(Stop press: Senate voted 53 for Cloture, 42 against - therefore debate continues around the bill)
Washington, 7 December 2007. The US is in the process of trying to
agree a comprehensive Energy Bill before the end of the year's business. A
groundbreaking vote in the House on Thursday 6 December
approved renewable energy tax breaks and a federal mandate to ensure
utilities provide 15% of electricity from renewable sources by 2020 (RES).
But US Senators still rejected the Bill in its current form.
In addition, the Bill includes a requirement to boost automobile fuel economy by 40% to an industry average of 35 miles per gallon by 2020, the first such increase since 1975, when Congress enacted the federal auto fuel economy requirements.
The latest developments from the Senate have seen a motion for Cloture fail, (see above), meaning that the Bill will need to be renegotiated before going back to the Senate floor for voting, suggesting that the House Bill will not remain in its current form. And if the various lobbies resisting the above renewables' concessions have their way, the RES - variations of which have already been adopted by a number of States - will no longer be in the Bill. In addition, the lack of tax incentives proposed - the production tax credit (PTC) and the investment tax credit (ITC) - would be a further blow to the industry.
The American Wind Energy Association's Executive Director Randall Swisher echoed the feeling amongst the renewables community: "We are deeply disappointed by [the] Senate vote on energy legislation. Our nation is at a critically important crossroads on energy policy and, with this morning’s vote, the Senate seems prepared to take the wrong road. At a time when the country is buffeted by growing demand for electricity, higher energy costs, and climate change and energy security concerns, a cornerstone of any energy bill should be to promote renewable energy. The Renewable Electricity Standard (RES) and the extension of clean energy tax incentives that are included in the House bill should therefore also be included in the final Senate bill. These provisions would unleash the power of renewable energy to generate new manufacturing and construction jobs, lower Americans’ home energy bills, strengthen our energy security, and help protect the planet’s climate.
"Reports suggest that Senate leaders may look to bring a revised version of this bill to the floor. We call on Senate leaders to work together to ensure that overwhelmingly popular provisions to promote renewable electricity are not left out in the cold as this effort moves forward. We will be working closely with our more than 1200 member companies to promote passage of these critical provisions."
For the wind industry, the PTC is vital for the developers and manufacturers that the American Wind Energy Association (AWEA) represent. Without a long-term extension of the PTC, which expires in December 2008, developers will be unsure how financially viable their projects are. If the market starts to slow down in the USA, manufacturers could be unwilling to scale up production or enter the country at all.
AWEA recently issued its fourth quarter market report, which showed that the industry is on track to install 4,000 MW of wind capacity, shattering the 2006 record of 2,454 MW. With long-term support, AWEA believes the industry can continue to surpass those numbers. But if the PTC is not extended, next year's installed capacity may fall short.
The danger for the US is that if this latest move fails and the Bill is allowed to go through minus renewable energy provisions that the industry had been hoping for, companies looking to develop their renewable portfolios in the US may choose to do it overseas; this is especially true if the tax credits don’t materialise. This would be detrimental to the US in terms of technology, competitiveness and jobs.
And all this comes at a time when a key US ally in refusing to sign the Kyoto Protocol - Australia - has reversed this decision following the election of Labour's Kevin Rudd. This will further isolate the US in the eyes of the world.
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