PRETORIA, South Africa (ResourceInvestor.com) -- Highlighting a swift and sharp turnabout in national energy policy since President Bush first took office and proposed his national energy security policy, the U.S. House of Representatives working on a Saturday just prior to breaking for summer recess debated and by a vote of 241-172 ultimately passed HR3221, the New Direction for Energy Independence, National Security and Consumer Protection Act.
Ten committees spent months hammering out the House’s 888-page energy bill, which will provide long-term incentives, capital investment and other types of support for a wide range of alternative energy resources and technologies, including solar, wind, ocean and geothermal power, biofuels and carbon capture and sequestration.
A Renewable Energy Standard (RES) amendment to the House bill introduced by Rep. Tom Udall (D-NM) requiring electric utilities to incrementally increase the percentage of electricity they produce from renewable sources from 2.75% by 2010 to 15% by 2020 passed by a 220-190 vote.
The House by a vote of 221-189 also passed HR 2776, the Renewable Energy and Energy Conservation Tax Act of 2007, which by eliminating an estimated $16 billion in oil and gas subsidies will provide some $16 billion in tax credits and bonds to promote investment in renewable energy production from wind, solar, celluosic ethanol, other biofuels and energy conservation efforts.
Democratic Leadership All On Board
The passage of the House energy bills highlights the dramatic shift in national energy policy that has taken place since President Bush was re-elected to a second term in 2004. “Energy independence is a national security issue, an economic issue, an environmental and health issue, and a moral issue,” said Speaker of the House Nancy Pelosi (D-CA) who led efforts to draft and pass the legislation.
“A new coalition is forming in the Congress. The legislation proves that energy production, job creation, and environmental protection can be achieved all at once, which is why a new coalition of labor and environmental groups have come together to endorse our bill. It is a remarkable development that shows what cooperation and consultation can achieve.”
Commenting on the RPS amendment, Todd Platts (R-PA) said, "This amendment is an important step -- similar to what is already taking place in many states, including my home state of Pennsylvania -- to help ensure America reduces its dependency on foreign oil and meets its growing energy needs in an environmentally-friendly manner.
“The question is whether we continue to approach the energy issue as we have for the past 30 years, or if we are going to work towards a more diversified, reliable, and clean energy supply. I look forward to seeing this or a similar provision in any final conference agreement with the Senate."
Of HR 2776, House Ways and Means Committee Chairman Charles Rangel (D-NY) stated, “This bill makes an investment in America’s energy independence through long-term incentives for the production and use of renewable energy and energy conservation.
“This bill sets an example by closing loopholes and repealing generous tax breaks to oil and gas companies enjoying record profits, to help American companies and communities lead the way in developing technologies to reduce greenhouse gas emissions and combat the harmful effects of global warming. H.R. 2776 will also help cities and states provide bonds and grants to make sure that working families and businesses can do their share to purchase energy efficient heat pumps, appliances and make home improvements to conserve energy.”
Industry Associations Cheer
Not surprisingly, the passage of the House energy bills was hailed by renewable energy industry associations.
Commenting on the House bills’ passage Solar Energy Industries Association (SEIA) President Rhone Resch said, "Today's vote gives the American people exactly what they are asking for - substantial new production of clean, domestic renewable energy.
“We estimate that, with the solar incentive provisions in the tax title, solar power will provide 50 percent of all new electricity in the U.S. within eight years. The growth of solar energy markets will create tens of thousands of new high-tech jobs throughout the United States, while helping to conserve natural gas and saving American taxpayers billions in energy costs.”
“Today’s vote was a landmark referendum on the direction of the nation’s energy policy,” commented Gregory Wetstone, Senior Director for Government and Public Affairs for the American Wind Energy Association (AWEA).
“For the first time ever, the House has endorsed a long term commitment to homegrown renewable energy. Studies show that shifting to renewable energy like wind and solar power can save consumers money while protecting our climate and promoting our national security.”
A Host of Incentives
The SEIA noted that among the provisions in HR 2776 conducive to ongoing research, development and commercialization of solar energy technology are an eight-year extension of the 30% investment tax credit for businesses under Section 48 of the tax code, the ability for corporate and personal filers to claim the investment tax credit against the Alternative Minimum Tax, removal of the prohibition barring utilities from using the Section 48 investment tax credit and elimination of the $2,000 maximum dollar investment tax credit limitation for homeowners under Section 25 of the tax code.
HR2776 also provides as much as to $2.4 billion in bonding authority for the issuance of Clean Renewable Energy Bonds while Title IV, the Solar Energy Research and Advancement Act of the bill, provides funds, subject to appropriation to support research, development and commercialization of solar energy technologies with particular emphasis on solar power thermal storage research, solar lighting and cooling and advanced photovoltaic technology development.
HR2776’s Renewable Energy Standard is similar to renewable power standards now in effect in more than 20 states across the country. It relies on market-based mechanisms, including the purchase of renewable energy credits that will enable electric utilities to meet the RES’s mandated minimum renewable energy generation requirements, which grow incrementally from 2.75% by 2010 to 15% by 2020.
According to the AWEA, studies show that in addition to slowing global warming by reducing carbon dioxide emissions by 11% below current levels, a 15% RES by replacing the use of fossil fuels to generate electricity would reduce consumers’ energy bills by more than $100 billion, create more than 130,000 new manufacturing jobs in the solar and wind technology industries, revitalize rural America with farmers receiving payments of $3,000-$8,000 per year per turbine erected on their land and strengthen energy security by reducing oil and liquid natural gas imports.
Showdown in DC
Not everyone in the federal government favors the new energy legislation, however. President Bush is expected to veto the resulting final version of the legislation.
U.S. Department of Energy (DOE) Secretary Samuel Bodman contended that the House legislation fails on a number of counts. “Today, the House passed legislation that does little to increase our nation's energy security or reduce greenhouse gas emissions. In fact, the bills will actually lead to less domestic oil and gas production and increased dependence on imported oil.
“Because H.R. 2776 and H.R. 3221 fail to deliver American consumers or businesses more energy security, but rather would lead to higher energy costs and higher taxes, the President’s senior advisors would recommend that he veto these bills.”
Bodman instead urged the full Congress to enact President Bush’s “Twenty in Ten” initiative, which he said would reduce gasoline usage by 20% in ten years. The DoE released a two-page "Statement of Administration Policy" detailing its objections to the bills.
A related new energy policy that does not include an RES passed in the Senate in June and the upper house has not as yet finalized its own version of an energy tax proposal. A House-Senate conference committee is expected to hash out differences between their respective versions when Congress convenes again in September.
The AWEA is lobbying for inclusion of the RES, a full-value, long-term extension of the Production Tax Credit and an effective small wind turbine tax credit in the final bill. “Now it’s on to conference with the Senate and, hopefully, enactment into law. … However, the move to cleaner energy faces aggressive and well-financed opposition, and will be possible only with the public’s active support and engagement,” the AWEA’s Wetstone noted in a media release.
