbon emissions out of the atmosphere. The Senate is expected to scale back the bill but still offer hundreds of billions of dollars in tax incentives.
Berger called the bill’s failure “disappointing” not just because the effects of climate change are worsening. Federal support helps solar developers like Sunnova subsidize the equipment they lease or sell to homeowners, so those homeowners can get below-market electricity rates. He thinks America is already in a recession, and the subsidy could give homeowners relief from high electricity prices driven by expensive commodities and high inflation.
Despite the setback, Sunnova is hopeful that it will continue to grow rapidly. “Our demand is increasing,” he said. In many parts of the country, traditional utility costs are rising, making solar cheaper. Berger said Sunova could raise prices while offering consumers a discount on their local utility. Instead of financing solar systems upfront, Sunnova offers plans where homeowners pay for energy through long-term solar leases.
If Biden declares a climate emergency, he could issue executive orders to boost renewable energy, but the logistics and funding for those plans are uncertain. The White House did not respond to a request for comment on whether Biden was considering an emergency declaration or what that declaration would entail. Biden is scheduled to speak about the weather in Massachusetts on Wednesday.
Berger brought home the devastating effects of climate change this week with life-threatening heat waves, droughts and power outages in Europe. He recently visited Alaska, which has been hit by several large wildfires. “Even people who have been there for a long time, even people who we say probably didn’t vote for Biden, sadly, yes, the climate is changing,” he said.
Even if the Senate doesn’t pass the climate bill, Berger hopes the solar tax credit will eventually be extended. Even when Republicans controlled the Senate and Donald Trump was president, Congress supported the credits. “Last time I checked, he wasn’t really a fan of what I was doing,” he said. Berger also thinks that Congress can pass the benefits of a solar manufacturing tax; It could help these US companies take some market share if China has a big lead in the production of solar modules.
For the renewable energy industry, the latest legislative setback adds to 18 months of frustration. Biden’s election sent shares of solar and wind stocks higher on speculation that the industries would receive more government support. But the savings have fallen, in part because Congress hasn’t passed legislation and some state laws have become less generous. Additionally, supply chain issues and tariff fears have recently slowed solar growth. Since the end of 2020, Sunnova has decreased by 56 percent
Invesco Solar ETF
(TAN) decreased by 29% and
First trust in the world’s wind power
The ETF ( FN ) is down 25 percent.
Write to Avi Salzman at avi.salzman@barrons.com
