CA Lost in Clean Energy Labyrinth

California’s entangled clean energy policy just added another program to an already convoluted, growing bureaucracy. The new program, signed into law August 2 by Gov. Brown, is supposed to assist property owners with financing for green-energy projects.

While a financing component may sound simple, ABX1 14 joins the alphabet soup menu of acronyms that make up the labyrinth of energy program subsidies and incentives in California.

But energy program financing already exists at the state level and in many of the state’s green-energy programs.

Looking onto the California clean-energy program maze is like peeling an onion and discovering layer after layer. Every level of government is involved, but no one can definitively explain where the subsidies are going or how much of the money has been spent. And the money just keeps coming.

ABX1 14 involves just four of the many programs: The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), the Property Assessed Clean Energy (PACE) Reserve program, the Renewable Resource Trust Fund (RRTF) and the Clean Energy Upgrade Program (CEUP).

Fortunately, the Legislative Analyst’s Office is currently evaluating the state’s numerous energy efficiency efforts and is expected to publish a report soon.

Alternative Energy

Created in 1980 to finance projects utilizing alternative energy, the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) supported cogeneration, wind and geothermal power projects.  In 1994 its charge was expanded to include the financing of “advanced transportation” technologies.

PACE programs provided up-front financing for renewable and energy efficiency-related upgrades to properties. Through PACE, property owners who wanted to install solar or other renewable energy-generating devices or make water or energy efficiency improvements to their properties borrowed funds from their local government program. But the loans were repaid by the property owner over 20 years via an annual assessment on the owner’s property tax bill. The assessment remains on the property even if it is sold or transferred.

Some things have become clear after talking with legislators and staff, the Legislative Analyst’s Office, clean-energy lobbyists and legislative committee staff members. No one really knows just how just large the behemoth is, or where the millions of dollars of subsidies have gone or is going. Ironically, most staffers agree that, because no one knows exactly how much money has been spent or is going to be spent, green-energy subsidies are not sustainable.

Current law required CAEATFA to establish the PACE Reserve program to assist property owners in financing the installation of renewable energy improvements. ABX1 14 will expand the purpose of CAEATFA. And because the federal government didn’t like that the PACE program required a lien on the property, the federal financing dried up.

But because Legislators didn’t want to lose out on the $50 million budgeted for the PACE program, ABX1 14 was created. The bill says, “Existing law, until January 1, 2015, appropriates up to $50,000,000 from the Renewable Resource Trust Fund to the authority for the purposes of the PACE Reserve program and authorizes the authority to expend up to $300,000 of that appropriation for initial administrative costs in implementing the PACE Reserve program.”

The final version of the bill authorized up to $550,000 for administrative costs.

Repurposing

The bill is more of a repurposing of the PACE money. The same goals are in place — to create clean energy jobs — but it’s no longer tied to a lien on property.

The CEUP, offered by the California Energy Commission (CEC), has similar goals to help put people in contact with banks for clean energy financing.

Are you confused yet?

Most agree that pursuing clean energy is a good goal. But this latest bill seems just to create another clean-energy program, while adding to the bureaucracy. It is amazing how many hands are in the clean-energy pot of money, and how many government departments are involved.

The real purpose of the bill is to make sure the $50 million is spent, according to one Capitol staff member who asked not to be named. And according to the staffer, there are far too many state employees currently working in green energy-related jobs in which the project financing has been milked and strung out. The staffer said that the $550,000 administrative costs in ABX1 14 will help to keep those jobs funded.

The CAEATFA Authority consists of five members: California’s Finance Director, the chairman of the California Energy Commission, the president of the Public Utilities Commission, the state Controller and the state Treasurer.

Calls made to the governor requesting information about his support for the bill were not returned.