United States

United States

Wind takes hit in Bush budget request -- Industry expected to shoulder costs of research

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The US Department of Energy's technology research priorities moved markedly in the direction of hydrogen technologies and fuel cell vehicles and away from wind power in President George Bush's proposed fiscal year 2004 budget. The president's proposal for wind energy research totals $41.6 million out of a $2.23 trillion budget plan that prioritises defence spending and tax cuts while projecting record spending deficits. The wind budget request represents a 5.5% decrease over the $44 million the Administration sought in 2003.

"In terms of the trends, when the numbers are going down, no matter how small the cut, it is not the direction we'd like to see," says Randy Swisher of the American Wind Energy Association (AWEA). Wind is not the only renewable technology hit. Biomass and geothermal research are also in line for budget reductions, although the administration is offering solar energy a 0.1% budget hike and leaves hydropower research untouched.

Hydrogen is Bush's big winner. The DOE is requesting $48.1 million more for hydrogen research, a 121% increase over its 2003 budget request, and $20 million more for fuel cell technology development, an increase of 35%.

Explaining the priorities, energy secretary Spencer Abraham says many renewables and energy conservation programs have already resulted in technologies that have been adopted by business. "We've concluded that since much of that research was quite advanced, it made sense for the private sector at this point to take on a greater share of the cost."

AWEA disagrees

Swisher, however, argues that in the case of wind there is still a significant role for the federal government to play, particularly in developing turbines adapted to lower wind speed areas. AWEA, he says, would like to see a wind research budget in the range of $50-60 million. "Despite how well wind is doing in the market, despite the progress that we've made, the idea that somehow that job is done is woefully shortsighted."

The Bush budget also proposes a two year extension to the wind production tax credit, three years short of the five year extension AWEA says is needed to help bring stability to the US industry. The current PTC extension expires at the end of this year. "We're glad that it's in the budget certainly," says Swisher. "But as we've stressed time and again, the single biggest problem facing this industry in the US is lack of stable long term policy from the federal government.

Uncertainty barrier

The fact that it has been so inconsistent, as exemplified by the production tax credit, is a very big barrier inhibiting investment in the US. If we had a five-year extension, I think clearly billions of dollars would flow into this industry.

The Bush budget also proposes eliminating funding next year for a program that provides low-interest loans, loan guarantees and grants to farmers, ranchers and rural small businesses to buy and install renewable energy systems and invest in energy efficiency. Congress had approved spending $23 million a year for five years on the program, which was included in US farm legislation passed last year.

Swisher says the work Congress did through the Farm Bill to get the Department of Agriculture engaged in rural renewable energy development was important. "The administration just sort of took that away. We'll see what Congress does with that, but it is certainly not encouraging."

Bush's budget proposal is only the first step in a long budgetary process. The focus now shifts to the US Congress, which must negotiate the appropriations bills that will determine the actual levels of funding for the various government programs. By the time Bush unveiled his 2004 budget plan in early February, Congress had still not approved much of the legislation required to fund federal agencies in 2003.

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