To the Congress of the United States:
On Sun Day, May 3, 1978 we began a national mobilization in our country toward the time when our major sources of energy will be derived from the sun. On that day, I committed our Nation and our government to developing an aggressive policy to harness solar and renewable sources of energy. I ordered a major government-wide review to determine how best to marshal the tools of the government to hasten the day when solar and renewable sources of energy become our primary energy resources. As a result of that study, we are now able to set an ambitious goal for the use of solar energy and to make a long term commitment to a society based largely on renewable sources of energy.
In this Message I will outline the major elements of a national solar strategy. It relies not only on the Federal government, both Executive and Congress, but also on State and local governments, and on private industry, entrepreneurs, and inventors who have already given us significant progress in the availability of solar technologies. Ultimately, this strategy depends on the strength of the American people's commitment to finding and using substitutes for our diminishing supplies of traditional fossil fuels.
Events of the last year—the more than 30% increase in the price of oil we import and the supply shortage caused by the interruption of oil production in Iran-have made the task of developing a national solar strategy all the more urgent, and all the more imperative.
More than ever before, we can see clearly the dangers of continued excessive reliance on oil for our long-term future security. Our energy problem demands that we act forcefully to diversify our energy supplies, to make maximum use of the resources we have, and to develop alternatives to conventional fuels.
Past governmental policies to control the prices of oil and natural gas at levels below their real market value have impeded development and use of solar and renewable resource alternatives. Both price controls and direct subsidies that the government has provided to various existing energy technologies have made it much more difficult for solar and renewable resource technologies to compete.
In April of this year I announced my decision to begin the process of decontrolling domestic oil prices. Last November, I signed into law the Natural Gas Policy Act which will bring the price of that premium fuel to its true market level over the next five years. Together, these steps will provide much-needed incentives to encourage maximum exploration and production of our domestic resources. They provide strong incentives to curb waste of our precious energy resources. Equally important, these steps will help solar and renewable resource technologies compete as the prices of oil and natural gas begin to reflect their real market value. Consumers will see more clearly the benefits of investing in energy systems for which fuel costs will not escalate each year. Industry can plan and invest with more certainty, knowing the market terms under which their products will compete.
We must further strengthen America's commitment to conservation. We must learn to use energy more efficiently and productively in our homes, our transportation systems and our industries. Sound conservation practices go hand in hand with a strong solar and renewable resource policy. For example, a well designed and well-insulated home is better able to make use of solar power effectively than one which is energy inefficient.
We must also find better ways to burn and use coal—a fossil fuel which we have in abundance. Coal must and will be a key part of a successful transition away from oil. We must and will do more to utilize that resource. Solar energy and an increased use of coal will help in the near and mid-term to accelerate our transition away from crude oil.
But it is clear that in the years ahead we must increasingly rely on those sources of power which are renewable. The transition to widespread use of solar energy has already begun. Our task is to speed it along. True energy security—in both price and supply—can come only from the development of solar and renewable technologies.
In addition to fundamental security, solar and renewable sources of energy provide numerous social and environmental benefits.
Energy from the sun is clean and safe. It will not pollute the air we breathe or the water we drink. It does not run the risk of an accident which may threaten the health or life of our citizens. There are no toxic wastes to cause disposal problems.
Increased use of solar and renewable sources of energy is an important hedge against inflation in the long run. Unlike the costs of depletable resources, which rise exponentially as reserves are consumed, the cost of power from the sun will go down as we develop better and cheaper ways of applying it to everyday needs. For everyone in our society—especially our low-income or fixed-income families—solar energy provides an important way to avoid rising fuel costs.
No foreign cartel can set the price of sun power; no one can embargo it. Every solar collector in this country, every investment in using wind or biomass energy, every advance in making electricity directly from the sun decreases our reliance on uncertain sources of imported oil, bolsters our international trade position, and enhances the security of our Nation.
Solar energy can put hundreds of thousands of Americans to work. Because solar applications tend to be dispersed and decentralized, jobs created will be spread fairly evenly around the Nation. Job potentials span the ranges of our employment spectrum, from relatively unskilled labor to advanced engineers, from plumbers and metal workers to architects and contractors, from scientists and inventors to factory workers, from the small businessman to the large industrialist. Every investment in solar and renewable energy systems keeps American dollars working for us here at home, creating new jobs and opportunities, rather than sending precious funds to a foreign cartel.
