Brick Bats and Fantasy – Washington Report 2002

In his ‘Washington Report’ to readers, Scott Sklar cuts through the political smoke screen and gives us a clear view of the many players positioning themselves and their energy proposals.

With President George W. Bush and Senate Majority Leader Tom Daschle exchanging political broadsides on the economic stimulus package, the pre-election confrontational tone has been set in Washington, D.C. as Congress opens. The political parties are positioning themselves for the upcoming November general elections which could change who controls the House of Representatives and the U.S. Senate. Congress left Washington, D.C. without passing an economic package due to the political meltdown. This political posturing also allowed the extension of the wind and closed-loop biomass production tax credits to expire. While most political energy watchers agree that an extension will pass sometime this Spring, no one is willing to predict the length of the extension, or if anything else will be added from the portfolio of renewable energy and energy efficiency bills in the offing. Daschle Introduced Mixed Bill Daschle did introduce his own energy bill in December which included the Democratic response to the House-passed energy bill H.R. 4. As expected, the Democratic bill did not support drilling in the Alaskan National Wildlife Refuge (ANWR) but the bill did support hundreds of millions of dollars of incentives for traditional energy as well. Surprisingly, the bill does not include the residential solar tax credits or the building efficiency credits proposed by the administration and congressional Republicans respectively. But Daschle’s bill also included a Renewable Energy Portfolio Standard, federal procurement targets, incentives for schools and Native American tribes, and net metering. No one is sure whether Congress will pass an energy bill in 2002. In fact, many pundits are saying that except for some “must pass” issues regarding tax and some non-controversial regulatory issues, with energy prices low — there will be no bill. This prediction may be true if other issues with more political mileage in this era of pre-election confrontation takes the front stage. Congress also left the FY 2002 budget for renewable energy deeply hobbled, not only with a five percent rescission (across-the-board cut) but also with a $10 million cut from the renewable accounts to beef-up the Super Conductivity RD&D account through a dubious conference report line-item in the Defense Appropriations Bill. Capital Hill supporters are checking to see if that is a legal ploy or not. Add to this, Congress included about 100 line-items in virtually every facet of the federal RD&D program, so you have a very controlled budget by Congress. Good R& D News for Concentrated Solar Power Some good news in all of this prevailed. Despite of the Department of Energy, making a decision to zero-out the Concentrated Solar Power RD&D program, the U.S. industry attracted US$90 million in private investment last year and with the European and Japanese RD&D programs in this area is going up. Congressional advocates included report language in the FY 2002 appropriations bill to maintain the solar RD&D programs (concentrated solar power, photovoltaics and solar buildings) at essentially the same levels of the prior year. Congress also asked for DOE to submit a formal report on how to implement a 1000 megawatt deployment program in the southwestern United States for concentrated solar power. The real test will be if the recent positive technical peer review of the concentrated solar program will be parlayed to the Hill, or buried in political mumbo jumbo. This is not the only DOE program being considered to be lowered in FY 2003. Rumors are that the geothermal RD&D program and the DOE Industries of the Future RD&D program which is funded by the Interior Appropriations bill, are being considered for a ramp down. Hydrogen Initiative and Support for Hybrid Vehicles The President made his State of the Union address earlier this month and released the FY2003 budget shortly thereafter. News of a new hydrogen RD&D initiative followed the administration’s press conference with the big three automakers. The administration vowed not to push for mileage standards and expressed hope for the development of fuel cell cars. Washington, D.C. based environmental groups, while supporting hybrid vehicles and fuel cell powered cars, attacked the move as being shortsighted in giving up potential large gains to cut petroleum imports that can be made this decade. But this was no surprise for Washington energy veterans who didn’t expect the administration to back the Clinton/Gore programs or CAFE standards promoted by environmental groups. But Daschle is ready to bring up the energy bill later this month for Senate discussion. Senator John Kerry (D-MA), a likely Democratic presidential contender, introduced his own energy bill the first week Congress came into session this January. His bill was an aggressive energy efficiency and renewable energy bill including most of the requests from the Sustainable Energy Coalition, the Washington, D.C.-based consortium of energy efficiency and renewable energy trade associations, think tanks, advocacy and consumer groups, and the national environmental groups. The “Green Group”, a smaller coalition of the major national environmental groups also seemed refreshed by the Kerry tactic. Environmental Groups Weigh In On another front, the Green Group is making a “full court press” for a Renewable Energy Portfolio Standard (RPS). Led by the Union of Concerned Scientists with very active support by the Sierra Club, USPIRG and others. The activity represents the first renewable-energy focused action by these groups to influence the outcome of an energy bill for some time. The solar and geothermal industries are pushing for some kind of portfolio within the portfolio standard so that the RPS insures all renewables will be serious options. The Sustainable Energy Coalition is pushing for a broader strategy beyond the tax and budget issues, for not only an RPS, but a national cost-shared (with states) System Benefit Trust Fund to support emerging technologies, consumer disclosure on energy bills of the mix and emissions, and transmission interconnection and net-metering at the user level. Only disclosure and net-metering seem to enjoy bipartisan support. But the real issue is what can get through a hotly partisan Congress. Most energy experts, particularly in the face of the Enron debacle, don’t see any move toward a comprehensive energy bill envisioned by former Senate Energy & Natural Resources Chairman Frank Murkowski (R-AK) and President Bush’s team led by Vice President Dick Cheney. But tax incentives, as part of either an economic or energy package, appears likely to have political legs. Primarily because tax policy is not controversial in this area, the traditional energy industries give big political contributions, and Congress can show it is moving on energy without either side giving up any political points. Political Debate The President and Congress have already accepted the fact that the FY 2003 budget will be back to deficits with the War and economic recovery as the rationale. So the real issue is whether the renewable energy industries are postured to win their piece of the pie. Again, the wind and closed-loop biomass tax credits seem assured for extension — but the big question is still “how long?”. Enhancements for other renewables and efficiency beyond the residential solar tax credits are more “iffy” and depends on the overall political environment, luck, and how high in revenue loss the House and Senate tax committees will stomach. Beyond Congress, the Administration in its May 2001 National Energy Strategy recommended an initiative to open the use of federal lands and resolve barriers that deter greater use of renewable energy. Interior Secretary Gale Norton hosted an impressive full-day meeting in mid-November with senior officials from a wide range of government agencies. A solid dialogue has been built dealing with barriers and opportunities with no concrete action yet. This seems the one area where follow-though is being pursued on the Vice President’s recommendations. The FY 2003 budget action began in February. adminstration appointees within the Department of Energy seemed pleased that the DOE Renewable Energy and Energy Efficiency budgets will be at comparable levels passed by Congress last year. Detractors note that increases in the State weatherization programs will be in place of increased energy efficiency RD&D, and increases in the non-renewable activities within the Renewable Energy RD&D budget will increase sharply undercutting the biomass, geothermal, solar and wind RD&D programs. Nearly a third of the Renewable Energy RD&D program is for non-renewable RD&D activities, an alarming trend noted by some Washington clean energy advocates. Author Access: Scott Sklar is President of The Stella Group, Ltd., a strategic marketing and policy firm for advanced battery, energy efficiency, fuel cells, heat engines and waste heat systems, microgeneration, modular biomass, photovoltaics, solar thermal and wind energy. Scott can be reached by email through the link below.


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