United States

United States

Bitter budget but Bush promises green gems

It is unclear what US President George Bush's new energy policy will mean for wind when it is revealed this month. Last month the President proposed slashing the federal R&D funding by about 50% -- news which came shortly after the announcement that his administration would not ratify the Kyoto protocol. But he is following through on a campaign promise to support wind power's Production Tax Credit.

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Bush is so far sticking to his election promise to extend wind's federal production tax credit but he is proposing slashing the wind budget by half, a vicious cut that the industry fears will leave European companies holding most of the technology cards

President George Bush is expected to issue an overview of his new energy policy sometime this month. But it is unclear what the recommendations will hold, if much at all, for wind. On the one hand Bush, a former oil executive, last month proposed slashing federal wind R&D funding by about 50% for fiscal year 2002 -- news which came only shortly after his highly controversial about-face on a campaign promise to limit CO2 emissions and the Administration's declaration that it would not ratify the Kyoto protocol. On the other hand, by mid-April there were hints that the Bush administration might be rethinking its highly publicised heavy handedness and in-fighting on the environment and was trying to avoid an all out green war, in large part because of adverse domestic and international reaction to his statements.

The Republican president's proposal for wind, just $20.5 million out of a $1.96 trillion budget plan, is in stark contrast with the proposal a year ago by President Bill Clinton. The Democratic president proposed a 30% increase in renewables and efficiency funding -- including $50.5 million for wind, almost one-tenth more than his request a year earlier. Renewables advocates are seeking an almost 40% increase of $55 million for next fiscal year, over the $39.6 million actually appropriated for 2001.

Even the American Wind Energy Association (AWEA), usually diplomatic about federal wind plans, slams Bush's budget proposal. "Cutting wind energy R&D efforts during an energy crisis is penny wise and pound foolish," says Jaime Steve, AWEA's head of legislative affairs. "The Bush administration proposes pulling the rug out from under the industry. These cuts are not a sensible component of sound energy strategy."

Other renewables programs did not fare well either in the president's budget. Bush is also proposing a cut in the solar-thermal R&D from $13.8 million to zero; the elimination of the Native American energy program, currently funded at $6.6 million; and the elimination in the $5 million international renewables program.

Bush's proposal did, however, contain one piece of good news for wind. As expected he is following through on a campaign promise to support wind power's all-important Production Tax Credit (PTC), which expires at the end of this year. Bush is recommending extending the credit by three years. Although two years short of what AWEA has lobbied for, "In practical terms, it really doesn't make that much difference," says the association's Randy Swisher. He adds that the inclusion of the extension in Bush's proposal means there is less potential for partisan conflict over continuing the vital market support for wind.

News filtering through to Europe that the PTC extension was in the Bush proposal had a positive effect on Vestas and NEG Micon share prices early last month. A bill to extend the credit by five years was introduced in the Senate in March. A companion bill was entered in the House of Representatives earlier the same month.

Clean coal increase

Meantime there are no details yet of exactly where Bush wants the cuts within the wind R&D program. The whole energy budget is being trimmed from $19.7 million to $19.2 million, which critics say is an odd reaction to an energy crisis. "The taxpayers sent us here to weed out waste and to address growing problems of energy supply," is the claim of Bush's Energy Secretary, Spencer Abraham, who as a congressman once proposed axing the whole Department of Energy. "The weeding begins in this budget."

Bush administration officials have suggested that they see energy R&D as government support of commerce. Even so, Bush is proposing to increase the "clean coal" budget by a mind-boggling $2 billion over the next decade -- even though some previous clean coal appropriations, which require matching funding from private industry, have gone unspent.

In an almost cruel twist, Bush officials have also suggested that the renewables budgets could be restored in 2004 -- with money earned by the government from oil leases in Alaska's Arctic National Wildlife Refuge. The Bush administration is so far insisting that any energy bill must allow drilling in the refuge, an explosive issue that is sure to divide Congress and delay most energy legislation.

