Lots of Talk – Not Much Action

This week’s RE Insider is Scott Sklar, president of Washington, D.C. based The Stella Group. In his article, “Lot’s of Talk, Not Much Action,” Sklar takes on the United States Congress for inaction regarding Renewable Energy in the Energy Bill currently under consideration. As always, Sklar’s commentary is vibrant, engaging and based on experience.

Facing no domestic electric brownouts or full-scale Mideast War, Washington policymakers have gone complacent again on energy. Even while many energy experts are warning that the electric supply and distribution system is not destined for lower or stable prices, and oil and natural gas imports are increasing – there is very little consensus between political parties, for they are all posturing for the November elections. Basically, three parallel sets of actions are being played out in the nation’s capital. First, an energy bill is in a conference committee of the House and Senate – where a group from each political party in the House and Senate from the relevant energy and tax committees are meeting to reconcile language. Second, energy appropriations for the House and Senate have passed each Committee, and after a floor vote in September, will be conferenced (numbers and language reconciled) for a final vote to begin the October 1 fiscal year (FY’2003). Third, the Federal Energy Regulatory Commission (FERC) has requested comments for a proposed ruling on interconnection issues. Appropriations: The House Energy and Water Appropriations Subcommittee passed a bill that is equal to last year in funding level of US$396 million, and US$11 million below the President’s FY’2003 request. That may sound good at a time when the US budget deficit is back in the red, but actually Renewable Energy spending is lower in this budget than anytime since the 1980s. The Congressional action follows a trend supported by the present Bush Administration and the prior Clinton Administration which has increased non-renewable research and development in the Department of Energy’s Renewable Energy program. That’s right, our Renewable Energy tax dollars are being spent on non-renewable research, development and demonstration (RD&D). Biomass and Geothermal RD&D are down from last year’s appropriation by over US$8 million, and while the Solar RD&D budget is the same overall, actually Concentrated Solar Power has been cut by US$8 million. So if three of the five core Renewable Energy research accounts got slashed, what got increased? Electric Energy Storage which comprise the superconductivity technologies research program received an additional US$7.5 million and another US$5.5 million went to Program Support and Implementation which generally goes to contractors. Some interesting earmarks, which are directives that Congress dictates, also adds to the non-renewable programs. In the biomass RD&D programs US$5 million is directed to non-relevant programs including for the Center for Plant BioTechnology which lobbies for its US$2 million every year. The US$4 million Renewable International budget (whose budget does not primarily support Renewable Energy) now has a directive lobbied by the electric utilities for US$2 million for International Utility Efficiency Production, a failed program pushed by certain utilities under the Clinton Administration. Hydrogen RD&D received a US$4.8 million increase but note that 85 percent of this program is focused on non-renewable RD&D issues. The recent program review had significant participation from the coal and nuclear power industries. Energy and Water Appropriations House Recommendation (in millions of dollars) for FY’2003 Biomass/Biofuel $86.0 Geothermal $26.5 Hydrogen $35.476 Hydropower $6.487 Solar $87.625 Wind $44.0 RE Support $19.866 RE Indian Support $6.3 Electric Energy Sys $70.447 Program Direction $14.592 According to my calculations, a minimum of US$118.7 million of the US$396 million proposed by the House Committee for Renewable Energy RD&D program goes for non-renewable energy RD&D, but it’s more likely that at least one-third of the overall renewable budget is for non-renewable activities. The United States Senate Energy and Water Appropriations Subcommittee marked up their FY 2003 bill for Renewable Energy R&D which was US$448 million and US$52 million above the House Committee’s US$396 million, and US$41 million above the Bush Administration request of US$407 million. Solar building technology research got a stiff increase of US$8 million for a recommended level of US$12 million to fund solar building technology development including enhanced support to the zero energy building (ZEB) program. Yet reports from DOE, where the ZEB program has been moved to the Buildings RD&D section, is that renewables will have a very low priority within that RD&D program. The Senate Appropriations Committee also recommended US$3 million for the Navajo electrification project which is not Renewable Energy but electric line extension, and another US$3 million to NREL for a southwest energy, which was not very clear whether the study is to evaluate Renewable Energy, or not. Concentrating solar power received a million more than the House. At US$6 million the Department of Energy was directed to begin implementation of a program to deploy 1000 MW of new solar capacity supplying the Southwestern United States by the year 2006. Within the US$100 million for biomass/biofuels energy systems which is a combined RD&D program of both the power systems (electricity) and transportation (fuels) RD&D. The Senate Committee directed not less than US$27 million be used for a competitive solicitation for Biomass Integrated Biorefinery Process Development as well US$5 million to work with regional governors’ organizations to make the Regional Biomass Energy Programs even more successful. The same earmark of US$2.5 million for the Consortium for Plant Biotechnology Research, a consortium of 34 universities and 33 agribusinesses and trade associations received their Senate funding too. Wind RD&D rose to US$50 million for wind to accelerate development and deployment of low wind speed turbines. The Wind Powering America initiative was also directed to be continued at last year’s funding level The Renewable Energy Production Incentive (REPI) received US$5 million for the Renewable Energy public power projects. The Senate Appropriators funded US$6.5 million for the DOE International program, and stated, ”The Committee supports efforts to increase international market opportunities for the export and deployment of advanced clean energy technologies–end-use efficiency, fossil, renewable, and nuclear energy technologies.” Just more proof that Renewable Energy programs are being used to promote non-renewable