If Congress continues to bicker over energy policies, the United States will lose an even larger share of what promises to be the next big engine that will drive economies: the production of clean alternatives to burning oil and other fossil fuels. In the production of solar panels, a technology pioneered in the United States, the lead has already been lost. America, once first, now places fourth behind Germany, Japan and Spain.

As columnist Tom Friedman pointed out recently in The New York Times, while politicians were railing against lost jobs, First Solar, an Ohio company that's a national leader in solar panel production, opened its newest branch in Germany, a move that created 540 engineering jobs. Nationally, the industry is on hold because tax credits for conservation measures and alternate sources of energy are set to expire at year's end. Those credits are far smaller than other nations used to seize the lead in creating green energy jobs and convincing citizens to switch from fossil fuels. But they've helped.

Uncertainty over whether Congress will extend the credits, and for how long, is keeping investors on the sidelines. Economists at Navigant Consulting in Washington, D.C., say that a failure to extend the credits could cost the United States 116,000 jobs and $19 billion in lost investment in alternative energy in 2009 alone. The long-term impact of allowing the credits to lapse will be even greater, because America will lose, perhaps permanently, more of its share of the global market in green energy.

Particularly in a down economy, investors and homeowners need incentives to convince them to spend now to reduce pollution and save money in the long run. But in December, Congress extended the needless tax credits it awards the oil and gas producers and cut the credits for alternative energy. Go figure. Now Democrats want to reverse that, but some Republicans balked and President Bush has threatened a veto.

Wednesday set another record as oil topped $134 per barrel. On the same day, U.S. senators fired angry questions at oil company executives who were subpoenaed to explain why prices, and oil company profits, are so high. The senators might as well have pelted the execs with Nerf balls for all the good it will do drivers who will soon be paying $4 per gallon for regular gas.

What the senators should have been doing is working to pass the House version of the Clean Energy Stimulus Act. That act extends the tax credits for the production of clean energy from sources like wind, solar, biomass, hydroelectric and geothermal power and energy conservation measures and eliminates them for gas and oil companies that are making money faster than they can spend it.

Congress must also stop playing yoyo with the credits - the ones for wind energy have expired three times - and make them good for at least a decade. That will stimulate the long-term investments necessary to rapidly develop a green power industry.

Higher prices for fossil fuels are making alternative energy sources more economically competitive, but that's no reason to shrink or eliminate the tax credits. The nation's goal should be to rely as little as possible as soon as possible on burning the fuels that cause global warming. It's time to do all we can to create a green economy, one that creates jobs and brings alternative energy to the rest of the world.


HUMAN CAPITAL INSTITUTE, INC.