A bill just introduced in the U.S. House of Representatives would support the $7.5 billion Clean Energy Victory Bond Act. HR 6275, by California’s Bob Filner and Dennis Kucinich of Ohio, promotes the domestic development and deployment of clean energy technologies. These Series EE and I bonds, available in $25 increments, would be sold to the general public, and are reminiscent of the World War II Victory Bonds that generated more than $185 billion at the time — $2 trillion in today’s dollars.

Oil subsidies have long inhibited the growth of the renewable energy industry. This unfair playing field, maintained by the oil lobby and the elected officials who cater to it, has meant that very little investment capital has been directed to this sector. During the economic downturn, the American Recovery Reinvestment Act channeled more than $11 billion in grants and contracts to hundreds of energy-efficiency projects throughout the country, but only $1 billion was invested in renewable energy itself.  Even so, this $12 billion total is only 5 percent of all stimulus funding. More Department of Energy money, $16 billion, was actually invested in environmental clean-up, grid modernization, transportation, and carbon capture and storage than in renewable energy and energy efficiency. 

Meanwhile, the private sector has not kept anywhere near the pace of public investment, particular in solar energy, as the influx of inexpensive Chinese photovoltaic panels have undercut the market share and profitability of domestic manufacturers. This may explain why solar stocks have taken a tumble in the past 3 years: the Powershares Wilderhill Clean Energy Index, for example, is down 24 percent since 2009, while other domestic and global exchange-traded renewable energy funds are similarly down between 21 percent and 43 percent during this period.

So, despite the need to wean off fossil fuels, the stimulus funds, and the continuing general rise of gas prices, renewable energy has not been a stellar stock investment in recent years.

One of the best ways to develop an industry is to provide tax incentives that stimulate private investment. This has been effective on the consumer side, with federal tax breaks covering 30 percent of the total cost of renewable energy system installations per household. States have also sponsored tax credit programs, and some municipalities have already established Property Assessed Clean Energy (PACE) bonds. These are sold to investors and the capital is loaned to consumers and businesses for energy installations. The loans are repaid over the assigned term (typically 15 or 20 years) via an annual assessment on their property tax bill, making them secure. As such, it’s the best time in a generation to invest in renewable energy.

However, with the Renewable Electricity Production Tax Credit for wind energy, first passed 20 years ago, set expire at year-end, and with Mitt Romney already stating his desire to let it expire, Clean Energy Victory Bonds may provide a more reliable solution to meet America’s renewable energy needs and create hundreds of thousands of jobs.

Bonds, of course, don’t end up on the Treasury’s books, and in fact will increase tax revenue. First, the proposed new bill extends all existing consumer solar, geothermal, fuel cell, microturbine, and wind tax credits by six years to 2023, and provides $2,500 vouchers to buyers of plug-in electric cars. It also adds incentives for second-generation biomass power plants, and constrains biofuel production credits so as not to use inputs that replace food crops.

Proceeds from the bonds will also be used to provide $500 million in funding for plug-in hybrid electric vehicle charging station grants and an equal amount for plug-in hybrid battery technology research and development.

The interest rate for the bonds, to be set by the Treasury, would be based in part on the valuation of carbon mitigated or energy saved through funded projects funded from the bond proceeds.

This is an innovative approach to investing in clean energy that, if passed, allows the public to support investments in clean energy without adding to the federal deficit. It is one of many important strategies underway to move this society away from fossil fuels and towards a more sustainable ecology and economy.