Financial: Before hurricane Maria, virtually all the Puerto Rico’s energy had to be imported — 98% from petroleum, natural gas and coal. Only 2% came from renewable energy. This cost a lot for the local economy that wasn’t creating much to be able to afford it. Switching to green energy in the long run for Puerto Rico was a lot cheaper, in addition to being environmentally beneficial.
However, funding from the U.S. Federal Emergency Management Agency was limited to repairs to projects that restored existing power grid infrastructure―not to financing novel improvements, such as solar power microgrids, with public money. While China was among the top global lenders in outbound clean energy investments during 2017, financing for clean energy projects existed in tension with continued financing for fossil fuels. For example, World Bank finances fossil fuels energy projects ($21 billion) three times greater than renewable energy projects ($7 billion). And according to a report prepared by Intergovernmental Panel on Climate Change (IPCC) Canadian, Chinese, European, Japanese, and U.S. banks continue to finance fossil fuels with $1.9 trillion since the adoption of the Paris Agreement.
Regulatory/Tax: In March of this year—a year and a half after hurricane Maria-- the Puerto Rican legislature approved a bill mandating that 100% of the island’s electricity to be generated from renewable sources by 2050. Similar legislation has been adopted by various states which have revised their Renewable Portfolio Standards (RPS), requiring that a specified percentage of the electricity that utilities sell comes from renewable resources. Twenty-nine states, Washington, D.C., and three territories have adopted an RPS, while eight states and one territory have set renewable energy goals. A report issued by LUT University in Finland and the Energy Watch Group (EWG) in Germany states that transitioning to green energy can be accomplished globally, in an economically competitive way, to reduce greenhouse gas emissions in the energy system to zero by 2050.
Puerto Rico’s tax laws offer a 30% tax deduction (up to $1,500) for expenses incurred in the purchase and installation of solar equipment to heat water for residential use. The Puerto Rico Energy Bureau recently ordered the PREPA to stop the implementation of a new tax that would generate an additional charge for customers using solar panels on the island. The tax would have resulted in the majority of customers with solar panels receiving a lower credit in their invoices for the surplus energy produced and sold to the PREPA network.
How will you help mitigating these problems?
I intend to continue to write about tax related environmental matters to aid the transition away from an environmentally damaging energy strategy to a renewable global energy economy, bolstered with a re-forestation and eco-friendly recyclable refuse policy.
Afterall, Ahmed Zaki Yaman, the ex-oil minister of Saudi Arabia said that “the stone age did not end because the world ran out of stones, and the oil age will not end because we run out of oil.” He may be right, as the share of renewable energy sources within the global power generation mix, has been rising quickly since the end of the 2000’s, after the 2007/2008 global credit crisis.
Wind and solar generation has gained momentum, by the fall in solar and wind development costs over recent years, enabling developing countries to expand their renewable capacities. Solar was responsible of 20% of the additional power generation in 2017 and wind 30%. Renewables now cover 1/3 of the power mix in Europe, 1/4 in China and 1/6 in the U.S., India and Japan.
More articles from Selva Ozelli:
Selva Ozelli, “Shareholder Leverage in the Face of Corporate Inversions”, Tax Notes International, Feb. 17, 2003
Selva Ozelli, “Is This Bribe Deductible? Tax Implications of the U.S. Foreign Corrupt Practices Act”, Tax Notes International, Dec 17, 2007
Selva Ozelli, “Why are heads of state facing more enforcement actions?”, FCPABLOG, Apr 4, 2018
Selva Ozelli Esq, CPA, Roger Russell, Esq, “Is This Payment Reportable? Global Standard for Payment Disclosure”, OECD, Mar 2017
Selva Ozelli’s article, “U.S. Tax Implications of Cross-Border Cryptocurrency Bribes,” Tax Notes International, Aug. 27, 2018, pp. 895-901
Selva Ozelli “Crypto and a Song for the Saints”, Bloomberg BNA, Feb 28, 2019
Selva Ozelli, “Brazil’s Operação Lava Jato Paves The Way To Blockchain Implementation”, Cointelegraph.com, Apr 23, 2018
Selva Ozelli, Esq., CPA, “Is Solar Power Adoption Hindered by an Inadequate Global Environmental Tax Policy?”, Bloomberg BNA, Tax Management Memorandum, Aug 5, 2019 (this article will be published on August 5, 2019, and I will request the reprint rights once published)