Increased reliance on solar and renewable technologies can also increase the amount of control each one of us as individuals and each of our local communities has over our energy supplies. Instead of relying on large, centralized energy installations, many solar and renewable technologies are smaller and manageable by the homeowner, the farmer, or the individual factory or plant. By their very nature, renewable technologies are less likely to engage the kind of tension and conflict we have seen in other energy areas, such as the problems posed by siting a very large energy facility, or trading off between surface uses of land and development of the energy minerals that might lie below that land.
Finally, solar and renewable technologies provide great international opportunities, both in foreign trade, and in the ability to work with developing nations to permit them to harness their own, indigenous resources rather than become dependent on fuels imported from other nations.
It is a mistake to think of solar energy as exotic or unconventional. Much of the technology for applying the sun's power to everyday tasks has been in use for hundreds of years. There were windmills on our great plains long before there were high tension wires. There were factories in New England using waterpower long before the internal combustion engine was invented. In Florida, before World War II, there were more than 60,000 homes and buildings using solar hot water heaters. The Native Americans who built the great cliff dwellings of the West understood and applied solar heating principles that we have neglected in recent years, but which are available for us to use today.
These traditional and benign sources of energy fell into disuse because of a brief glut of cheap crude oil. These years are over. That inescapable fact is not a cause for despondency or a threat to our standard of living. On the contrary, it presents us with an opportunity to improve the quality of our lives, add dynamism to our economy and clean up our environment. We can meet this challenge by applying the time-tested technologies of solar power, and by developing and deploying new devices to harness the rays of the sun.
The government-wide survey I commissioned concluded that many solar technologies are available and economical today. These are here and now technologies ready for use in our homes, schools, factories, and farms. Solar hot water heating is competitive economically today against electric power in virtually every region of the country. Application of passive design principles that take into account energy efficiency and make maximum use of the direct power of the sun in the intrinsic design of the structure is both good economics and good common sense. Burning of wood, some uses of biomass for electricity generation, and low head hydropower have repeatedly been shown to be cost competitive.
Numerous other solar and renewable resources applications are close to economic competitiveness, among them solar space heating, solar industrial process heat, wind-generated electricity, many biomass conversion systems, and some photovoltaic applications.
We have a great potential and a great opportunity to expand dramatically the contribution of solar energy between now and the end of this century. I am today establishing for our country an ambitious and very important goal for solar and renewable sources of energy. It is a challenge to our country and to our ingenuity.
We should commit ourselves to a national goal of meeting one fifth—20%-of our energy needs with solar and renewable resources by the end of this century. This goal sets a high standard against which we can collectively measure our progress in reducing our dependence on oil imports and securing our country's energy future. It will require that all of us examine carefully the potential solar and renewable technologies hold for our country and invest in these systems wherever we can.
In setting this goal, we must all recognize that the Federal government cannot achieve it alone. Nor is the Federal budget the only tool that should be considered in determining the courses we set to reach this goal. The extent to which solar and renewable technologies become more competitive will depend upon the cost of existing sources of energy, especially oil and natural gas. The degree to which existing solar technologies achieve widespread use in the near term will be as much if not more a function of the commitment on the part of energy users in this country to consider these technologies as it will be a function of the incentives the government is able to provide.
State and local governments must make an all-out effort to promote the use of solar and renewable resources if the barriers now found at those levels are to be overcome. Zoning ordinances, laws .governing access to the sun, housing codes, and state public utility commission policies are not Federal responsibilities. Although the Federal government should provide leadership, whether or not these tools are used to hinder or to help solar and renewable energy use ultimately depends upon decisions by each city, county and state. The potential for success in each of these areas is great; the responsibility is likewise. I call on our Governors, our Mayors, and our county officials to join with me in helping to make our goal a reality.
