Key Energy Report Scant on Renewables

Last week, the independent National Commission on Energy Policy (NCEP) released their key findings from over two years of research aimed at identifying and seeking solutions to U.S. energy needs. Their consensus may have pleased some major players in the energy game but has left most in the renewable energy community disappointed.

An organization comprised of twelve clean energy leaders, who each have over 25 years in the field, labeled the study a “well intentioned, but misguided attempt to balance U.S. climate change emissions goals with reliance primarily on traditional energy resources.” Members of the NCEP commission plan to take their ideas from the report and advocate before Congress, the Administration, the States and industry for an end to the energy stalemate. Congressional failure to pass comprehensive energy legislation during the Bush Administration’s first term is the most telling example of this stalemate. The NCEP report contains detailed policy recommendations for addressing oil security, climate change, natural gas supply, the future of nuclear energy, and other long-term challenges. Whether these recommendations are the best way forward is highly debatable. The clean energy group expressed particular disappointment in an area of criticism known all too well by advocates of both renewable energy, and the environment: increased reliance on coal and nuclear. “While lower carbon emissions from coal conversion are laudable, public health risks from mercury and particulates, water resource depletion from mining and conversion, and worker risk from accidents and health (brown and black lung) — add up to critical issues not addressed by the study,” said the group in a collective reaction statement. Members of the clean energy group — including Donald Aitken, Deborah Bleviss, Ken Bossong, Joel Gordes, William Holmberg, Scott Sklar, Carol Werner and Jack Werner — were also quick to point out the increased national security risks associated with increased reliance on fossil and particularly, nuclear energy approaches. “Adding more nuclear power generators at a time of heightened global terrorism, exposes to the public to extreme risks that are completely unwarranted,” the group said. They emphasized that maximum use of energy efficiency tied to the maximum use of renewable energy is the only way to insure climate change emissions goals are met wisely while maintaining U.S. homeland security, public health and safety, and a more geographically and technologically diverse energy system that is more agile and cost effective. Solar Down Representatives for the solar energy industry felt particularly chafed by the National Commission’s report. The Solar Energy Industries Association (SEIA), the national trade association of the U.S. solar industry, said the NCEP consensus misreported some basic facts on current solar market trends in the United States. SEIA noted specifically that the report did not include electricity generation from rooftop solar energy systems installed on homes and businesses throughout the U.S. “Consumer-owned rooftop photovoltaic (PV) systems are the fastest-growing sector of the U.S. solar market,” said Rhone Resch, executive director of the Solar Energy Industries Association (SEIA). “These distributed clean technologies have high value for their ability to generate electricity at the point of consumer use. Leaving out solar rooftops is like doing a telecommunications usage survey and leaving out cell phones.” Including rooftop systems, the U.S. has approximately 185 MW of grid-connected PV capacity, four times greater than the number cited in the NCEP report, according to SEIA. The organization estimates that more than 80 MW of grid-connected PV were installed in 2004 alone. Given the burgeoning market for rooftop PV, the trade group questioned the NCEP report’s preference for an existing 1.8 cents / kWh production tax credit (PTC) as a vehicle for commercialization of solar energy. “For rooftop solar, a 1.8 cent production tax credit is just not worth the transaction costs,” said Colin Murchie, SEIA Director of Government Affairs. “In large-scale generation – concentrating solar thermal energy, for example — a production credit makes sense. But you can’t pay for a home system by having the IRS come out and read your meter to garner $40 a year.” As an alternative, the U.S. solar industry is calling for simple, sustained, annually declining tax credits for homes and businesses that purchase solar energy systems. This mechanism would accelerate the deployment of solar energy systems, make solar cost-competitive with conventional energies by 2015, and stimulate over 260,000 jobs in the clean energy industry by 2030. The only silver lining SEIA could find in the NCEP report was a call for $300 million annually for solar R&D by 2010. “With the global solar industry doubling in size every two years, maintaining U.S. technology ownership is more critical than ever,” Resch said. “Increasing the solar budget to $300 million annually will allow the U.S. to leverage our research and development excellence – and grow solar markets at home and abroad.” Wind Power Up While the solar industry was largely disappointed with the NCEP’s recommendations, the wind power industry heard the magic words they wanted to hear: Long term PTC extension. Tom Gray, deputy executive director for the American Wind Energy Association, said his organization was pleased with the commission’s recommendations to extend the PTC for renewable energy sources for four years through the end of 2009. “U.S. wind generation has quadrupled in size in the past five years, and could triple again by 2009 with a long-term extension of the credit, putting it well on the way to generating 6 percent of the nation’s electricity by 2020, something we believe is an achievable goal,” Gray said. Unlike the solar photovoltaic industry, the wind power industry is particularly well-suited to take advantage of the 1.8 cents / kWh PTC. In fact, every year the PTC has been in effect, the wind power industry has boomed. Unfortunately, Congress has often allowed the credit to expire, leading to start and stop cycles in the industry. For example, this year has been a weak year for wind due to an expired PTC, but 2005 will turn it all around since a short term PTC extension through next year has already been signed into law. While this short term fix is important to get the massive machinery moving again, the industry craves long term consistency almost to the exclusion of other goals. There were other notables for AWEA in the NCEP findings including support for the Federal Energy Regulatory Commission’s efforts to speed the integration of variable resources like wind into the nation’s electricity system, along with increased funding for renewable energy research, development and early deployment. Environmental Mixed Speaking for the environmental community, the Natural Resources Defense Council (NRDC) had mixed feelings on the consensus report, calling it a major step forward in many areas, but also reflecting outdated thinking in several key areas. “It is very big news that everyone involved agrees on the need for concrete limits on global warming pollution as soon as possible,” the NRDC statement said. “This is a major step forward in the discussion. Commission members did not agree on limits strong enough to get the job done, however.” In terms of the “outdated thinking” the NRDC cited the NCEP report’s section on nuclear power which suggests costly government subsidies to jumpstart the stalled energy industry. “Big federal subsidies for constructing new nuclear power plants would be a giant burden on the American taxpayer, especially since nuclear power plants continue to have unresolved issues regarding nuclear proliferation, safety risks and waste disposal,” Wesley Warren of the NRDC Advocacy Center said. “What we need today is a sensible energy policy that keeps our economy rolling without compromising our national security, our health, or the oceans and landscape that are our national endowment. As the report makes clear, Congress and the Bush administration have not gotten this job done.”
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