U.S. Energy Bill -- Early Christmas Present or Lump of Coal?

Senate Majority Leader Harry Reid and House Majority Leader Nancy Pelosi decided to remove a renewable portfolio standard (RPS) and all tax provisions benefiting renewables so that they could pass an energy bill through Congress before Thanksgiving break on Friday, November 16.

“This is basically Congress delivering an early Christmas present to the American public — and it's a lump of coal,” said Rhone Resch, President of the Solar Energy Industries Association (SEIA). “We are feeling disgusted because this energy bill goes right back to maintaining the status quo.”

That status quo, said Resch, means continued support for coal, oil and natural gas, additional support for biofuels, but no support for renewable forms of electricity such as solar, wind and geothermal.

The renewable portfolio standard, which would set a target of getting 20-25% of the nation's electricity from renewable resources by 2025, will no longer be in the bill. While that is indeed a blow to the cause of renewable energy supporters, perhaps the bigger issue is the lack of tax incentives such as the production tax credit (PTC) and the investment tax credit (ITC).

“I can't imagine the Congressional leadership would seriously propose an energy bill that would not place a strong emphasis on renewable energy, especially the long-term tax incentives that are so vital to the growth of the industry,” said Randall Swisher, Executive Director of the American Wind Energy Association (AWEA).

The PTC is vital for the developers and manufacturers that AWEA represents. Without a long-term extension of the PTC, which expires in December of 2008, developers will be unsure about the financial viability of their projects. If the market starts to slow down in the U.S., manufacturers will be unwilling to scale up production or enter the country all together.

Earlier this week, AWEA issued its fourth quarter market report, which showed that the industry is on track to install 4,000 megawatts (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.

“Getting into 2008, we will start to see uncertainty creep in in terms of getting projects financed and, even more importantly, attracting manufacturers to this country, bringing with them the jobs that are a critical part of what this industry can deliver for the future of this country,” said Swisher.

Another report released this week by the American Solar Energy Society looked at the economic impact of renewable energy in the U.S. According to the report, the renewable energy industries could generate up to $4.5 trillion in revenue for the U.S. economy with the appropriate public policies, including a RPS and long-term tax credits.

A lot is at stake for renewables in the upcoming energy bill. Now, with only one week left before Congress leaves for Thanksgiving recess, renewable energy lobbyists on Capitol Hill and around the country are making a final push to get lawmakers and citizens to support a bill that would reflect the long-term needs of the industry.

“We're doing everything we can to make sure Americans know about this issue and that they contact their lawmakers to put these very important provisions back in the bill,” said Chris Stimpson, Executive Campaigner for Solar Nation, a renewable energy advocacy organization. “Without such action, all the talk about a new energy future means nothing.”

In a statement on his website, Senator Reid writes, “I believe that Congress needs to provide a long-term extension of the renewable energy production and investment tax credits to help provide for long-term growth in the renewable energy sector.” His recent decision to leave out the tax incentives does not reflect that message, however.

Resch believes that the decision to strip the bill down can be turned around in the next week — with the right public support.

“We truly hope that Congress will provide the leadership that brings our country into the 21st century on energy technologies and energy policy — not remain stuck in the 19th and 20th century,” he said. “But we need to make sure that lawmakers on Capitol Hill hear the voice of all Americans who are thirsty for a clean energy future.”