Washington Review

The Stella Group’s Scott Sklar reviews the current status of Washington’s energy policy landscape and how renewable energy may be influenced by the impact of the 9/11 tragedy, anthrax terrorism and the war in Afghanistan. Millions of dollars are at stake.

Washington D.C., 2001-11-21 [SolarAccess.com] In the aftermath of the September 11th tragedy, anthrax scares, and the War in Afghanistan – the Washington landscape has changed dramatically. On the visual side, Washington, D.C. has more cement barricades, blocked off streets, and armed security guards than I can ever remember in the thirty years I have lived and worked here. As a result of the anthrax evacuations of the Congressional office buildings, many Members of Congress in both the House and Senate are working from other buildings dispersed around Capitol Hill. From the policy perspective, it is also chaotic and hard to follow. Reducing the budget deficit has now been reversed by three large multibillion dollar votes to fund the war, reimburse the Washington-area and New York City, and bolster the airline industry. And they will be funding a myriad of homeland security issues from federalizing airport security; protecting reservoirs, nuclear power plants and transmission lines; and aide packages to our war a llies such as Pakistan. Budget and Taxes With all of these budget pressures, many of us thought the FY’2002 Energy & Water Appropriations budget that funds the renewable energy programs would be closer to the Bush Administration’s request to cut the overall program by $100 million. Yet the Conference Committee which reported out the Bill funded the renewable energy programs $21 million higher than last year at the $396 million level . Most line-items within the budget were level funded but the winners were Hydrogen RD&D $4 million increase over last year’s $27 million budget and Electric Energy Systems (which includes SuperConductivity and Distributed Power) which received an $11 million increase over last year. Note that neither of these programs are really renewable energy programs. The other winner in this budget was the Concentrating Solar Program that the Administration tried to cut by 50 percent and the Department of Energy recommendation to OMB for FY’2003 funding is $3 million to close out the program. But Congress funded the Photovoltaics, Concentrating Solar Power, and Solar Buildings at the $95 million level, a million dollars above last year, and the Conference report stated that the program should be funded at comparable levels. An interesting comparison of budgets is that the German parliament recently increased the biogas, geothermal, solar and wind RD&D programs by $60 million to $180 million which almost reaches the $251 million RD&D program the United States funds for the comparable programs. The tax bills have been subsumed by the revenue shift to the war and economic recovery. Tax bills dealing with removing the Alternative Minimum Tax (AMT) for US industry and subsidizing a broad swarth of US industry to aid them from the economic downturn has dwarfed most energy tax legislation whose prospects looked very bright before September 11th. It is still too fluid to predict exactly the outcome but it is more likely that a two year extension of the wind and closed-loop biomass production tax credit will be incorporated with an off-chance that the residential solar tax credit might be included because of its low cost. Energy Legislation and Electric Utility Restructuring What was a sure thing before September 11th looks murkier now and most experts in Washington believe that there is no chance for any energy legislation being passed before Congress adjourns for the holiday season. Upon their return after the New Year, it is an open question what Congress will have the stomach to do. Congressional Republicans have rallied around HR 4, an omnibus energy bill, that has a potpourri of energy subsidies from drilling for oil in the Alaskan National Wildlife Reserve, sustained insurance protection for Nuclear power plants, and a host of tax and funding benefits for coal, natural gas, renewable energy and energy efficiency. The new Chairman of the Senate Energy & Natural Resources Committee, Senator Jeff Bingaman (D-NM) will submit his new omnibus bill in the next few weeks presumably for the Democrats in Congress to rally around. The real political drama will be whether Congress and The Administration can stomach the additional revenue loss in such a Bill with larger federal deficits looming, and whether the regulatory protections will be dumped in the face of low energy prices overall. The outcome is subject to too many forces to give any accurate predictions, so stay tuned for the next column. The Sustainable Energy Coalition, the 35-member group composed of the national renewable energy and energy efficiency trade associations, advocacy and environmental groups, and analytical organizations, had issued its FY’2002 Energy BluePrint” to help lay out the options for an aggressive mix of energy policies to promote an energy efficiency and renewable energy http://www.sustainableenergy.org. Both the Union of Concerned Scientists and the Natural Resources Defense Council released their own national energy plans to add to the debate. Obviously, the Bush Administration, Congressional Republican leadership, and the large energy and business associations do not support the goals of these energy plans and studies put forth by the Coalition, NRDC and UCS. In fact, the American Gas Association appears to be changing its historic alliance with energy efficiency and renewable energy organizations by pulling out of some coalitions with them if they do not support HR 4, which is unlikely these groups could support. While tax incentives and interconnection/net metering have faired well in these omnibus energy proposals offered by Republicans and Democrats, the Renewable Energy Portfolio Standard (RPS) and the System Benefit Trust Funds seemed to have “no” political steam – that is till lately. A Coalition of clean energy groups has just engineered a letter signed by over 25 Senators supporting a Renewable Energy Portfolio Standard and interest in the Benefit Trust Funds is growing more out of economic concerns and impacts on the “under-served” more than as a tactic to insure emerging technologies are protected in the transition under a deregulated utility environment. But again, these are issues reserved for Congressional considerations next year. —- The Congressional Session, when taking into account the Thanksgiving and Holiday recess, has just four weeks left – so no one should have high expectations. But at the end of every legislative session, they have what’s called “Christmas Tree” bills which add on the wish list of many groups and legislators. Let’s hope we all share in the holiday cheer. Author Access Scott Sklar is founder and President of The Stella Group, Ltd., a strategic marketing and policy firm for the distributed generation industry located in Washington, D.C..

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