American industry must also be willing to make investments of its own if we are to reach our solar goal. We are setting a goal for which industry can plan. We are providing strong and certain incentives that it can count on. Industry, in turn, must accelerate and expand its research, development, demonstration, and promotional activities. The manufacturing, construction, financing, marketing, and service skills of American business and labor are essential. Banks and financial institutions will need to examine and strengthen their lending policies to assure that solar technologies are offered a fair chance in the marketplace. Universities and the academic community must mobilize to find ways of bringing those solar and renewable technologies that are still not ready for commercial introduction closer to the marketplace. Small businesses and family farmers also have opportunities for significant use of solar and renewable resources. They, too, must join in this effort.
Finally, each one of us in our daily lives needs to examine our own uses of energy and to learn how we can make solar and renewable resources meet our own needs. What kind of house we buy, or whether we are willing to work in our own communities to accelerate the use of solar energy, will be essential in determining whether we reach our goal.
The Federal government also has a responsibility in providing incentives, information, and the impetus for meeting our 20% solar goal by the year 2000. Almost every agency of the Federal government has responsibilities which touch in one way or another on solar energy. Government agencies helped finance over one million U.S. homes in 1978. By their lending policies and their willingness to assist solar investments, these agencies have significant leverage.
The Tennessee Valley Authority is the Nation's largest utility and producer of power. It has a far-reaching opportunity to become a solar showcase—to set an example for all utilities, whether public or privately owned, of how to accelerate the use of solar technologies. The Department of Defense (DOD) is a major consumer of energy and a major provider of housing. A multitude of opportunities exist for DOD to demonstrate the use of solar. The Agency for International Development (AID) works full time in helping other countries to meet their essential needs, including energy. Solar and renewable resources hold significant potential for these countries and, through AID, we can assist in promoting the worldwide application of these technologies.
The Department of Energy has a particularly significant responsibility in aiding the development and encouraging the use of solar energy technologies, in providing back-up information and training for users of solar, and, generally, in directing our government-funded research and development program to ensure that future solar and renewable technologies are given the resources and institutional support that they need.
As a government-wide study, the Domestic Policy Review of Solar Energy has provided a unique opportunity to draw together the disparate functions of government and determine how best to marshal all of the government's tools to accelerate the use of solar and renewable resources. As a result of that study, the set of programs and funding recommendations that I have already made and am adding to today will provide more than $1 billion for solar energy in FY 1980, with a sustained Federal commitment to solar energy in the years beyond. The FY 1980 budget will be the highest ever recommended by any President for solar energy. It is a significant milestone for our country.
This $1 billion of Federal expenditures-divided between incentives for current use of solar and renewable resources such as tax credits, loans and grants, support activities to develop standards, model building codes, and information programs, and longer term research and development-launches our Nation well on the way toward our solar goal. It is a commitment we will sustain in the years ahead.
I am today proposing the establishment of a national Solar Bank as a government corporation to be located within the Department of Housing and Urban Development (HUD). It will provide a major impetus toward use of today's solar technologies by increasing the availability of financing at reasonable terms for solar investments in residential and commercial buildings.
The Solar Bank will be funded at $100 million annually out of the Energy Security Trust Fund from revenues generated by the windfall profits tax. The Bank will be authorized to provide interest subsidies for home improvement loans and mortgages for residential and commercial buildings. It will pay up front subsidies to banks and other lending institutions which, in turn, will offer loans and mortgages for solar investments at interest rates below the prevailing market rate. Ceilings on the amount of the loan or portion of a loan which can be subsidized will be set.
The Solar Bank will be governed by a Board of Directors including the Secretary of HUD, the Secretary of Energy, and the Secretary of the Treasury. The Board of Directors will be empowered to set the specific level of interest subsidy at rates which will best serve the purposes of accelerating the use of solar systems in residential and commercial buildings. Standards of eligibility for systems receiving Solar Bank assistance will be set by the Secretary of HUD in consultation with the Secretary of Energy.
The Solar Bank I have proposed is similar in many respects to that introduced by Congressman Stephen Neal of North Carolina. A companion bill has been introduced in the Senate by Senator Robert Morgan of North Carolina. To them, and to the co-sponsors of this legislation, we owe our gratitude for the hard work and sound conceptual thinking that has been done on how a Solar Bank should be designed.
The Solar Bank will complement the residential and commercial tax credits that I originally proposed in April 1977 and that were signed into law with the National Energy Act last November. To provide full and effective coverage for all solar and renewable resource technologies which can be used in residential and commercial buildings, I have recently proposed two additional tax credits, to be funded out of the Energy Security Trust Fund.
