United States

United States

A matter of priorities

It was not much of a surprise when Congress went home on October 18 to stump for their jobs in the run-up to this month's elections, rather than stay in Washington to hammer out an energy policy that would set the nation on a course for how it wants to develop, distribute and pay for energy in the future. Tucked within that debate are two crucial elements -- a further extension of the production tax credit and a national renewables portfolio standard. It is critical to the wind power industry that an energy policy decision is made sooner rather than later. Wind has a strong future in the US, but its potential won't be realised until the country has a long term energy policy, backed by a mandate and incentives.

For anybody familiar with US politics, it was not much of a surprise when Congress went home on October 18 to stump for their jobs in the run-up to this month's elections, rather than stay in Washington to hammer out decisions on the economy, a national budget and the war on terrorism. Job security, it seems, rates higher than settling vital issues of government.

Also left undone was an energy policy that would set the nation on a course for how it wants to develop, distribute and pay for energy in the future. Tucked within that debate are two elements that are crucial to establishing a stable future for US wind energy development -- a further extension of the production tax credit (PTC), now worth about $.017/kWh, to the end of 2006, and a national renewables portfolio standard (RPS). An RPS will drive billions of dollars into the wind market, argues the American Wind Energy Association's Randy Swisher, providing jobs and spurring an economic resurgence in rural areas.

Early this summer, first the House of Representatives and then the Senate passed separate versions of an energy policy. The bills have common features (including support for a PTC extension), but also major points of disagreement. These must be settled for a law to result. President George Bush and the House oppose an RPS. Energy Secretary Spencer Abraham says implementation of energy standards is best left to the states, but warns that "combining it [the RPS] with the renewable production tax credit would be costly and inefficient." Evidently Abraham has not heard that the department he manages predicts a decline in energy prices for consumers as an RPS picks up speed and as US energy supply is diversified. Nor has he heard the story coming out of the President's home state of Texas, where the combined state-mandated RPS and federal PTC spurred a herd of wind projects so cost-effective, as Swisher puts it, "that electric power retailers in the state bought more than twice as much as they were obligated to under the program."

The RPS is not the only ball being interminably punted back and forth among conference committee members. There is also the issue of opening up a portion of the Alaska National Wildlife Refuge (ANWR) to oil exploration, which appears to be a showstopper for both the President and the House. Bush opposes a Senate climate change plan, preferring his own plan for "voluntary" action. And there is certain to be more wrangling over the cost of an energy tax package that pays for conservation and renewables incentives, such as the PTC. The President's tax proposal totals $9.5 billion, while the Senate wants $20.6 billion and the House wants $36.5 billion, both a fair distance from what the President can live with.

It seems like reasonable people, given a full summer, could have reached a compromise on these issues. Yes, Bush's determination to attack Iraq hijacked all other debate in September and early October, but the conference committee itself had made little progress all summer. It is still debating the same issues that separated the two bills in June.

A cynic might accuse Congress of slowing the debate to gamble on the outcome of the elections. A change by one seat could upset the congressional balance of power. Republicans rule the House, while Democrats "own" the Senate by a slim margin of one. Given the "behind closed doors" nature of the conference sessions, it is difficult to know which party might be stalling. If the election goes their way, Democrats could increase their control of the Senate and strengthen their weak position in the House, a combination that could result in the nation's first RPS. But if Republicans gain in the Senate, an RPS could fall off the table as oil developers head for the ANWR to drill for oil.

No time, no will power

At the moment it looks like the conferees may not reach a conclusion to the energy debate this year at all. Too much is in the way. Although Congress reconvenes November 12, the outcome of the elections will likely determine what it will tackle. Among other issues, it still has to put together a national budget before January. While Democratic Senate majority leader Tom Daschle, who has the final say, isn't sure the energy bill will be taken up in November, Senate Republican leader Trent Lott fears it may be. He worries that tackling the complex and contentious issues in the bill during a lame duck session will lead to a poor national energy policy. The fact is, it's unlikely Congress will have the time or the will power to pass an energy bill until next year.

Still, the thought that energy is a matter of national security as well as keeping the lights on will ensure it will not be forgotten when the new Congress meets in January. But it is critical to the wind power industry that an energy policy decision is made sooner rather than later. Wind farm development stopped while waiting for Congress's late approval of the past two PTC extensions and that kind of unsettled policy is literally holding back a potentially huge industry in the US. In addition, the unmade commitment to renewables in US policy is slowing foreign investment, such as Vestas' plans to build a wind turbine factory in the Northwest. Wind has a strong future in the US, but its potential won't be realised until the country has a long term energy policy, backed by a mandate and incentives, that promotes clean energy development.

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