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Congress set for a budget boost -- Hopes of shift in energy spending

Wind energy research funding in the United States suffered a setback in President George W Bush's proposed fiscal year 2008 budget, but industry representatives expect rival Democrats, who are now in charge of Congress, to oppose his cuts. The president's proposal for wind totals slightly more than $40 million out of a $2.9 trillion budget plan, about $4 million less than current funding. "That is going, obviously, in the wrong direction," says Jaime Steve of the American Wind Energy Association (AWEA).

But, with the new Democratic leadership in the House of Representatives and Senate identifying clean energy as a priority, Steve is confident the current Congress will "go in the right direction." He adds: "Congress has the power of purse. All the president can do is propose and his proposal is not going to go very far on Capitol Hill."

The House of Representatives has already signalled its interest in more renewable energy funding, passing a spending bill in late January that added $300 million to the $1.2 billion for renewables and energy efficiency already allotted for the 2007 fiscal year. The Senate also passed the bill in a February 14 vote. The Department of Energy has yet to decide how to allocate the extra funding and if wind will benefit, says Steve.

As well as cutting the wind budget, the President's proposal also adjusts the Department of Energy's research priorities, reducing the allocation for low wind speed technology development by $13.2 million and adding money for distributed wind technology and "technology acceptance activities, aimed at higher priority efforts to reduce the institutional, political, and environmental barriers to wind energy development." AWEA does not want more spending in this area to come at the expense of low wind speed technology and is arguing the case, says Steve. Overall, AWEA will be pushing Congress for a wind budget of about $110 million. "This is an opportunity to think bigger and we think that is important."

No PTC provision

One key provision conspicuously absent from the 2008 Bush budget is an extension of the $0.019/kWh production tax credit (PTC). Although it is not set to expire until the end of 2008, all past budgets have included proposals for extension. "It has been in Republican budgets and it has been in Democratic budgets," says Steve. "I don't know the answer as to why they didn't put it in this one."

He speculates its absence has less to do with the extension than with perception. This is the first year the Bush administration has included the cost of the Iraq war in the budget. "The only thing I can think of is they went around and eliminated anything over a billion dollars to try to keep the budget numbers down. I was told there were a lot of other tax credits that were not included either."

Steve says he is not concerned by the exclusion. "It is Congress that decides these issues," he says, and within the Democratic leadership support for the PTC is strong. "I think we will end up seeing a long term extension of the credit," Steve says. Some Democratic senators are calling for as much as ten years, while in December, a bipartisan group of 42 senators asked for a five year extension in the budget. In the House, North Dakota Democrat Earl Pomeroy has introduced a bill calling for a five year extension. Congress does not vote on individual bills, but wraps them up into a larger tax bill.

Finding the money will be the key to securing a long term extension. In 2006, $510 million was budgeted for PTC payments, about 80% of which were expected to go to wind. "You still have to find the funding to do these things, especially in the current situation, which is what they call a pay as you go system. If you are going to propose spending you have got to find the cuts from somewhere to pay for it," says Steve. "But then again the Democrats have done some of that already."

In January, the House passed a bill that would shift $14 billion in oil and gas subsidies to investments in renewable energy and efficiency technologies. The measure still needs to get past the Senate and the White House, but Steve says it is a "clear indicator" that the new Congress has made clean energy a high priority.

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