Bush's energy budget proposal is only the first step in the long budgetary process. Both houses of Congress will pass their own budget legislation, which AWEA and other renewables advocates hope will be more friendly towards wind power. The administration's upcoming energy report, which is being pulled together by a task force headed by Vice President Dick Cheney, will almost certainly focus on increased energy production -- especially of oil, gas and coal -- and on investment in new refineries, pipelines and power grids. "We won't extend Clinton administration energy spending priorities," wrote energy secretary Abraham in the Washington Post. "These approaches failed to avert our energy crisis."

Oil and gas

There are a few hints of what the policy may encompass, even though the Bush administration is keeping a close lid on the proceedings, apparently to try and minimise criticism when the report is issued. The bulk of the 100-page report will be on domestic oil and gas production, although one of the 12 chapters will be on renewables.

There is expected to be much interest in market based initiatives and tax incentives to encourage increased domestic production. Suggestions include a "smart" power grid system with flexible pricing that charges consumers more for power during peak hours. Another possibility being considered is an "energy ombudsman" to deal with community or "not in my back yard" objections to new power plants.

Environmental groups are also complaining that Cheney will not meet with their leaders even while he sits down with a parade of officials from the traditional energy industries. Already they have seen Bush halt US participation in the Kyoto talks and making a U-turn on his campaign promise to reduce CO2 emissions.

"This is what happens when you stack the administration with oil, gas and coal guys," says a disgusted John Coequyt of the Environmental Working Group. Indeed even some of America's most prominent political analysts have been questioning whether Bush, who has a record in Texas of loyalty to the largest and most powerful business interests, is simply caving in to well funded lobbying from the coal and oil industries.

Glimmers of hope

Randy Swisher, AWEA's executive director, however, points to a few glimmers of hope. He says that there has been discussion that the Bush administration will in fact gear support for wind back up again, but in an entirely different direction from Clinton's program. Indeed, the Washington Post has reported that task force officials as saying that because so much of the energy report will focus on hot-button items -- such as domestic oil production -- it will also contain "hidden gems" to please environmentalists. Nuclear, it is widely rumoured, could be one of these.

"We're going to have conservation, we're going to have renewables and thoughtful pieces on the environment," one Bush official told the Washington Post. "There's pieces the renewables crowd and energy efficiency groups will be very supportive of." It remains to be seen whether these items will indeed be gems, or a few green crumbs.

If nothing else, Bush will have to keep in mind some recent poll results that show how out of step he is with broad public opinion in the Unites States. An opinion poll in Newsweek found that Bush's approval rating, as president, is lowest on environment and energy. Only 38% of those polled approve of Bush's handling of the environment, compared with 42% who disapprove. Only 41% believe he is committed to the environment. And only slightly more like Bush's handling of energy issues -- 39% approve, while 41% disapprove.

In fact, by the middle of last month the Bush administration already seemed to be retreating a little on the issue of greenhouse gases, so loud was the furore over Bush's U-turn, both domestically and from the European Union. Secretary of State Colin Powell, one of the moderate and more internationally-minded members of Bush's cabinet, is apparently pushing Bush to compromise and endorse some kind of action -- albeit a less pro-active one -- on global warming. And Cheney, also a former oil-man, is known to have phoned a Seattle newspaper after the furore over CO2 to insist that the administration is "concerned" about green house gases.

Entwined with oil

But then on April 18, the administration announced its replacement for Dan Reicher, the Clinton political appointee and former solar executive who was the driving force behind Windpowering America, an initiative aimed at encouraging use of more wind power, particularly by state and federal buildings (Windpower Monthly, April 2001). The new assistant secretary for energy efficiency and renewables will be Capitol Hill insider David Garman, former chief of staff to Senator Frank Murkowski, chair of the senate energy and natural resources committee.

Even as AWEA praised Garman as someone they could work with, one thing about Garman's background -- and presumably his outlook -- stood out. His former boss Murkowski, who represents Alaska, is a driving force behind opening up domestic oil and gas drilling, especially in the Arctic National Wildlife Reserve. More than ever before, wind's federal support for the next four years may well be inextricably entwined with a push for more dirty power.

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