Will the Renewable Energy Tax Package Get Signed into Law?

[Originally published at CleanTechnica on 4.11.08]By a rather impressive tally of 88-8, the U.S. Senate approved The Clean Energy Tax Stimulus Act (S.2821) as an amendment to HR.3221, which aims to mitigate the economic impact of the current housing crisis.

The renewable energy tax credits were slipped into a housing bill that that did not end up looking the way its lead author, Sen. Chris Dodd really, intended it to, remarking earlier in the week that it was “a housing bill, not a Christmas tree.”

However, will the production tax credit and investment tax credit ever make it to the President’s desk to sign?

I would argue that we will see some sort of stripped-down version of the renewable energy tax credits, if any at all. The House has hardened its opposition to this version of the tax-credit extensions, which are estimated to cost $6 billion over 10 years. House leaders have strong objections to deficit-financed tax breaks, and with few exceptions, they have offset lost tax revenue with tax increases or spending cuts elsewhere. But since the President rebuked Congress’ previous attempts at funding the tax credits by rescinding tax breaks for big oil, there hasn’t been much of a discussion as far as where the money for this program will come from. One possible, though unlikely, route that this bill could follow for passage could be if the bill is consistently framed as an economic stimulus package. In that case, the House might be able to bend their pay-go rules. But, that may be a long shot.

“I doubt that the House will accept these extensions without some corresponding offsets,” said Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) on the Senate floor. “This leaves the administration with a key role to play in developing a compromise that will be acceptable to both chambers.”

So we’re leaving this up to the Bush administration to figure out? Yikes.

Community Wind Faces Financing & Market Obstacles

The largest wind turbine in the world owned by a school district is about to go online in Wray, CO. Apparently, the parts for the Americas Wind Energy turbine came from all over the world to tiny Wray, population 2100 and falling. The blades came from Spain, the generator from Holland, the tower from South Korea and the copper wire came from Canada. Ironically, even Americas Wind Energy itself is not an American company, it is Canadian.

After originally deciding on the size and type of turbine needed, the community found they couldn’t buy just one turbine in that size range. Because of the bottleneck in American wind turbine production, the large wind farms and energy development companies are dominating the turbine purchasing market, trying to get their projects online before the end of 2008 when the production tax credit (PTC) is currently set to expire. The current market uncertainty is favoring the large turbine orders, whilst moving small orders to the fringes.

It is possible this bottleneck will loosen as Vestas has just opened its first North American turbine blade facility in Windsor, CO. The wind giant has recently taken an order (pdf) for 109 turbines in the US that they said would not affect any of their existing orders. However, E.ON Climate and Renewable Energy, who placed the order, will not be scheduled to have all 109 turbines up and running by the end of 2008. Their project is not projected to be finished until the middle of 2009.

It is my guess that even if the PTC does not pass this year, it will pass at the beginning of next year, when there is a strong chance there will be a Democrat in the White, and maybe even a filibuster-proof majority in the Senate. It is also quite likely that Congress would extend the PTC retroactively back to the beginning of 2009, as if it never expired. Even if that is the case, there is certain to be some downturn in the renewable energy industry as investors may get a little sheepish without the security of a production tax credit this year.

Fort Morgan Times
Photo: Americas Wind Energy (AWE 52-900)

Renewables to Get Another Chance in Congress?

This week, the Senate is doing some tinkering with the recently proposed economic incentive package put forth by the House leadership and President Bush. More specifically, this tinkering would extend the renewable energy production tax credit (PTC) for another year and would extend the solar investment tax credit. The Senate Finance Committee also included energy efficiency incentives to the package. Hopefully, these amendments will not be left by the wayside as they were late last year.

Read more...

Denial of Kansas Plant Seen as Opportunity for Co-ops

TOPEKA, Kan. – Supporters of a proposed coal-fired power plant in Kansas that would provide power to most parts of rural Colorado are working to revive it after the Kansas Department of Health and Environment (KDHE) became the first government agency in the United States to cite carbon dioxide emissions as the reason for rejecting an air permit for a proposed coal-fired electricity generating plant. Tri-State Generation and Transmission’s partner in the project, Sunflower Electric, has filed papers with the KDHE Secretary Rod Bremby to reconsider his rejection of the air permit.

In the written decision to deny the Tri-State/Sunflower permit last Friday, Secretary Bremby said that “it would be irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change and the potential harm to our environment and health if we do nothing.” Sunflower and Tri-State have already begun the appeal process. "We are disappointed with the Secretary's arbitrary and capricious action," said Earl Watkins, Sunflower's president and chief executive officer.

