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Bold Moves for Renewables in 110th Congress

While the renewable energy industries have been focused on extending or expanding the investment and production tax credits, adopting a renewable energy portfolio standard (which passed the House of Representatives), and addressing access issues from interconnection rules to accelerating clean energy projects on federal lands and facilities -- Congressional leaders are stepping out to define their own vision.

Now such actions had started earlier in the year, when solar, small wind and fuel cell advocates were surprised that the House Ways and Means Committee was not moving the Section 25 residential investment tax credits in the energy section of the new Energy Bill. In fact, Congressional Democrats had adopted an approach on their own for long term government loans.

For some Congressional supporters, residential tax credits were only useful to the upper middle class with tax liabilities, while tax credits were less useful to the lower middle class homeowner that had lower tax liabilities and had little cash to even consider the solar option.

Now, it appears both options are destined for passage, with loans as part of the Energy Bill deliberations in November and December, and residential credits either leveraged into the Energy Bill by the Senate or considered as part of a separate expiring tax credit package the House will move before adjournment this year.

Two seasoned legislative leaders have introduced important bills that deserve attention, and are already creating talk on Capitol Hill.

The Senate Majority Leader Harry Reid, a long time renewable energy supporter, introduced S. 2076 (Clean Renewable Energy and Economic Development Act), which limits the Federal financing of high-voltage transmission lines to only those that carry at least 75 percent renewable electricity, and applies the same limitation to any new lines to be built across Federal lands.

According to the Nevada Senator's press release, "This legislation would also require the power administrations to start integrating renewable energy and energy efficiency into all of their programs, including finding ways to reduce petroleum consumption through electricifying the transportation sector using renewable power and encouraging more distributed generation."

Now Reid has moved in this direction by being the advocate of his State's long time opposition to the nuclear waste repository being pushed onto his State. Additionally, Nevada is resource rich in renewables, with geothermal leader Ormat located in Sparks, Acciona Solar's 64 MW concentrated solar plant recently coming on-line in Boulder City, several large wind farm projects, and biomass energy projects also coming on line.

According to the Renewable Energy Access article, "Experts estimate that there are at least an estimated additional 1,300 MW of baseload geothermal electricity generation in the northern part of Nevada that could be brought online within the next 5-6 years with sufficient investment and thereby help finance the interconnection of the Sierra Pacific Power and Nevada Power grids."

National Renewable Energy Zones are not a new idea. In the Energy Policy Act of 2005, Congress created Energy Transmission Corridors which gives federal preemption over State and Local governments in potentially siting electric transmission lines. Section 368 of the Act requires the designation of corridors for oil, gas and hydrogen pipelines and electricity transmission and distribution facilities on federal land in the eleven contiguous Western States.

It also requires them to perform environmental reviews and incorporate the designated corridors into the relevant agency land use and resource management plans or equivalent plans.

And, the Federal Energy Regulatory Commission (FERC) in October 2007 issued a proposed rule (NOPR) on new transmission lines to accelerate the application process, and will assist the Commission to determine if proposed transmission facilities: 1) are eligible for an electric transmission construction permit; 2) are in the public interest; 3) will reduce transmission congestion and protect and benefit consumers; and 4) are consistent with sound national energy policy and will enhance energy independence.

Companies, like 3Tier (Seattle, Washington) which maps wind, solar and hydropower resources has also advocated siting transmission lines where renewable energy resources converge—opening multiple resources for the public good.

Senator Reid (D-NV), as the Majority Leader, has now given this prioritization of renewable energy resources a lift in the implementation of new transmission line infrastructure.

But House Energy and Commerce Chairman John Dingell (D-MI) sent some legislative shockwaves in introducing a carbon tax bill addressing greenhouse gases. Now the environmental community basically reacted negatively to the Bill, claiming the Chairman was just trying to divert attention for the need to increase vehicle mileage standards in the Energy Bill (CAFE), rather than promoting greenhouse gas reductions. And surely, the Congressman has been a defender of auto industry interests in his home state.

However many clean energy advocates have been worried that Congressional discussions of Cap and Trade of greenhouse gas emissions may promote more tree panting and carbon sequestration from coal and petroleum rather than promote energy efficiency and renewable energy applications. And from this a reemergence of a pro-carbon tax coalition to monetize carbon has shown its head in the Washington dialogue.

According to Josef Hebert's recent AP story, quoted the Chairman, "Dingell says he hasn't rule out such a so-called "cap-and-trade" system, either, but that at least for now he wants to float what he believes is a better idea."

The released proposal (not yet introduced as a formal bill) establishes: 1) a 50-cent-a-gallon tax on gasoline and jet fuel, phased in over five years, on top of existing taxes, 2) tax on carbon, at $50 a ton, released from burning coal, petroleum or natural gas, 3) Phaseout of the interest tax deduction on home mortgages for homes over 3,000 square feet. Owners would keep most of the deduction for homes at the lower end of the scale, but it would be eliminated entirely for homes of 4,200 feet or more which estimates that would affect 10 percent of homeowners.

Dingell says "it's only fair" to tax those who buy large suburban houses and create urban sprawl. Historic and farm houses would be exempted. The Bill also designates some of the revenue would be used to reduce payroll taxes, but most would go elsewhere including for highway construction, mass transit, paying for Social Security and health programs and to help the poor pay energy bills.

Charles Komanoff and Dan Rosenblum, founders of the Carbon Tax Center have been banging the drum that carbon taxes are faster, simpler and more transparent than "cap and trade". The Business Council for Sustainable Energy has been holding Capitol Hill programs advocating cap and trade with performance results and where energy efficiency and renewable energy are an important piece.

Now with Congress in pre-election mode, there is no way an energy tax will ever be adopted. But senior legislator Dingell having squarely raised the issue in a legislative context is important, and will generate serious discussion.

Senator Reid has just announced that the Senate will name the Energy bill conferees to begin the process of reconciling the House and Senate versions of the Energy Bill. Expect Speaker Pelosi to follow suit. I expect votes on the Energy Bill will begin in November, and depending on the politics should move forward to passage either in November or December.

Scott Sklar, founder and president of The Stella Group, Ltd., in Washington, DC, is the Chair of the Steering Committee of the Sustainable Energy Coalition and serves on the Boards of Directors of the Sustainable Buildings Industry Council, the Business Council for Sustainable Energy, and the Renewable Energy Policy Project.
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