I am directing the Department of the Treasury to send to the Congress legislation which will provide a 20% tax credit up to a total of $2,000 for passive solar systems in new homes. Credits will also be proposed for passive solar in commercial buildings. Passive solar applications are competitive today, but we need to provide incentives to owners, builders, architects, and contractors to ensure early and widespread use.
I am also directing the Treasury to prepare and transmit legislation to provide a tax credit for purchasers of airtight woodburning stoves for use in principal residences. This credit would equal 15% of the cost of the stove, and will be available through December 1982. There is a great potential to expand significantly the use of wood for home heating. It can help lower residential fuel bills, particularly as oil and natural gas prices increase.
With these levels of assistance, hot water heating can be made fully competitive with electricity. In many instances, complete passive solar home designs, including solar heating and cooling, will be economically attractive alternatives.
A strong Federal program to provide accurate and up-to-date solar information to homeowners, builders, architects and contractors will be coupled with these financial incentives. The Department of Energy has established a National Solar User Information Program to collect, evaluate and publish information on the performance of solar systems throughout the country. Expanding the government's information dissemination systems through seminars, technical journals, state energy offices, and the Solar Energy Research Institute will be a major thrust of DOE's program in 1980. The four Regional Solar Energy Centers will become fully operational in 1980, providing information to the general public and to groups such as builders, contractors, and architects who will play key roles in the acceleration of solar technologies.
To be fully effective, however, these incentives must be combined with a determined effort by the architects, engineers, and builders who design and construct our homes and offices, schools, hotels, restaurants, and other buildings we live and work in. I am calling upon the deans of our schools of architecture and engineering to do their part by making the teaching of solar energy principles an essential part of their curricula. The young men and women being trained today must learn to regard the solar energy and overall energy efficiency of the buildings they design as no less important than their structural integrity. I call as well on America's builders to build and market homes which offer the buyer freedom from escalating utility bills.
In the end, it will be consumers of this country who will make the purchasing decisions that will dictate the future of this industry. They must have confidence in the industry and in the products which it produces before they will be willing to make necessary investments. To this end, both industry and government must be ever vigilant to assure that consumers are well protected from fraud and abuse.
Significant opportunities for use of existing solar technologies are also able in the agricultural and industrial sectors of our economy. Industrial process heat can be generated using solar technologies. Critical agricultural activities-fueling tractors, running irrigation pumps and drying crops—provide numerous opportunities for the use of solar and other renewable resources.
Biomass, gasohol, wind energy, low head hydro, and various direct solar technologies hold significant promise in the agricultural and industrial sectors. I will soon be forwarding legislation to the Congress which will:
• Provide a 25% investment tax credit for agricultural and industrial process heat uses of solar energy. This is a 15% addition to the existing investment tax credit and it will remain available through 1989. This responds directly to the concern expressed in the Domestic Policy Review that the tax credit currently provided in the National Energy Act is set at too low a level and expires too early to provide needed incentives. These uses now account for about 25% of our energy demand. Substitution of solar and other renewable resources for a portion of this energy would significantly reduce our dependence on foreign oil.
• Permanently exempt gasohol from the Federal gasoline excise tax. More and more Americans are learning that a gasohol blend of 90% gasoline and 10% alcohol—which is made from various agricultural products or wastes—is an efficient octane-boosting fuel for automobiles and other gasoline engines.
The existing tax incentives of the National Energy Act will continue to stimulate the uses of these technologies in the industrial and agricultural sectors.
The Department of Agriculture will have a significant responsibility for informing farmers and other agricultural users of energy about how solar and other renewable sources can begin to help meet their needs. The Farmers Home Administration and other agencies within the Agriculture Department will continue to provide financial and technical assistance to farmers in using solar and other renewable technologies.
The TVA is demonstrating what can be done by utilities in helping private industries, farmers, and residential customers apply existing solar technologies. The goal of the TVA's "Solar Memphis" program is to install 1,000 solar water heaters this year by offering long-term, low-interest loans, by inspecting solar installations, and by backing manufacturers' warranties. In addition, the TVA's 1.75 million square foot passive solar office complex in Chattanooga, Tennessee will be designed to be completely energy self-sufficient and will be a model for the nation in the use of renewable technologies in office buildings.