I see the denial of the air permit as an opportunity for Tri-State's 44 member owned co-ops to seize opportunities in efficiency and renewable energies. Not only is Northern Colorado blessed with excellent wind, solar, and biomass resources that can all be harnessed to make clean, reliable, and cost-effective energy, much the same can be said for most of Tri-State's coverage area. Tri-State needs to see the writing on the wall that carbon-emission legislation is coming, and that it is only a matter of time before we are living in a carbon-constrained world. In stead of frittering away member-owners' valuable resources fighting for the construction of new coal-fired power plants, Tri-State should be investing in efficiency, smart-grid technologies, distributed generation, and other ways in which its many members can directly capitalize on the new energy economy.

Exactly how the co-ops will be able to take advantage of the upcoming energy legislation remains to be seen. Rumors continue to swirl that the final bill may be only a skeleton of its former self. I am not playing prognosticator here, but it is quite possible there may be no RPS, no solar tax credit, no extension of the federal production tax credit, and only a meager increase in CAFE standards. I believe that something useful will be passed out of the legislature, I'm just a little skeptical about how many of those good things will make it.

Yet there may be one kernel of hope for renewable energy that is tucked away in the otherwise much-maligned farm bill that would grow renewables by incentivizing distributed microgeneration through a tax credit for small wind. More on this later this week...

Photo Credits:
1. Brian Brainerd, Denver Post

Energy Bill: Losing its luster?

I was hopeful yet somewhat skeptical when I last wrote about the chances of meaningful energy legislation making its way through both houses and avoiding the president's recently discovered 'veto pen.' For much of Bush's tenure in the White House, the administration has had little or no need to break out the veto pen. But even when Bush does pass a bill that he has serious reservations about, he has preferred to use the 'signing-statement pen,' despite the fact that there is no Constitutional provision, federal statute, or common-law principle explicitly permitting or prohibits signing statements. Signing statements give an opportunity to the president to add a 'P.S.' that allows the president to voice rhetorical disagreement or otherwise evade proper execution of the laws. Despite the fact that Article II, Section 3 of the Constitution requires that the executive "take care that the laws be faithfully executed", the President has made clear on several occasions that he does not need to execute laws that he does not believe are constitutional.

In the preceding sixteen years of the Reagan, Bush I, and Clinton presidencies, the three produced 347 signing statements between the three of them. By October 4, 2006, Bush II had signed 134 signing statements that challenged 810 federal laws. If you have more time and are really interested in this topic, I highly recommend Boston Globe columnist Charlie Savage's new book, Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy .

But before the president even has a chance to see a bill come across his desk, there are some serious substantive differences between the two bills that need to be reconciled, but it is quite possible the differences will not even have a chance to get ironed out before the impending vote some time this week. It appears as though Speaker Pelosi and Senate Majority Leader Reid are ready to call for a vote on this before Thanksgiving break, without a conference committee on the subject ever have been convened. It looks like an extension of the production tax credit, and the establishment of aggressive renewable energy targets may be overlooked. Major obstacles to the successful passage of quality energy bill include:

1) The Senate version proposes the increasing of new vehicle fuel efficiency (CAFE) standards. Some House members have been trying to ratchet back the Senate-endorsed 35 mph mileage standard. The House version contains no CAFE standards.

2) The house version of the bill included a 15% renewables portfolio standard (RPS) for investor-owned utilities by 2020. States were also permitted to invest in energy efficiency in lieu of renewable energy. The Senate passed no RPS in their version, largely because Senators from the southeast states argued that they do not have adequate renewable resources.

3) There is a proposed repeal of oil, coal, and gas subsidies in the form of tax credits to big energy companies. Pres. Bush has said he would veto a bill with any such repeal and he may get the help he needs as K. Bailey Huthinson of Texas may have the ability to block a joint committee.

4) Perhaps the biggest issue for renewable energy advocates is the apparent lack of tax incentives such as the production tax credit (PTC) and the investment tax credit (ITC). I would be very surprised to see the PTC be passed over for extension, although some large wind energy manufacturers have already shown that they are not waiting to find out.

You can have an impact on what this energy bill looks like. These are not insurmountable obstacles. Urge your Representatives and Senators to consider the RPS, the PTC, and cuts in coal, oil and gas subsidies.