Energy:

Federal Support for Renewable and Advanced Energy Technologies

GAO-13-514T: Published: Apr 16, 2013. Publicly Released: Apr 16, 2013.

Additional Materials:

Contact:

Franklin W. Rusco
(202) 512-3841
ruscof@gao.gov

 

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What GAO Found

This statement presents highlights from two reports related to federal support of renewable and advanced energy technologies.

The first report discusses GAO's broad review of federal wind-related initiatives. In summary, GAO identified 82 federal wind-related initiatives implemented by nine agencies in fiscal year 2011. Most of these initiatives supported deployment of wind facilities and, of these, GAO identified 7 that provided duplicative support--financial support from multiple initiatives to the same recipient for deployment of a single project. These 7 initiatives included tax expenditures, grants, loans, and loan guarantee programs and were implemented by the Departments of the Treasury, Energy (DOE), or Agriculture (USDA). In many cases, wind project developers combined the support of more than one Treasury initiative and, in some cases, received additional support from smaller DOE or USDA grant or loan guarantee programs. Of the 7 initiatives, those implemented by Treasury accounted for more than 95 percent of the federal financial support for wind in fiscal year 2011, based on available estimates from Treasury and the Joint Committee on Taxation. In addition to these 7 initiatives, GAO identified 3 other DOE or USDA initiatives that did not actually fund any wind projects in fiscal year 2011 but that could be combined with one or more other federal initiatives to provide duplicative support in the future based on the types of projects eligible for their support.

DOE and USDA have discretion—to the extent allowed by their statutory authority—over the projects they support, and Treasury supports projects based on the tax code’s eligibility criteria and generally does not have discretion to allocate support to projects. DOE and USDA have used their discretion to allocate support based on projects’ ability to meet initiative goals, such as reducing emissions or benefitting rural communities, as well as other criteria, such as financial and technical feasibility. According to agency officials and program guidance, DOE and USDA also consider applicant need for their initiatives’ support, in some cases. However, neither DOE nor USDA officials provided documentation that indicated how information they collected or examined about applicant need influenced their decisions on whether to provide support, or how much support to provide, under their initiatives for specific projects. As a result, the extent to which applicant need influenced agency decisions is unclear. Whether initiatives’ incremental support was always needed for wind projects to be built is also unclear. According to agency officials and financial professionals active in the wind energy industry, the incremental support provided by each initiative may be necessary, in many cases, for wind projects to be built. However, because agencies do not document assessments of projects’ need for support, it is sometimes unclear if the entire amount of federal support provided was necessary.

The second report discusses GAO's review of the status of DOE's efforts to use its remaining loan and loan guarantee authorities and remaining credit subsidy appropriations to support projects under its Title XVII Innovative Technology Loan Guarantee Program (LGP)and Advanced Technology Vehicles Manufacturing (ATVM) loan program. As of January 29, 2013, DOE was considering using $15.1 billion of the $34.8 billion in remaining loan guarantee authority for loan guarantees requested by 13 active LGP applications. According to DOE officials, the agency planned to use all of the remaining $170 million in credit subsidy appropriations to support active applications for energy efficiency and renewable energy projects. DOE considered an additional 27 LGP applications requesting a total of $73 billion to be inactive. The loan guarantee authority and credit subsidy appropriations do not expire.

In addition, as of January 29, 2013, DOE was not actively considering any applications for using the remaining $16.6 billion in loan authority or $4.2 billion in credit subsidy appropriations available under the ATVM loan program. DOE considered the seven ATVM loan program applications it has, requesting a total of $1.48 billion, to be inactive for reasons including insufficient equity or technology that is not ready. Most applicants and manufacturers we spoke with told us that, currently, the costs of participating outweigh the benefits. Although the ATVM loan program is accepting applications on an ongoing basis, according to DOE officials, DOE is not likely to use the remaining ATVM loan program authority given the current eligibility requirements. As with the LGP, the loan authority and credit subsidy appropriations for ATVM do not expire.

Why GAO Did This Study

This testimony discusses federal support for renewable and advanced energy technologies. Americans' daily lives, as well as the economic productivity of the United States, depend on the availability of energy, the majority of which comes from fossil fuels. However, faced with concerns over the nation's reliance on imported oil, volatile energy costs, and greenhouse gas emissions, federal policymakers have increased support for deployment of renewable and advanced energy technologies to help meet our nation's energy needs. Federal agencies including the Departments of Agriculture (USDA), Energy (DOE), and the Treasury, among others, provide support for these technologies through tax expenditures, grants, loans, and loan guarantees. This support helps finance production of electricity from wind and solar farms, manufacturing of electric and hybrid vehicles, and construction of advanced nuclear power plants, among other things. Energy produced from nonfossil fuel sources has increased over the last several decades, growing to about 22 percent of total U.S. energy production in 2012, according to projections by DOE's Energy Information Administration, an independent statistical and analytical agency. At the same time, the increase in federal support for renewable and advanced energy technologies and the involvement of multiple agencies in supporting such technologies have raised questions about the effectiveness of this support. In the current fiscally constrained environment, it is especially important to allocate scarce government resources where they can be most effective. GAO has issued a number of reports related to federal support of renewable and advanced energy technologies including, most recently, the following two reports:

(1) a broad review of federal initiatives that promote wind energy, including the extent to which initiatives may provide duplicative support and the extent to which agencies assess applicant need for the initiatives' support, and

(2) a review of the status of DOE's efforts to use its loan and loan guarantee authorities and remaining credit subsidy appropriations to support projects under its Title XVII Innovative Technology Loan Guarantee Program (LGP), which guarantees loans for projects that, among other things, use new or significantly improved technologies, and Advanced Technology Vehicles Manufacturing (ATVM) loan program, which provides loans for projects to produce more fuel-efficient passenger vehicles and their components.

This statement presents highlights from these two reports.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.

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