Congress and the Energy Crisis. Do they have what it takes?

July 31, 2008

Another Test for the Shills on the Hill

Do the 535 elected leaders in the United States Congress have what it takes to help America solve its energy and climate crises?

Apparently not. Congress flunked a crucial test on climate change earlier this year when the Senate failed to bring a cap-and-trade bill to a vote. The House hasn’t even brought a bill to the floor.

Another crucial test is scheduled this week on a proposal to extend tax incentives for renewable energy industries. The incentives are critical to the rapid development of wind and solar systems in the United States, technologies that are essential to reducing our greenhouse gas emissions. Unless Congress votes to extend them, the incentives will expire at the end of the year.

How much science does it take; how many droughts, wildfires and natural disasters; how many energy crises; how many entreaties from world leaders before Congress does the right thing?

For some historical perspective, here’s another question: What do Tim Wirth, Al Gore, Claudine Schneider, Ernest Hollings and Daniel Patrick Moynihan have in common?

The answer: They all are former members of Congress who sponsored legislation on climate change nearly 20 years ago in the 101st session. Yet today, U.S. carbon emissions are higher than ever and still growing rapidly.

To be fair, Congresses over the decades have approved 96 different laws that mention global warming, climate change or greenhouse gases. This week, the Presidential Climate Action Project (PCAP) is releasing a new study that identifies how the next president can use those statutes to act on climate change without waiting for further votes on the Hill.

Current climate statutes span a wide variety of topics in the U.S. Code, including agriculture, commerce, conservation, education, foreign relations, Native Americans, labor, public health, transportation and the Internal Revenue Service. They include provisions addressing coastal zone research, government conservation, federal procurement, R&D, small business loans, electric utility standards, forestry management, air pollution, energy independence, alternative energy resources, building codes, and more.

Many laws that do not mention global warming — for example, some of the country’s landmark energy and environmental statutes — also give the President, the Administrator of the Environmental Protection Agency and other federal officials authority to act on climate change. The federal government’s inadequate response can be blamed in part on past and current administrations. A key question for the next President is whether these laws are being fully obeyed.

But this week, the important question is what our elected leaders will do going forward, and that brings us back to renewable energy incentives in federal law.

If you ask an industrialist what public policies are most useful in moving a new technology to commercialization, he or she is likely to give three answers: some type of financial assistance, public and/or private, to help the technology reach market viability; consistent federal policy; and a sufficient sustained market. When a new technology is critical to national security, federal subsidies are both justified and important. That’s the case for emerging energy efficiency and renewable energy technologies in the United States.

But Congress apparently doesn’t understand the concept of continuity. It has been the renewable industries’ runaway bride. Since 1999, it has allowed the Production Tax Credit (PTC) for wind power and Investment Tax Credit (ITC) for solar power to expire three times. When it has extended the incentives, it has done so for only two or three years at a time — perhaps because it wants energy industries both for and against the credits to keep those campaign contributions coming.

The result has been recurring boom-bust cycles in the wind and solar industries. The American Wind Energy Association estimates that each time the tax incentives have lapsed, investment in wind projects has fallen 70 to 93 percent. As I noted in a letter to the New York Times last February, the fits and starts have led to “under-investment in wind turbine manufacturing capacity in the U.S. and variability in equipment and supply costs,” according to Lawrence Berkeley National Laboratory. The lab estimates that a 10-year extension of the PTC would bring the installed cost of wind power down by up to 15 percent compared with off-again, on-again credits in place today, and would create more local economic development and jobs.

In terms of the overall federal budget and America’s enormous energy industry, the cost of the two tax breaks is chump change — about $1.8 billion each year. But supporters on the Hill have been hung up by the majority party’s pledge to offset each new spending increase with cuts elsewhere — a necessary discipline to bring the federal budget deficit under control.

When the new energy bill moved through Congress last December, renewable energy supporters proposed to pay for the solar and wind tax credits by reducing tax breaks given to the oil industry a few years ago. After all, the oil industry is doing very well and is quite capable of taking care of itself. But the White House threatened a veto and a sufficient number of Members balked, killing the extension.

In February, supporters tried to include the tax credits in the economic stimulus bill. The Senate dropped them. In June, supporters tried again by including extensions of the credits in the Energy and Job Creation Act. A filibuster in the Senate blocked the legislation.

Now, proponents are proposing that the cost of the renewable energy credits be covered by closing a tax loophole that allows hedge fund and investment managers to shield income from U.S. taxes by parking the money overseas. That would seem to be a bullet-proof trade-off, but head-counters say it remains doubtful that the Senate can muster the 60 votes needed to bring the extension to a vote.

Why? Each time the solar and wind tax incentives come up, opponents roll out an old theme: that Democrats want to raise taxes. For example, Senate Republican leader Mitch McConnell of Kentucky issued a statement Friday complaining that the latest attempt to renew solar and wind incentives “permanently raises taxes on some to extend temporary tax relief for others.” McConnell is correct: Closing a loophole does raise taxes — for tax dodgers. It seems reasonable to argue that helping the solar and wind industries gain a stable foothold in the U.S. economy is more important than helping hedge fund managers evade taxes.

Democrats are in the majority of the Senate and House this session, but they clearly aren’t in control. On party-line issues, they don’t have enough votes to override a presidential veto or even to force a vote on the floor of the Senate.

But surely they can use their bully pulpits better to shape the energy and climate debate underway in Congress right now. They are letting the oil lobby hog center stage with its argument that we can lower gasoline prices with more drilling offshore and in environmentally sensitive areas. Yet the Bush Administration has been issuing oil leases to the industry for years, as quickly as federal agencies can process them. That hasn’t prevented the crisis at the pump today.

