Rentiers of the low-carbon economy? Renewable energy's extractive fiscal geographies

Abstract

Progressive movements today call for transformative state-led investment in renewable energy and other climate infrastructures—in the United States, a vision that confronts inherited legacies of austerity. I argue that a significant obstacle is the neoliberal toolkit through which the US federal government subsidizes renewables, an indirect, highly opaque system of tax credits and incentives. For forty years, tax subsidies have ‘paid’ private financial players to invest in renewables, via allowing them to claim legal tax shelters against their other income. In this political economic analysis, I question, first, how US renewable energy acquired this peculiar form of public finance ‘through the tax code’, unique in the global industry. Second, I explore how the model has shaped US renewables financing, development, and ownership. I center two decisive moments: the California ‘wind rush’ in the 1980s, and the ongoing renewables boom of the last fifteen years. This history articulates financial experiments and tax sheltering scandals of the Reagan Administration with exploitation returned today in more organized (and lucrative) form, as ‘tax equity’ finance. Via tax equity, a handful of major US banks dominate financing for renewables and other politically embattled public goods. They exert a troubling ability to extract rents for their capital, gatekeep what projects get built and by whom, and stall US renewables development altogether. Today, the practice is increasingly strained by these and other problems—growing public costs, private capacity ceilings, and amplification of sectoral crises. Under Biden, it faces probable reform, but may need more comprehensive reimagination.

Climate change and industrial relations: Reflections on an emerging field

“…Studies examining the quality of work in renewables, particularly under highly competitive, unco-ordinated liberal capitalist paradigms, paint a bleak picture of precarious and sometimes exploitative work arrangements (Knuth, 2021;Masterman-Smith, 2010;Neimark et al, 2020;Stock, 2021), as do studies analysing the working conditions in the extraction of the rare-earth elements which are crucial to solar panels and batteries (Sovacool, 2021).…”

“…It rather indicates that some reflection on the extent to which the categories of analysis and preoccupations the discipline inherited from the fossil capitalist age might now, in an age of carbon constraint, be understood as contributors to environmental destabilisation. How might the principles that were directed toward making work ‘fair’ in the 20th century carry with them the potential to constitute a basis for ‘carbon lock-in’ in the 21st (Unruh, 2002), and thus contribute to new and different varieties of unfairness? How might concepts such as skill, occupation, task and craft be re-thought in light of climate change?…”

Introduction

“… Teece, 1986 ; Pisano, 1991 ) to an emerging critical mass of political-economic literature focusing on rentiership in contemporary, technoscientific capitalism (e.g. Zeller, 2008 ; Sayer, 2015 , 2020; Schwartz, 2016 ; Srnicek, 2016 ; Standing, 2016 ; Tretter, 2016; Ward and Aalbers, 2016 ; Kay and Kenney-Lazar, 2017 ; Langley and Leyshon, 2017 ; Fields, 2019; Birch, 2020 ; Christophers, 2020 ; Rikap and Lundvall, 2020 ; Birch and Cochrane, 2021 ; Knuth, 2021 ; MacKenzie, 2021 ; Rikap, 2021a ; Strauss, 2021 ).…”

“…Firstly, while land rent is still a major component of wealth, it is being remade through techno-economic rentiership. One apt example is the remaking and reframing of land and the environment more generally as an ownable and alienable ‘environmental resource’ or ‘natural asset’ ( Kay, 2017 ; Levidow, 2020; Ouma, 2020 ; Knuth, 2021 ). In his dissection of climate regulation, Felli (2014) outlines how legally created entitlements to pollute, such as carbon credits, represent a form of rentiership since carbon credits are fictitious commodities, in Karl Polanyi's terms, being a financial instrument resulting from government fiat, rather than a commodity produced for sale.…”

“…In his dissection of climate regulation, Felli (2014) outlines how legally created entitlements to pollute, such as carbon credits, represent a form of rentiership since carbon credits are fictitious commodities, in Karl Polanyi's terms, being a financial instrument resulting from government fiat, rather than a commodity produced for sale. According to Stratford (2020) , these transformations raise important questions about who can capture these climate rents, how they are distributed, and how they are eventually eroded as part of a wider low-carbon transition ( Knuth, 2021 ; Serna, 2021 ).…”