New Year Will Bring New Ideas

 

 
  December 18, 2006
 
With the new year fast approaching, so too comes new ideas. The Democrats are about to control both chambers of Congress and bring with them their legislative priorities that include an emphasis on renewable energy programs and clean air proposals.

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

It's a philosophical question as to whether the nation ought to channel its finite resources into sustainable energies that comprise a fraction of the overall energy mix or into making conventional and prevalent fuel sources such as coal, natural gas and nuclear cleaner and safer. Under the leadership of a Republican-controlled Congress and White House, the emphasis has been on the latter. But, now that a power shift has occurred, it is expected that a higher priority will be placed on the former.

Those of the liberal persuasion say that the results of the 2006 midterm elections were driven by environmental and energy concerns -- or the desire to curb emissions and to promote the use of green energy. Simply, big energy has had too much influence on the policy agenda during the Bush years and the time has come to give more breaks to alternative energy sources.

"The American people's vision of an energy future that is very different from current policies is the winner, and Big Oil is the big loser," says League of Conservation Voters President Gene Karpinski, in a formal statement. "Energy independence and the creation of a new energy economy was the singular domestic issue that cut across partisan, geographic and demographic lines."

No doubt, there's plenty of room for compromise. A bi-partisan group of U.S. senators that is led by the now-Independent Joseph Lieberman of Connecticut have authored a bill that aims to cut oil use in half over 30 years by motivating the utility industry along with businesses and retail consumers with a series of incentives. The same bill would follow the lead of many states by requiring utilities to get 10 percent of their fuel from renewable energy forms by 2020.

Other lawmakers that are mostly from the farm states have bills in the hopper to require 25 percent of the utility mix to come from green energy, with an emphasis on ethanol that is derived from corn and soybeans. The aim, to be achieved by 2025, is that home grown fuels can offset some of the country's foreign oil dependence. One proponent of the measure is Democratic Representative John Salazar of Colorado who says that the technology exists to manufacture vehicles that could totally run on ethanol. To get there, though, he says that the Big Three carmakers must be persuaded that the demand exists to buy such cars.

"If you give consumers an option, success will follow," says Salazar, in a speech. "If America were energy-independent, politics in the Middle East would be totally different. The only way I can ever see peace is to devalue the only resource they have in the Middle East, which is oil."

The Agenda

The trend toward the use of more bio-fuels is already underway. Volatile energy prices in combination with a provision in the Energy Policy Act of 2005 requiring the use of more ethanol has been a shot in the arm for such manufacturers. The result is that increasing numbers of ethanol refineries are in the works, all to contribute 1.4 billion gallons of capacity in the coming year -- a progression supported by the American Farm Bureau Federation as well as the National Wildlife Federation.

Clearly, the power shift in Congress means that Midwestern lawmakers who represent farm interests will control key congressional committees while the southern Republicans who represented oil concerns will now take a back seat. Beyond that, more pronounced changes in energy policy may be coming and namely those related to carbon dioxide emissions that are tied to global warming.

Some Republicans and Democrats have split over the issue of whether the United States ought to join the global warming pact called the Kyoto Protocol. While Republicans acknowledge the phenomenon, they have argued that the technologies to curb carbon dioxide emissions are not mature and the country will join the cause when such tools become commercially available. Many Democrats counter that proactive legislation is not only healthy for the environment but also for the economy, noting that mandates would bring about new technologies while creating new job opportunities.

Canada, Europe and Japan are all signatories of the Kyoto Protocol that requires 5 percent cuts in greenhouse gas emissions from 1990 levels. Others such as Australia, China and India are waiting to see what the United States will do and particularly as the second phase of the global warming pact that begins in 2013 is negotiated. Environmental advocates will be pushing the new U.S. Congress to make plans for the next phase and to get on board in the next two years.

Indeed, many new members of Congress were elected on promises to help build a new energy economy. While a wide swath of bi-partisan lawmakers have paid lip service to wind energy, the so-called production tax credit that makes the power source more cost competitive with fossil-fired generation has been allowed to lapse in the past. That, in turn, has created uncertainty in the sector. Democratic leaders have vowed to give more attention and more resources to renewable energy and just helped push through another yearlong extension of the production tax credit given to wind producers.

"Following the election, prospects for more action on issues such as climate change, clean air, a national renewables portfolio standard, an incentive for residential wind-energy systems and a long-term extension of the production tax credit will be stronger than before," writes the American Wind Energy Association.

Coal and natural gas will still dominate the country's energy mix and will continue to get their fair share of federal tax incentives even as the political winds change. But, more attention and more resources will now be devoted to ushering in the technologies to increase the use of green energy. That is what the voters have demanded.

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