Someone has defined insanity as doing the same thing over and over again and expecting a different result. If that’s true, then it’s time to send drilling proponents to the funny farm. The dialogue we really need in Congress (dialogue, because it should be beyond debate) is how to create a new economy that works in the 21st Century and that’s fueled by carbon-free, limitless domestic fuels.

I’m a peace-loving guy. I would love to see the members of Congress have a collective epiphany and a big group hug, and start working together with the American people to secure that future.

But if old-think continues ruling on the Hill, it will be time to call on T. Boone Pickens. If he really wants to see wind and solar power take hold in the United States, the best investment he can make is to deploy his swift boats against the oil industry’s shills on the Hill, while giving the presidential and congressional candidates who are serious about America’s energy future as much of his money as the law allows.

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2 Responses to “Congress and the Energy Crisis. Do they have what it takes?”

  1. You know, I have to tell you, I really enjoy this blog and the insight from everyone who participates. I find it to be refreshing and very informative. I wish there were more blogs like it. Anyway, I felt it was about time I posted, Ive spent most of my time here just lurking and reading, but today for some reason I just felt compelled to say this.

  2. Ron Phillips said

    Every state across the country should not hesitate to immediately implement a plan of action and a type of legislation termed Renewable Energy Payments or REP’s. The policy behind REP’s has been called “the world’s best renewable energy law”. It has proven to promote the fastest, cheapest, and widest growth of renewable energy. Its core principles are: 1. access to the power grid, 2. long-term guaranteed prices, and 3. no limit to the amount of renewable energy that can be sold to the utility companies.

    STATE LEADERSHIP
    In the US, energy policy is set at the national and state levels. Recognizing that our Federal Government is doing far too little to promote renewable energy, every state government needs to take leadership.

    ENERGY INDEPENDENCE
    The US consumes 25% of the world’s oil, but only has 3% of the world’s oil reserves. Our national and state economies are overly dependent on oil. Developing our own renewable energy breaks our dependence on Middle East and other foreign oil, thereby increasing our energy security. Renewables will help to solve global warming, and create millions of new well-paid jobs.

    MORE THAN ENOUGH
    Every state has more than enough renewable energy from the sun, wind, water, biomass and/or heat from the earth, to meet their needs. Renewable energy can be used for heating, cooling, electricity, and as fuel for machinery and transportation.

    FREE & CLEAN
    Once the investments are made to buy, install and maintain solar panels, wind turbines, etc., the actual “fuel” is free and ongoing. Compared to the costs related to fossil fuels-extraction, production, transport, pollution, illnesses, and wars-clean renewable energy is cheap. While fossil fuels pollute the environment and cause global warming, renewable energy is clean.

    MOST EFFECTIVE LAW
    The most effective legislation to stimulate a rapid transition from fossil fuels to renewable energy has been pioneered in Germany. This has made Germany the world leader in the production of solar panels, creating 234,000 jobs. In the 1980s the US had an 80% share of the solar panel market; today we have 25%. The German legislation is so effective that over 45 other countries, states and provinces have adopted similar laws with great success. We must remember Germany has the same number of peak sun hours (3) per day as southern Canada. Most states receive an annual average of twice this amount of solar resource per day.

    HOW IT WORKS
    This legislation encourages people and groups to install solar panels, wind generators, etc. to produce energy and sell it to their power company at a price guaranteed for 15 to 20 years. People are eager to install this equipment, as they will recoup their investment in about 9 years and have a steady stream of income after that. This increased demand creates jobs, conserves fossil fuels, and lowers greenhouse gas emissions-Germany is on track to meet its reduced CO2 emissions targets three years early.

    BRING IT HOME
    This simple idea that is producing astonishing results elsewhere has received little attention in the USA. It can help states reach their CO2 reduction targets, and their goals to have a percentage of their energy come from renewables by a set date. Climate chaos, escalating fuel prices, and wars show us that we need to switch from fossil fuels to renewable energy. We have the technology, know-how, and resources. Now we need leadership from our state government.

    WE CAN MAKE A DIFFERENCE
    We can all be innovative leaders in renewable energy. With REP’s we can do the most to help our country make a rapid transition from fossil fuels to clean renewable energy. By being a leader in clean renewable energy, we will create many thousands of well-paid jobs, improve public health, and help stop global warming. By reducing our dependence on imported fuels, we will keep the revenues of the energy industry within each state and increase our national security.

    PLAN OF ACTION

    With Decentralized Renewable Energy we create:

    Efficiency – Renewable energy can be produced right where it’s used, so almost nothing is wasted.

    Security – Currently, accessible renewable resources can deliver six times more energy than all the people on this planet use every day.

    Investment – Governments should support future technology that has the capacity to solve energy problems with clean, affordable energy for everyone.

    Ecology – Most renewable-energy fuels produce no emissions. The quicker we switch, the quicker we can stabilize our climate and prevent catastrophes.

    Independence – Renewable-energy technology produces energy in diverse, small-scale ways, allowing energy independence for everyone, everywhere.

    Cost – Renewable-energy fuels are free. The sun and wind do not increase their price, and technology will become cheaper as the market grows. As a result, our valuable water supplies are left to meet other needs.

    Economic Growth – Renewable energy provides stable fuel prices while creating a large number of high-skilled jobs in many sectors. The benefits are spread throughout society.

    Similar legislation is being introduced in Washington, DC, Florida and Michigan.

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