Nov. 11 Daily News editorial

So-called “green jobs” have been all the rage over the past decade. Lawmakers throughout the Pacific Northwest have touted the benefits of clean energy economies and rushed to invest in various strategies aimed at developing renewable energy projects. Oregon’s push to green up has been particularly aggressive, according a report earlier this month by Harry Esteve of The Oregonian newspaper in Portland. Esteve’s report is a case study in the fiscal consequences of overstating the benefits of tax incentives while grossly understating costs.

No state has been a more vigorous advocate of green economy — or, as it turns out, invested more in attracting renewable energy companies — than Oregon. The actual size of that investment was only recently brought to light by Esteve. The sticker shock for Oregon lawmakers and taxpayers must have been extreme.

Esteve reported that the state’s Business Energy Tax Credit (BETC) cost taxpayers $68 million in 2007-09 — more than 40 times what legislators had been told it would cost. And that’s only for starters. The cost of BETC subsidies for green projects is estimated to climb to $167 in 2009-11, and to $243 million in 2011-13.

Neither lawmakers nor taxpayers bargained for this kind of expenditure, and the state certainly is in no position to shoulder it in this down economy. Even in good economic times, this level of commitment to green jobs would be suspect. There simply is no way to justify the sort of tax breaks Oregon has been handing wind and solar companies since 2007, the year BETC subsidies were raised from up to $3.5 million per project to as high as $20 million per project.

At the time, of course, Oregon lawmakers didn’t know the true cost of these subsidies or that they would rise so sharply under Gov. Ted Kulongoski’s proposed expansion of the BETC. According to The Oregonian’s Esteve, the governor’s staff purposefully low-balled cost estimates. “I remember that discussion (on costs),” Charles Stephens, a former analyst for the state Energy Department, told Esteve. “Everyone was say, yes, this is going to be a huge (budget) hit. The governor’s office was say, ‘No, we need a smaller number.’”

That effort to mask the likely cost of the larger tax break for renewable energy companies was wrongheaded and terribly shortsighted. So was the willingness of Oregon decision makers to throw money at wind, biomass and other renewable energy projects with little oversight or accountability. Esteve noted several very wasteful projects. Among them was the Clatskanie ethanol plant which eventually went bankrupt and ceased operations. It received $12 million in tax subsidies and a $20 million energy loan from the state. Another wasteful example cited in the report was a wind energy project that was handed tax credits totaling $40 million. Esteve found that this project will generate less electricity than projects that received credits totaling around $4 million.

Washington state officials would do well to take a lesson from Oregon’s costly experience. Take a very hard and honest look at costs versus benefits before committing tax dollars to the cause du jour. Tax incentives are to be used sparingly. For the most part, it’s best to let the market pick winners and losers.