Updated 27 November 2007: Washington DC.
Debate over the Energy Bill in the US continues apace, key to the debate
being the inclusion of support for renewables (see 'what is the
background to the latest controversy', below).
According to Monique Hanis of the Solar Energy Industries Association (SEIA), the situation on the ground is "still fluid", as all parties try to pull something together that can be passed. And Hanis indicates that all isn't lost, as officials at Senate Majority Leader Harry Reid's office say that the RPS and tax provisions are still "in play" at this stage, though Hanis herself believes the chance of the Energy Bill passing at all by December 21 is only "50/50".
If this turns out to be the case, the renewables industry may have to wait until next year, when an extenders bill could be used to continue tax provisions that currently expire at the end of 2008.
The industry continues to receive political support though. In a letter to the Speaker of the House Nancy Pelosi, US Reps. John Hall and Paul Hodes led Freshmen Members of Congress in calling for inclusion of the House-passed Renewable Electricity Standard (RES) and the Senate-passed fuel economy increases in the final version of the Energy Bill.
What is the background to the latest controversy?
Reports coming out of Washington in recent weeks appear to suggest that both the US House of Representatives and the US Senate - in committee - are to remove planned concessions from the upcoming Energy Bill; this support would have given the renewables industry in the US a huge boost.
The contentious Bill is still being worked on in committee, as the House and the Senate try to come up with a version acceptable to both parties, as well as President Bush who has said he will veto it anyway. And Senate Majority Leader Harry Reid and House Majority Leader Nancy Pelosi had reportedly decided to remove the federal renewable electricity standard (RES), as well as all tax provisions benefiting renewables.
Many sources close to the negotiations have backed this up, indicating that the tax credit and national RPS could be taken off the Bill, as Pelosi and Reid try to make it acceptable to representatives who oppose it; an article in Fortune magazine also quoted Al Gore as saying that he had spoken to California Senator Barbara Boxer and that he "wasn’t optimistic" that tax credits would be extended by Congress.
If this does turn out to be true, the RES - variations of which have already been adopted by a number of States - and which set a target of sourcing a set amount of the US' electricity requirements from renewable resources, 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.
It isn’t just the solar industry that is up in arms about the developments. 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.
Those in the industry still believe that the decision to strip the Bill down can be turned around — with the right public support – and everyone with an interest is being urged to get behind the campaign to reinstate the renewable energy provisions (see below).
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 - looks to be about to reverse this decision following the election of Labour's Kevin Rudd. This will further isolate the US in the eyes of the world.
What can you do to help get the provisions reinstated?
|
