What's Happening in Congress with Ocean Renewables?

Yes there is some movement in Congress; however, the status of the bills in the House of Representatives and Senate remain in a state of flux. For the most part, we are still awaiting the House and Senate energy bills to be ratified through a joint House and Senate Conference, which ultimately must be signed into law by the President. Several large issues, including a nationwide Renewable Energy Standard (RES), carbon reduction through Cap and Trade, and the Corporate Average Fuel Economy standards (CAFÉ) continue to dominate the energy debate—issues that may, or may not, help the ultimate implementation of an energy bill this year.

Tax Incentives
The House of Representatives passed the energy tax bill H.R. 2776 that provides for 5-year extensions of the Production Tax Credits (PTCs) through 2012 for all qualified renewables. That bill includes ocean renewables for the first time; although the Energy Policy Act of 2005 (EPAct) did include ocean renewables in the Renewable Energy Production Incentives (REPI). REPIs can be seen as the equivalent of Production Tax Credits for municipal utilities that don’t pay taxes. The recent energy tax bill also provides for ocean renewable energy in Clean Renewable Energy Bonds (CREBS). CREBS provide bonds for municipal utilities as well; however, both the REPI and CREBS programs have suffered from continued underfunding since their inception.

The Senate energy tax bill was not passed last month. Many speculated that a Senate energy tax bill will pass prior to conference, but there is much to be negotiated with the House to establish a comprehensive bill that the President will sign into law.

Research & Development
The House of Representatives passed H.R. 3221 and the Senate passed S. 6, both of which contain the central Research and Development (R&D) provisions of their predecessor bills, H.R. 2036, introduced by Congressman Jay Inslee (D-Washington) and S. 1511 introduced by Senator Akaka (D-Hawaii), Senator Murkowski (R-Alaska) and Senator Snowe (R-Maine). For the most part, these bills provide $50 million per year over 5 years for research and development primarily for advanced marine renewable energy systems and technologies. The bills also include provisions for DOE to create National Ocean Energy Research Centers.

The House bill also includes Coastal Zone Management modifications including transmission studies funding and site assessments. The Senate bill includes Renewable Energy Construction Grants and provisions specifically for geothermal and ocean renewable energy in Alaska.

Adaptive Management Program and Programmatic Environmental Impact Studies
Two programs that were cut from the original Bills H.R. 2036 and S. 1511 were the Adaptive Management Program and Programmatic Environmental Impact Studies. The Adaptive Management Program would have provided low interest loans on an elective basis for companies that agree to contribute additional environmental data into the public domain. The Programmatic Environmental Impact Studies would have provided guidance on preferred siting areas and those areas where siting would be discouraged.

Regulatory Progress
As funding initiatives advance through the legislative process, regulators are finally moving to implement a system for siting new marine renewable energy technologies. In EPAct 2005, Congress authorized the Minerals Management Service (MMS) to develop regulations for siting marine renewable energy projects on the Outer Continental Shelf (OCS). Since that time, questions have arisen about whether MMS or the Federal Energy Regulatory Commission (FERC) have ultimate jurisdiction.

For over a year FERC and MMS have been negotiating a Memorandum of Understanding (MOU) to allocate authority on the OCS. Now that several developers have filed preliminary permit applications at FERC for projects that straddle the OCS and state waters, the need for resolution of this issue has taken on new urgency. Though an MOU was expected at the end of July 2007, as of this writing it has not yet been released.

Developers increasingly impatient about uncertainty caused by the lack of an MOU have been investigating the possibility of a legislative solution. As a consequence, companies are forced to hold off seeking funding for specific projects as financial institutions are loath to fund projects with so much risk within the permitting arena.

FERC plans to hold a meeting in Portland, Oregon in October to work with developers, resource agencies and other stakeholders on a proposal that would expedite siting of prototype and early-stage commercial marine renewable energy projects. Getting prototype and small-array projects into the water will generate data and reduce uncertainty about potential operating effects, so FERC’s efforts are regarded as a positive step forward.

So, what is the significance of all of this activity?

The level of congressional and regulatory activity is evidence that marine renewable energy is finally being regarded as an important potential contributor to our nation’s indigenous energy supply and can be a major help in combating climate change. Both funding and regulatory change are necessary components of advancing the marine renewables industry in the U.S.

Sean O,Neill is co-founder and president of the Ocean Renewable Energy Coalition and principal of Symmetrix Public Relations & Communication Strategies where he serves the non-profit, energy, and human resources sectors. He has provided public affairs and communications support for energy projects in 18 states during the past twenty years.