The Small Business Administration is now operating a solar loan program for small manufacturers and purchasers of solar technologies. Next year, the SBA aims to triple the amount of funds available to small businesses under this program over the amount originally appropriated. We will also marshal the efforts of agencies such as the Economic Development Administration to include solar and other renewable resources within their assistance programs.
These activities, along with the basic information dissemination programs of the Department of Energy, will help increase the use of solar and other renewable resource technologies in residential, commercial, agricultural, and industrial buildings.
Finally, we will strive to increase use of solar energy by the Federal government itself. An estimated 350 solar systems will be placed in government facilities and buildings over the next fifteen months. Energy audits of all large federal buildings will be completed in 1979. DOE will continue to develop guidelines which take into account the lifetime energy costs of various systems. The Department of Defense, which accounts for about 72% of all government-owned buildings, is playing a major role in the federal solar buildings program. To date, DOD has over 100 solar projects in various stages of completion, ranging in size from solar hot water heaters in residences to solar heating and air conditioning of Naval, Air Force and Army base facilities. When all of the presently planned solar projects are complete, DOD estimates that they will be providing more than 20 billion Btu's of energy. The Federal government must set an example, and I call upon the states to do likewise.
The Domestic Policy Review recommended several important changes in the direction and nature of the Federal research and development program for future solar and renewable resource technologies. It found that solar demonstration programs for active hot water systems and high-cost centralized solar electric technologies had been overemphasized at the expense of those systems which hold wider potential to displace the use of oil and natural gas.
As a result of the Domestic Policy Review, the FY 1980 budget for DOE's research and development program for solar and renewable energy sources was redirected toward technologies such as photovoltaics, biomass, wind energy, and systems for generation of process heat. To respond to these new priorities, over $130 million in increased funding was provided in the R&D program, an increase of 40% over FY 1979 levels.
While solar heating and cooling units are already being used to meet the energy requirements of buildings throughout the country, the DOE is supporting continued advances in these products, by providing funds to industry, small business, Federal laboratories, and the research community to reduce the cost of solar systems and to improve performance. Improved system design, analysis, and system-integration activities are being carried out for active heating and cooling systems, passive systems, and agricultural and industrial process heating systems. The program also supports product improvements for such key components as solar collectors, energy storage units, and controls.
Photovoltaics, which permit the direct conversion of sunlight into electricity, hold significant promise as a solar technology for the future. Research and development efforts are directed at reducing the cost of photovoltaic systems. In addition, new systems which produce hydrogen through an electrochemical reaction can be used to produce electricity. There is no question about our technical ability to use photovoltaics to generate electricity. These systems are already used extensively to meet remote energy needs in our space program. The main issue now is how to reduce the costs of photovoltaics for grid-related applications such as providing electricity to residential buildings over the next five to ten years. The photovoltaic program involves all aspects of research and development, from hardware components to materials, marketing and distribution systems. The Federal government has already made commitments to purchase $30 million of photovoltaic systems at a specified cost per watt as a means of stimulating private efforts to reduce the cost of this technology.
DOE's research and development program has also emphasized wind energy. Our objective is the development of wind systems which will compete cost-effectively with conventional technologies. There will also be efforts to develop wind technologies for small units suitable for farm and rural use and for large utility units.
Biomass conversion holds significant promise as a major source of renewable energy over the coming decades. Liquid and gaseous fuels produced from organic wastes and crops can displace oil and natural gas both as direct combustion fuels and as chemical feedstocks. Some biomass fuels, such as gasohol, are in use today. Others, such as liquid fuels from organic wastes, require additional research and development.
In the coming fiscal year, DOE will complete construction of the solar power tower in Barstow, California. Such systems could potentially displace some oil and gas-fired generators. The DOE solar thermal program is also concentrating on reducing to near commercial levels the costs of distributed receiver systems by 1983 and similarly reducing the future costs of central receiver systems. This program supports R&D efforts in advanced space heating and cooling, photovoltaic concentration, and high temperature industrial heat applications.
