Two contrasting proposed plans for the United States Federal Budget are seen competing to set the course not only of the country’s economy but of the renewable energy market, a report from Austin-based Zpryme suggests.

While unlikely to be accepted in their separate entirety, both the renewable energy-leaning plan of Democrat and current President Barack Obama and the Republican-backed plan emphasizing more heavy fossil fuel consumption will be serving as the starting point for negotiations for a federal budget, according to Megan Dean, Zpryme senior research analyst.

“The main questions become where will the negotiations end and what will the end budget’s effect be on both the clean energy sector and the U.S. economy,” Ms. Dean said.

“The full ramifications of the proposals must be investigated, including the effect on revenue (and GDP as a result), jobs, and manufacturing, must be considered.”

The Democrats’ plan is leaning towards their belief in investing in innovation, infrastructure and clean energy as areas critical to economic growth, the report said.

The proposal was evident through Obama’s 2012 State of the Union Address, where he promised further development of the clean energy sector. A total of $8 billion will be allotted to clean energy advancement, plus the creation of a Clean Energy Standard – where 80 percent of all energy generated must be from renewables by 2035.

The effects would help advance the renewable energy sector, allowing those industries to contribute to the U.S. economy through their revenues, taxes and created jobs. The advancements would also address environmental standards, improve international competition and increase energy efficiency – which would reduce the overall strain on existing U.S. energy infrastructure.

“In Massachusetts, clean energy companies received $20 million from the federal government and were able to generate another $95 million in private investments,” said Ms. Dean. “Not only did this investment further the clean energy field and create revenue, but it also created jobs and further stimulated the economy.”

Republican opinion

On the other hand, an alternative Republican opinion proposed by House of Representatives Budgetary Committee Chairman Paul Ryan stresses that current economic issues are caused by overspending, and a decrease in governmental spending in what they claim as “unproductive areas” like renewable energy is needed to stimulate the economy.

The plan proposes cuts in corporate and federal subsidies in renewable energy, at the same time reducing investment in alternative and clean energy technology, research and development and manufacturing.

The Republican-led House of Representatives have already voted to suspend programs such as the Advanced Research Project Administration-Energy, funding for electronic vehicle battery technology, and the federal loan guarantee program, the report said.

Effects include having new renewable energy companies failing to compete due to the removed subsidies, and a “significant” rise in prices of the technology – reducing market penetration and revenue.

Possibilities of existing companies forcing to downsize or close operations are higher with the lack of federal support, the report said.

“The combined effect of reduction in revenue, reduction in job growth, and reduction in manufacturing would reduce the sector’s contribution to the national economy,” Ms. Dean added. “Although it is unlikely that the entire clean energy sector would be eliminated entirely, the industry and its contribution to the economy would decrease significantly.”

Zpryme is a research-based advisory firm which services business and consumer insights. It produces studies, reports and advisory services for its clients, like those in the smart grid sector. – N.P. Arboleda

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