AT THE BRINK OF THE ENERGY BILL FIGHT

The Energy Fight Coming to the Senate; The renewable energies are fighting for their lives and environmental groups are fighting for the planet
Herman K. Trabish, July 12, 2010 (Greentech Media)

(NewEnergyNews was on assignment yesterday, chasing down interviews about the crucial fight scheduled to begin on the Senate floor this coming Monday (July 26). Below is a profile of the fight. A version of it originally appeared at Greentech Media.)

“This is such an important time for the industry,” was the first thing Acciona Energy North America CFO Susan Nickey, fresh from meetings in Washington, D.C., said.

It’s an important time because the Gulf oil spill has revived hope for the once lost-cause energy-climate legislation and because the renewable energy industries are desperately in need of such legislation.

After sustaining growth in 2009, some of the renewables’ most important incentives are set to expire at the end of this year. Nickey’s meetings with Republicans revealed there are Republican votes for new legislation – IF.

“There is bipartisan support both on the Senate and House sides to pass a Renewable Energy Standard [RES] to create long-term growth and to also extend the grant-in-lieu of ITC program to maintain last year’s expansion,” Nickey said. But, she stressed, only if the administration and the Democratic leadership forego action on greenhouse gas emissions.

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A national RES would require regulated U.S. utilities to obtain 20-to-25% of their power from renewable sources by 2020 or 2025. The Treasury’s grant program allows unused tax credits to be exchanged for federal grants.

Nickey is in a unique position to see the legislative dilemma clearly. Because Acciona, one of the biggest players in U.S. solar and wind, has a major manufacturing facility in Iowa, Nickey had meetings with the staffs of Iowa Democratic Senator Tom Harkin and Iowa Republican Senator Chuck Grassley, as well as other Republicans. Iowa is a wind powerhouse and one of the first states to pass an RES. But it is also a conservative state and not inclined toward climate change-fighting cap and trade legislation.

The cap and trade plan would limit the greenhouse gas emissions (GhGs) emitted by major power producers and users determined by climate scientists to be the cause of global climate change. It would also create a market mechanism to facilitate the emitters’ ability to meet their caps. Seen by many environmentalists as vital to the fight against climate change, cap and trade has been successfully branded a too-complicated stealth tax by its opponents.

What Nickey learned in D.C. is the very real news that Republican senators could support energy-only legislation and an RES. Grassley, she said, has long supported the wind industry and “helped put together the production tax credit [PTC] a long time ago.”

The PTC is the key incentive with which the wind industry built its 2005-to-2009 “boom” but it is a short-term incentive and responsible, when it was withdrawn, for wind’s three “bust” years (2000, 2002, and 2004).

Having a long-term incentive like the RES will thrill the renewable energy industries but some environmental groups will not be pleased if Congress is unable to pass climate change provisions along with it.

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"The Bingaman bill would do more harm than good, by promoting more off-shore and ultra-deepwater oil and gas drilling in the Gulf, as well as other dirty energy industries such as nuclear power, coal with carbon sequestration and 'biomass' incineration," according to Mike Ewall of the Energy Justice Network. "The bill's main selling point – the Renewable Electricity Standard (RES) – does nothing that the similar existing policies in 30 states would not already accomplish and it is riddled with loopholes. We support addressing climate change with good energy policy that isn't full of dirty energy subsidies, but our corporate-controlled Congress is not up to the task."

“A bundle of energy policies alone cannot accomplish the three-fold task of curbing pollution, creating jobs, cutting our dependence on foreign oil,” wrote David Doniger of the Natural Resources Defense Council (NRDC). “An integrated bill will reduce global warming pollution, while a piecemeal ‘energy only’ bill could make carbon emissions worse.”

But Nickey, fresh from D.C. and impressed with the Republican senators insistence there are not enough Senate votes for a bill with climate provisions, nevertheless sees something very valuable in the compromise measure.

Acciona has, since 2006, invested a billion dollars in the U.S. wind and solar sectors and has created more than 2,300 direct and indirect jobs. It sources more than 60% of its turbine components domestically and could grow U.S. manufacturing far more with the extension of the Treasury grant program and the long-term RES that may be within the reach of this divided Congress, despite election-year tensions.

“We’re supportive of carbon legislation,” Nickey said. “But it’s a complicated policy.”

“They,” meaning the Republicans she met with, “were supportive of a bill that had a Renewable Energy Standard like the Bingaman bill. And we also focused on not just having 20% or 25% by 2020 or 2025 but also an increase in the Renewable Energy Standard in the near-term, the 10% by 2012, because its about creating momentum, investment and jobs today.”

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Congress-watchers say the floor fight must happen by the week of July 19 if it is going to happen before the August recess. Nickey said the key will be whether the Democratic leadership is willing move off comprehensive carbon legislation.

[Update: Senate Majority Leader Reid moved introduction of the legislation to July 26. There is, reportedly, an ongoing fight among Democratic Senators over whether to retain a climate component. Capitol Hill veterans say the Senate is now unlikely to be able to move fast enough to pass the bill.]

To Nickey, such legislation would be no defeat. “In the U.S. market, we start out with wind under 2% of our energy portfolio,” Nickey concluded. “With a mandate to get 25% of our energy from renewables by 2025, we’ll create a large and growing industry opportunity.”