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New hope for Bush energy strategy -- No AWEA condemnation

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With President George Bush facing an uphill battle to implement his new national energy policy, the renewables business is waiting to see exactly where it stands. Bush's plan, aggressively supply-sided, is almost certain to face major changes on Capitol Hill following last month's sudden return to power of the Democrats in the Senate. While Bush's push for market based solutions to the country's energy woes may well remain intact, his most controversial calls -- boosting coal, nuclear power and oil drilling -- are far more uncertain.

Crucial for wind power is Bush's recommendation that wind's $0.017/kWh Production Tax Credit (PTC) is extended, although the $10 billion "National Energy Policy" does not specify for how many years. In April, however, Bush's budget called for a three-year extension. Momentum for extending the credit is strong, especially since it was Senator Jim Jeffords of Vermont, a veteran battler for wind, who defected from the Republicans and changed the make-up of Washington. Jeffords, who is bound to be in the limelight for months, is a key sponsor of legislation to extend the PTC by five years. Indeed renewables and efficiency now stand to receive attention, with moderate politicians in Washington emboldened and more emphasis on the environment.

Bush's 193-page document, issued on May 17, also recommends that federal agencies re-evaluate the use of federal land for renewable power plants and promote "brown field sites" for clean energy production. That element, which does not require congressional action, could be highly significant for wind. Vast tracts of the West and Southwest are both windy and owned by the US government.

Wind budget revisited

The document calls too for a "review of current funding and historic performance of the research and development programs for energy efficiency and renewable energy." According to the plan, the US Department of Energy should then propose "appropriate funding for those programs that are performance-based and are modelled as public-private partnerships." The wording suggests the administration may reconsider its proposed funding cut for renewables. Indeed, with the Democrats now back calling at least some of the shots, Bush's proposal to halve wind R&D funding in fiscal year 2002 to $20.5 million is almost sure to be modified.

The plan recommends that federal agencies consider the energy impact of all new regulations and streamline the federal portion of permitting energy plants across the country. This could speed up the wind plant permitting process as well as that for conventional power plant. Moving characteristically fast, Bush signed executive orders on the two recommendations within hours of the plan's release.

Another item in the document, vital to the nation's energy markets and to the wind market in some areas, is Bush's call for granting authority to federal agencies to obtain right-of-way for power lines. Transmission constraints in the Midwest are already hampering wind development. The recommendation, which would require congressional approval, immediately sparked criticism from the advocates for private property rights. The Federal Energy Regulatory Commission already has eminent domain authority over the siting of natural gas pipelines, but has no such power over long-distance electricity transmission lines.

In presenting the plan, Bush portrayed himself as sensitive to the environment. But his bid to open up the Arctic National Wildlife Refuge for oil and gas leases, his U-turn on a campaign promise to curb power plant CO2 emissions and his declaration that the Kyoto protocol is dead have sparked a furore both domestically and internationally. He may not have the support of the American people. An ABC News poll released last month said 43% of Americans disapprove of the president's handling of the energy situation. Other polls have shown that Americans believe Bush is too beholden to oil and big business in general.

As if reacting to the public disquiet, Bush visited a hydro power facility the day after he released the energy plan and lauded the plant as conservation friendly. "I hope some day that [such] renewables will be the dominant source of energy in America. But I'm not so sure how realistic that is," he said.

The American Wind Energy Association (AWEA), which is lobbying for a five-year extension of the PTC, described the plan as "a useful first step" towards the value of wind power in solving America's energy problems.

In an all-out effort to drum up support for the energy policy, Bush administration officials had met with more than 100 groups and industry leaders as they finalised the strategy. "We're happy, but it didn't go far enough," said Jaime Steve, AWEA's legislative director, after meeting with White House officials.

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