Renewables Wait as Energy Bill Stalls

Thanks partly to a filibuster from Senator Charles Schumer (D-NY), the energy bill faced its first major defeat in the Senate last Friday. Massive subsidies to the major energy industries and liability protection for the manufacturers of the gasoline additive MTBE were the main sticking points. The renewable energy industries must now hope for a successful vote in the next few days before the Senate begins the holiday break.

Washington D.C. – November 24, 2003 [] Thanks partly to a filibuster from Senator Charles Schumer (D-New York), the energy bill faced its first major defeat in the Senate last Friday. Massive subsidies to the major energy industries and liability protection for the manufacturers of the gasoline additive MTBE were the main sticking points. The renewable energy industries must now hope for a successful vote in the next few days before the Senate begins the holiday break. The bill’s major defeat last week took place when the Senate invoked a cloture vote, which effectively would have ended debate on the legislation and forced a final vote on the bill. The original vote was 58-39. Senate Majority Leader Bill Frist then changed his vote to “no” which will allow him to call another cloture vote. The final tally of 57-40 left the supporters down by three votes and the energy bill debate will continue this week with Frist expected to exercise another cloture vote in the next few days. Despite major subsides to the fossil fuel, and nuclear industries, the Solar Energy Industries Assocation (SEIA), the Geothermal Energy Association, the American Wind Energy Association, and the National Hydropower Association, are explicitly supporting passage of the Energy Bill, due to the solar tax credit, (including the first residential tax credit in a generation and the precendent-setting production tax credit). There are also programs for Federal deployment and assisted state deployment of photovoltaics (PV), that embrace of solar technologies as a means of increasing transmission reliability, and potential advances in net metering and interconnection. – Solar – More specifically, the legislation includes provisions designed to speed deployment of solar power across America, including: – A 15 percent tax credit for homeowners who purchase residential solar electric and solar hot water systems, capped at $2,000 per system. Sponsored by Rep. J.D. Hayworth (R-AZ) and Sen. Wayne Allard (R-CO), the provision was a “Bush 2000” campaign promise. – Authorization of a $300 million program to deploy solar electric systems on federal buildings, sponsored by Rep. James Oberstar (D-MN). – A program establishing a 40% federal cost-share to help states and localities deploy clean energy systems, sponsored by Rep. Lynn Woolsey (D-CA). – A federal government renewable energy purchase program starting at 3% of electricity and scaling up to 7.5% by 2011, with double credits for on-site generation, as well as electricity generated on federal and Indian lands. – New rules requiring states to establish “net metering” rules that can make it easier for solar and other distributed clean energy users to connect to the utility grid and sell their excess generation to their local utilities. States are also encouraged to establish “time of use” metering that recognizes the enhanced value of mid-day power like solar; and the bill acknowledges that solar and other distributed technologies enhance transmission reliability. – Expansion of the Renewable Energy Production Tax Credit to include solar power, a provision championed by Sen. Harry Reid (D-NV). – Increased authorizations for renewable energy R&D programs. – A $210 million authorization to produce hydrogen from concentrating solar power (CSP). Biofuels and Biomass Perhaps the biggest winners in this energy bill are the biofuels and biomass industries which gained strong support from midwestern lobbyists and legislators. The bill would… – Create a Renewable Fuel Standard (RFS). This program would greatly expand ethanol and biodiesel production. In 2003, ethanol production is expected to reach a record high 2.7 billion gallons. Under the bill, ethanol would grow from a minimum of 3.1 billion gallons in 2005 to 5 billion gallons in 2012. Rural employment and farm income would rise as ethanol production rapidly expands. – Provide New Economic Opportunities. Ethanol produced from cellulosic feedstocks, ranging from forest residues and farm wastes to dedicated crops, would receive special incentives in the bill. This would create a new industry that would generate new economic opportunities for agriculture and rural America. – Increase Demand for Ethanol. MTBE is a fuel additive that enhances octane and oxygen in gasoline but has been found to contaminate ground water. The bill phases MTBE out of the gasoline pool by 2015. The MTBE phase-out would create market demand for ethanol for its octane and environmental benefits. – Change Tax Law. Another important part of the Energy Bill supports renewable fuels through changes in tax laws. For example, the bill expands the small producer ethanol tax credit and allows cooperatives to receive the benefit. This would foster the continued expansion of small ethanol plants, where farmers as owners will see income generated through value-added processing of their crops. – Expand the Renewable Resources Tax Credits. This bill also extends and expands the tax credits for energy produced from renewable resources. This would increase the incentive to use wind, solar, biomass and agricultural wastes, as the feedstocks produce power. Using these new sources to produce energy would generate new economic activity in rural areas. – Create a Biodiesel Tax Credit. The bill also creates an excise tax credit for biodiesel. Biodiesel from virgin oils, like soybean oil, get a $1 credit for each gallon of biodiesel marketed. This tax credit would increase the economic attractiveness of using biodiesel as a lubricity additive or alternative fuel. – Extend the Ethanol Excise Tax Exemption. Under the bill, ethanol receives an extension of its excise tax exemption recognizing its benefits in energy security and the environment. This extension fulfills the Presidentýs campaign promise and reiterated in the Administrationýs National Energy Policy. – Wind – The tax title of the legislation contains a number of important provisions for the wind industry, according to the American Wind Energy Association (AWEA). Included is a three-year extension of the wind energy production tax credit (PTC), relief from the Alternative Minimum Tax (AMT) for a period of four years for companies who gain access to the PTC, and a new investment tax credit for the purchase of small wind systems of 15 percent of system costs, capped at a maximum credit of $2,000. – Geothermal – The legislation would also benefit the Geothermal industry in two major ways. The first by expanding the Section 45 PTC to include new geothermal power facilities. This tax provision, first adopted in 1992, has fueled the rapid expansion of wind power in the US. Under the new energy bill, new geothermal facilities placed in service by January 1, 2007 would receive a 1.8 cent per kWh tax credit during their first five years of operation. The second provision GEA highlighted would streamline and update the laws governing leasing and permitting on public lands. The proposal closely tracks legislation introduced by Representative Jim Gibbons (R-NV), H.R. 2772, the John Rishel Geothermal Steam Act Amendments of 2003. – Hydropower – According to the National Hydropower Association (NHA), the industry stands to gain from changes to hydropower licensing procedures and regulations. “Failing to act on energy legislation, among other things, will allow the hydropower licensing process to continue to operate in a dysfunctional, contentious, costly and burdensome manner, resulting in a degradation of the many benefits which the hydropower resource provides to millions of Americans,” said Linda Church Ciocci, executive director of NHA. “Passing H.R. 6, however, will resolve the largest issue facing hydropower, encourage the development of unused hydropower capacity and allow us to rely more on this valuable, emissions-free, domestic and renewable resource. We remain hopeful that Congress will get the job done.”


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