technologies. Geothermal RD&D received US$37 million for geothermal technology development including GeoPowering the West. The Committee expressed concern that the Department of Energy appears to be cutting funds for these important research efforts prematurely. According to the Committee, The decision to cut funds for geothermal technology development flies in the face of the recommendations of the President’s Committee of Advisors on Science and Technology (PCAST) made in 1997. The PCAST report recommended an escalation of funding over a short period of time to US$50 million – US$60,000,000. Hydrogen research, while increased, was directed by the Senate Committee to focus more on renewable-based RD&D. Senator Reid (D-NV) and the Chairman of the Subcommittee on Energy & Water Development has been a long time hydrogen and Renewable Energy supporter. The Subcommittee strongly supported research and development of hydrogen technology and what was important is that they noted that hydrogen is not an energy source (which most Members of Congress do not know). The SubCommittee noted, “recognize it to be a highly promising and cost effective energy carrier and recommended US$45 million. The Committee continues to encourage demonstration of a dedicated fleet of vehicles, including buses, powered by hydrogen, Industrial consumption of hydrogen, especially by the petrochemical and fertilizer communities is large and growing. The rate of petrochemical hydrogen consumption necessary for gasoline-powered vehicles will accelerate as global reserves of sweet crude oil diminish. The dominant resource for hydrogen production today is natural gas whose reformation into hydrogen and carbon dioxide contributes significantly to atmospheric greenhouse gases. Moreover, natural gas reserves are insufficient to service simultaneously domestic heating and electricity requirements, industrial hydrogen consumption, and future demands by hydrogen powered vehicles and other fuel cell applications that would accompany the future `Hydrogen Economy.’ Accordingly, the Committee supports investment in exploration of feasible concepts for renewable production of hydrogen with no greenhouse gas emissions and no other waste products by adding US$2 million for an engineering study and evaluation of solar-powered thermo-chemical production of hydrogen from water. The Senate Committee also recommended US$7.4 million for Hydropower RD&D and US$9 million for Indian Renewable Energy Resource Development. The Committee recommendation includes US$50 million for high temperature superconductor research and development and US$25 million for distributed energy systems, both which are primarily non-renewable RD&D programs. Energy Bill: The Energy Bill has been stripped of its most controversial issues. The Alaskan National Wildlife Reserve (ANWR) drilling is out of the Senate Bill, as are mandatory increases in automobile fuel efficiency, known as “CAFÉ.” A watered-down Renewable Energy Portfolio Standard and Net Metering provisions are in the Senate Bill. The tax provisions in both bills are similar, giving conventional fossil fuel and nuclear industries over US$8 billion in tax subsidies for mature industries with mature technologies. Renewables and efficiency are destined to receive about US$4 billion in incentives, which may be less valuable if the conventional energy resources receive their additional subsidies. The House/Senate Conference Committee schedule as outlined by Representative Billy Tauzin (R-LA) who is Chairman, of the House Energy and Commerce Committee, plans to send a final conference report to the House and Senate by September 30. The joint staff agreement is expected by August 30, which will likely be ratified by the House and Senate conferees in their first meeting after the Labor Day recess. The issues expected to be agreed to by the first meeting are: natural gas and oil pipeline safety and all secondary issues such as the nuclear industry’s Price-Anderson insurance extension, and nuclear, clean coal, and energy efficiency other than CAFE, and energy R&D. Another joint staff agreement is proposed by September 9 and may be ratified by the House and Senate conferees at this second meeting. The issues to be covered are: electricity (other than the Renewable Energy portfolio standard (RPS)) The final joint staff agreement is proposed to be completed by September 16, thus allowing House and Senate floor debate by September 23. The sticking points between the Republicans and Democrats are drilling in ANWR, oil and gas subsidies, climate change requirements, Renewable Energy portfolio standard and some ethanol tax issues. But most believe the contentious issues will just drop out of the Bill, so Congress can show some sort of “product” in November. And hey, if they can’t deliver for the big energy industries, the Congress and political parties can fundraise from these interest groups this election cycle as a ploy to fix it when they get elected in November. Democracy in action. Federal Interconnection and FERC The Federal Energy Regulatory Commission (FERC) is responsible for regulating energy issues between states primarily relating to interstate electricity transmission and natural gas pipelines. FERC is headed by the former Texas Public Utility Commission chairman Patrick Wood, whose commission supported Renewable Energy and the right of interconnection. FERC asked for comments in July for on FERC’s Interconnection NOPR — Docket No. RM02-1-000 – which wanted comments under 20 MW and was open for additional comments under 2 MW. The national Renewable Energy trade association and advocacy groups filed comments. The real question is whether FERC will supercede the Congress in driving a deregulatory agenda – and go further than Congress has been willing so far in the Energy Bill. My bet is that FERC will take the lead. What is every clear from all the political machinations over energy, is that the United States really does not want to significantly cut energy imports, significantly reduce greenhouse gas and traditional regulated emissions (Nox, Sox and particulates), nor does the US want to command global markets in these new emerging technologies. The Energy Bill is a status quo bill promoting better iterations of conventional energy applications. The Appropriations bills have a similar status quo approach. The real activity appears to be at the state and local level that are significantly pushing Renewable Energy and energy efficiency. And those initiatives will be covered in an article later this year. About the Author Scott Sklar is President of The Stella Group, Ltd. in Washington, D.C. He can be reached at: solarsklar@aol.com
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