Energy Bill Passes House, Faces Fight in the Senate

At a time of record high gas and energy prices, the U.S. House of Representatives passed a broad energy bill, an $8 billion dollar package of legislation aimed at increasing domestic supplies of energy. While the bill targets the majority of its tax cuts to the traditional energy industries — a point not lost on Congressional Democrats who held little sway in crafting the package — it does include some provisions to promote renewable energy.

The comprehensive legislation (H.R. 6) includes a measure called for by U.S. Representative Charles F. Bass (R-NH), who serves on the House Energy and Commerce Committee, that would enact a rebate program for residential and business investments in renewable energy systems. It will cover up to 25 percent, or $3000, of the cost of a solar thermal, solar photovoltaic (PV), small wind turbine, geothermal (geoexchange), small hydro, or biomass system with a high enough level of thermal exchange, like a wood-pellet stove. Rep. Bass himself recently upgraded to a pellet stove at his New Hampshire residence in Peterborough, an experience that partly affected his support for this legislation. “By deferring some of the costs of installing these state-of-the-art systems, we guarantee that more people will have access to more affordable, environmentally sound, and domestically produced energy options,” Rep. Bass said. The rebates suffer from a critical weakness, however. They are not crafted as a secured tax credit but rather rely on funding to be appropriated by Congress each year, an arguably daunting prospect in that fiscally-constrained environment. “As a tax credit, it’s a step forward, but as a grant program, it would be irrelevant,” said Colin Murchie, director of Government Affairs for the Solar Energy Industries Association (SEIA). Many an admirable and well-intentioned bill has been passed by Congress yet failed to fulfill on its promises due to a lack of guaranteed, and consistent, funding. Tad Furtado, legislative aide for Rep. Bass, acknowledged this challenge and said they would work to have the bill’s structure changed from a grant program to a tax-based structure when the Senate takes up the comprehensive energy bill later this summer. “Our hope is that we will be successful in getting it covered as a tax rebate system,” Furtado said. “It’s just a lot easier for a lot of consumers.” Should the effort fail in the Senate, Furtado said Rep. Bass could exert influence through his position on the House Energy and Commerce Committee to secure funds for the bill. Senate Now Decides the Final Energy Bill The funding situation presented by the bill from Rep. Bass — however it resolves itself — reflects a larger concern with the energy bill. The bill, which the House passed on margins of 249 to 183, is merely a starting point. The renewable energy rebate plan, along with every other item in the energy bill, won’t become law unless a number of steps occur: The Senate must pass their own version, a final conference committee must then reconcile both the Senate and House version and then its off to the President for a signature. This is the fourth time in as many years that the House approved a similar version of the energy bill, only to see it fail on the Senate side of Congress. The Senate’s version of the energy bill is still being finalized and is a stronger package for renewable energy. Senator Lamar Alexander (R-TN) is proposing a five-year 30 percent investment tax credit for both residential and commercial solar PV and solar thermal projects. The bill would be capped at $7500 for residential projects and unlimited for commercial-scale projects. With items like Rep. Alexander’s bill, the Senate version will likely be the better bill for renewable energy. But it’s also where the real fight takes place on issues like allowing drilling in the Arctic National Wildlife Refuge (ANWR), and liability protection for the manufacturers of MTBE, a known groundwater pollutant afflicting many U.S. states. Both items were approved in the House bill. “The House version is cut way back, this will not ultimately be the final tax package,” Murchie said. “What we’ve seen on the house side is on the lower end of what’s realistic. We’re in the same position as almost anyone hoping for a tax credit. All the tax credits will have weak House versions and a stronger Senate version. That’s where the real battle’s going to be.” In essence, the U.S. House passed a trimmed down bill and is leaving the Senate to fight for the final outcome. Traditional renewable energy advocates are not the only ones looking to see more clean energy provisions in the Senate version than was included in the House bill. The Bush Administration, which is regularly passed off by critics as being too favorable to the traditional energy industries, indicated that there are not enough renewable energy provisions in this recently passed house version. The Bush Administration’s official reaction to the House version of the energy bill states the following: “The Administration also is concerned about the significant direct and potential cost of H.R. 6. The President’s 2006 Budget contained tax incentives totaling $6.7 billion over ten years, dedicated to alternative and renewable fuels, conservation, energy efficiency, and emissions-free energy. The tax incentives in H.R. 6 exceed the President’s Budget and do not contain the President’s proposed tax credits for renewable power sources such as wind and landfill gas, for businesses that invest in combined heat and power property, or for hybrid and fuel-cell vehicles.” At a press conference held yesterday, White House Press Secretary Scott McClellan went a step further, expressing concern over tax cuts directed to the oil and gas industries which are thriving due to the high costs of gasoline and energy. “(The President) doesn’t believe that with the price of oil around $50 a barrel, that oil and gas companies need any incentives at this point,” McClellan said. “Now, we do have tax incentives in our plan, and we believe those ought to focus on renewable sources of energy and increasing energy efficiency.” It’s now up to the Senate to decide if items like the rebate bill secured by Rep. Bass, or the strong tax-credits proposed by Rep. Alexander are included in a final Senate version. And even if the upcoming battle over drilling in ANWR and MTBE manufacturer shield legislation doesn’t keep the bill down like it has done in the past, the two versions will still have to go on to a secretive, behind-closed-doors finalization process. “If it passes, it all disappears into conference. And it’s all smoky rooms after that,” Murchie said. For more information on Energy Bill items, see the following links below.


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