The oceans are another potential source of solar energy. We will pursue research and development efforts directed toward ocean thermal energy conversion, and other concepts such as the use of salinity gradients, waves, stud ocean currents.
DOE is working with the National Aeronautics and Space Administration to evaluate the concept of a solar power satellite system (SPS) which would capture solar energy in space for transmission to earth. A determination will be made in January 1981 on whether this system should proceed to the exploratory research stage.
DOE will undertake intensified efforts involving solar energy storage and basic solar energy research. In the basic research area, emphasis is being placed on the development of new materials to better use or convert the sun's energy, solar photochemistry (including the possibility of using electrochemical cells to convert the energy of sunlight into electricity and/or fuels) and research on artificial photosynthesis.
In Fiscal Year 1980 we will begin building a new 300-acre solar research facility for the Solar Energy Research Institute at Golden, Colorado. This institute, along with four regional solar centers established across the country, will help provide a focus for research and development activities and will become information centers for individuals and firms who market or install solar equipment.
In addition to DOE's research and development activities, several other agencies will continue to support commercial introduction of solar technologies as they become available. AID, TVA and the Department of Agriculture now have and will continue to have significant responsibilities in the demonstration of new solar and renewable resource systems.
The Domestic Policy Review identified numerous specific program suggestions, many of which I believe can and should be implemented. Over the course of the coming weeks, I will be issuing a series of detailed directives to the appropriate agencies to implement or consider recommendations in accordance with my instructions.
Some of these suggestions involve detailed budget issues which should be taken up in our normal budget planning process. In order to provide much-needed flexibility to DOE to respond to these-and other—suggestions, I am .directing the Office of Management and Budget to provide an additional $100 million to DOE for use on solar programs beyond that which had previously been identified for the FY 1981 base program.
An essential element of a successful national solar strategy must be a clear central means of coordinating the many programs administered by the numerous agencies of government which have a role in accelerating the development and use of these energy sources. I am today directing that the Secretary of Energy establish a permanent, standing Subcommittee of the Energy Coordinating Committee (ECC) to monitor and direct the implementation of our national solar program. The ECC membership includes the major agencies which have responsibilities for solar and renewable resource use. By using this existing mechanism, but strengthening its focus on solar and renewable activities, we can provide an immediate and direct means to coordinate the Federal solar effort. The Subcommittee will report on a regular basis to the ECC, and through it directly to me, on the progress of our many and varied solar activities. The Subcommittee will be able to identify quickly any problems that arise and the ECC will provide a forum to resolve them. Since the membership of the ECC includes key agencies of the Executive Office of the President, especially the Office of Management and Budget, the Special Assistant to the President for Consumer Affairs, the Council on Environmental Quality, and the Domestic Policy Staff, direct and easy access to my staff and Members of the Cabinet is assured.
The Standing Subcommittee of the ECC has an extremely important responsibility. I am expecting it to provide the leadership and the day-to-day coordinating function which will be essential as we strive to meet our national solar goal.
We are today taking an historic step. We are making a commitment to as important a goal as we can set for our Nation-the provision of 20% of our energy needs from solar and renewable sources of energy by the year 2000.
We are launching a major program-one which requires and has received a significant commitment from the Federal government to accelerate the development and use of solar technologies.
We are marshalling the best that the agencies of government can provide and asking for the commitment of each of them, in their diverse and numerous functions, to assist our country in meeting our solar goal.
The stakes for which we are playing are very high. When we speak of energy security, we are in fact talking about how we can assure the future economic and military security of our country—how we can maintain the liberties and freedoms which make our Nation great.
In developing and implementing a national solar strategy we are taking yet another critical step toward a future which will not be plagued by the kinds of energy problems we are now experiencing, and which will increase the prospects of avoiding worse difficulties.
We have set a challenge for ourselves. I have set a challenge for my Presidency. It will require the best that American ingenuity can offer, and all the determination which our society can muster. Although government will lead, inspire, and encourage, our goal can be achieved only if each American citizen, each business, and each community takes our solar goal to heart.
Whether our energy future will be bright—with the power of the sun—or whether it will be dim, as our fossil resources decline, is the choice that is now before us. We must take the path I have outlined today.
The White House,
June 20, 1979.