Energy incentives will unlock energy dominance

OPINION:

The first 100 days of the new Trump administration have reshaped the energy landscape. Reliable, affordable energy is a top priority as the president seeks to unleash a new era of American energy dominance. Lower energy prices can usher in a true golden age for U.S. consumers. Done well, this agenda can also reduce global carbon dioxide emissions.

This dynamic is underscored by the president’s work to recruit new artificial intelligence and data center investments to the U.S. These investments can lead to economic development and will require rapid energy demand growth when paired with an American manufacturing resurgence, increasing U.S. energy demand by as much as 18% over the next decade, according to data from the North American Electric Reliability Council. Energy prices are one of the most important cost drivers in these energy-intensive industries.

A rapid increase in supply is required to maintain affordable costs for all American consumers. The U.S. must rapidly deploy all types of new American power. To effectively deploy these new technologies at speed, the administration will need to break down permitting barriers to accelerate the buildout of new energy infrastructure like pipelines, transmission, and other grid-enhancing technologies.

In addition to streamlining the permitting process to increase and maximize new investments, minimizing the tax burden on developers is another essential part of this equation. Maintaining low corporate rates is certainly going to help, but tax incentives also play an enormous role in minimizing investment risk and keeping prices low. Fortunately, some key incentives will not require drastic policy changes like the green new deal or a heavy-handed government regulation.

Existing incentives authored or supported by Republicans in Congress under current law are critical for American leadership in new, affordable, 24/7 American power. These forms of power include advanced nuclear, geothermal, hydropower, natural gas with carbon capture, and even new breakthroughs in fusion technology. Key incentives, like 48E/45Y technology-neutral electricity credit; the 45X advanced manufacturing credit; the 45Q carbon capture, utilization, and storage credit; and the 45V hydrogen credit, can reduce the costs for American producers and support the manufacturers and the mineral supply chain across the economy. Simply put, consumer prices go up if the U.S. doesn’t lower the tax and energy cost burden for American producers and manufacturers.

Conservatives have long championed innovation and targeted incentives, rather than mandates, to unlock new forms of American energy production. Public-private partnerships are a powerful tool for research and development and have catalyzed many world-changing American innovations. The U.S. shale boom is a prime example. The private sector led the charge to develop new drilling technology in partnership with the U.S. Department of Energy when the U.S. was struggling to compete with foreign adversaries in the 1980s. Congress then enacted a new production tax credit to rapidly scale up adoption.

Once the technology matured, the tax credit reasonably expired. As a result, U.S. consumers now have abundant, affordable, reliable, lower emissions natural gas. This private-public partnership has delivered a 10-fold return on investment of taxpayer resources. This is just one example of how American innovation not only increases reliability and affordability for U.S. consumers but gives the U.S. a competitive edge in the global market for energy exports.

Today, there is a similar energy scarcity dynamic developing as the U.S. experiences unprecedented energy demand growth. Tax credits can help new technologies overcome initial hurdles and rapidly reduce the cost of deployment. Early support for new technologies can be part of a comprehensive strategy to unlock domestic energy resources and make American manufacturing more competitive globally. Once technologies are proven domestically, they can rapidly reshape the global energy market, just as U.S. LNG exports have. Above all, tax credits should promote the uptake of new technologies as they become cost-competitive and not relied on as a permanent subsidy for uneconomic resources.

With proper incentives in place for innovative emerging energy and manufacturing technologies, America’s private sector will continue to deliver affordable energy to power the U.S. economy. Congress should seek to leverage these past successes to support the technology this moment requires. When paired with robust domestic manufacturing incentives, like those in the advanced manufacturing credit, U.S. producers all along the supply chain can benefit. Similarly, Congress should broaden the advanced manufacturing credit to support component manufacturing for new forms of energy production.

As part of a tax policy deal this year, Congress can use targeted policies to best position the U.S. to lead the world in energy production and prevail against China. To build on President Donald Trump’s goal to make American energy dominant, the private sector needs all tools available, including low-cost financing, tax incentives and faster permitting, to increase power production and lower consumer costs.

• Jeremy Harrell is the CEO of ClearPath, a conservative energy organization whose mission is to accelerate American innovation to reduce global energy emissions.