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WASHINGTON, DC, US, August 3, 2005 (Refocus Weekly) Both houses of the U.S. government have voted to approve a US$14.5 billion energy bill which has mixed reaction from renewable energy groups.
The Senate approved the legislation, 74 to 26, following a 275 to 156 vote by the House of Representatives. The bill now requires the signature of president George Bush to become law.
Wind, geothermal, biomass, landfill gas and hydropower technologies will receive $3.1 billion in tax credits. The largest provision for renewables is a two-year extension of the production tax credit, worth $2.7 billion, most of which will promote construction of new windfarms, while the balance will help other green power technologies.
The American Wind Energy Association estimates that $5 billion in new wind projects will proceed over the next two years, and failure to extend the tax credits would have stalled the projects and lost hundreds of jobs, says Randall Swisher.
The bill creates a new category of tax credits, clean renewable energy bonds, with an estimated value of $400 million. The tax-exempt bonds can be issued by local governments or electricity cooperatives and other non-profit utilities, as well as tribal governments, to help pay for wind, solar, biomass and other specified green power projects.
Homeowners who install solar photovoltaic systems will be eligible for federal financial assistance for the first time in 20 years, with a tax credit worth 30% of the cost of solar panels that is capped at $2,000. The Solar Energy Industry Association says the tax credit would support purchases that improve energy independence in the U.S.
For geothermal, the bill includes new tax incentives, improvements in federal leasing laws, and support for continued technology development. Geothermal will receive the full 1.9c/kWh production tax credit for ten years to new facilities placed in service by December 2007. Last year, Congress expanded the PTC to include geothermal and other renewables, but the credit would be for only five years. The Geothermal Energy Association says the decision to give geothermal the full credit period places it on equal terms with wind, and is a huge victory for geothermal that will spur new developments across the west.
The two largest issues facing the domestic hydropower industry were resolved in the legislation, the hydropower licensing process and the lack of growth over the past two decades, according to the National Hydropower Association. “Today is a great day for the nation's hydropower resource, as well as millions of America's electricity consumers,” says Linda Church Ciocci, and the reforms will improve the licensing process to preserve “important environmental protection standards and ensures that all stakeholders can fully participate in the process.”
The Energy Policy Act of 2005 recognizes ocean energy for the first time in 20 years, says the Ocean Renewable Energy Coalition. It contains provisions to require mandatory purchases for ocean energy generated from tidal, current and wave technologies, although it was not included in the PTC.
Another $194 million will fund a two-year extension of excise- and income-tax credits for manufacturers of biodiesel, and a provision mandates the annual use of 7.5 billion gallons of ethanol by 2012.
Of the total $14.5 billion, $2.6 billion is in tax breaks for oil and gas drilling and the expansion of pipelines and refineries. Electric utilities will receive $3.1 billion in tax credits and subsidies to build nuclear reactors, and coal companies will receive $2.9 billion to invest in new technologies that reduce air pollution.
“By encouraging greater efficiency, increased energy production in an environmentally responsible way and encouraging investment in our nation's outdated energy infrastructure, this bill takes a balanced approach and embodies the right priorities for the American people," says energy secretary Sam Bodman.
The 1,725 page legislation provides $875 million in tax credits to people who buy hybrid gas-electric vehicles before 2010, with car manufacturers limited to credits for 60,000 vehicles a year. Another $555 million will be provided as tax credits to homeowners who buy energy-efficient fans, furnaces and hot water boilers, and tax credits will be available for manufacturers of dishwashers, refrigerators and other appliances, as well as commercial builders, if they meet certain energy-efficiency standards.
The legislation imposes new efficiency standards for commercial appliances, and requires electric utilities to meet federal reliability standards for the transmission grid that will avoid blackouts. It will facilitate imports of liquefied natural gas by giving federal regulators final approval over import terminals and provides $1 billion for coastal environmental management in states where there is offshore oil production. There is a $1.8 billion program to promote clean coal research and development, and a requirement for an inventory of offshore oil and gas resources, including areas now off limits to drilling.
The bill also extends daylight saving time by one month, beginning in 2007.
Critics in Washington say the legislation will do nothing to reduce high energy prices or to reduce dependence on Middle East oil. Lawmakers dropped a provision to allow oil drilling in the Arctic National Wildlife Refuge in Alaska to avoid opposition to the bill in the Senate, as was a provision to require the president to find ways to reduce U.S. oil demand by 1 million barrels a year by 2025.
“This bill is a major disappointment from an energy policy perspective,” says Dan Reicher, a former assistant secretary in the Department of Energy during the Bill Clinton administration and now president of New Energy Capital, a venture capital firm that specializes in renewables.
There are no minimum requirements for clean power production and no disincentives to curb consumption of fossil fuels, or mandatory caps on GHG emissions.
“This bill demonstrates no vision, no leadership and no courage,” says Kevin Curtis of the National Environmental Trust. “I just hope the Senate makes up for it by moving separate bills on renewable energy, global warming and oil savings.”
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