Senators Cantwell, Kerry and Smith Introduce Clean Energy Package

Senator Maria Cantwell (D-WA) introduced a new energy bill to Congress last week that would provide long term extensions of several key clean energy tax credits, including the Federal Production Tax Credit. The bill, the "Clean Energy Investment Assurance Act of 2007" (S.6020) has been co-sponsored by Senators Gordon Smith (R-OR) and John Kerry (D-MA).

According to a summary of the bill from Senator Cantwell's office [word doc] the purpose of the bill is three fold:

Provide a sufficient duration to the incentives for investment in and wide-scale deployment of renewable energy technologies.

Provide incentives for improved efficiency to reduce energy consumption and enhanced management of energy demand.

Set an overall goal for the tax incentives—production of energy resulting in zero carbon emissions—and enable all technologies to become cost competitive within the defined timeframe of the incentives.

The bill would do the following:

Expands and Extends the Federal Production Tax Credit:

Extends the Production Tax Credit (PTC) for renewable energy generation through Dec 31st, 2013.

Expands the PTC to include thermal energy production technologies utilizing renewable energy to produce useful heating or cooling (i.e. solar hot water heating, biomass for heating, etc.).

Specifies that the PTC applies to any zero-carbon emission generating technologies utilizing renewable fuels, even if not explicitly enumerated in the bill (i.e. provides the Treasury Department the authority to grant eligibility for emerging zero-emissions technologies like wave, tidal, etc. to qualify without having to go through full Congressional amendment of bill).

Amends PTC to extend full value of credit to all technologies (currently gives half credit to hydro, irrigation hydro, open-loop biomass, landfill gas and waste combustion). [The National Hydropower Association was really excited about this part]

Expands and Extends the Clean Renewable Energy Bonds:

Extends the Clean Renewable Energy Bond (CREBs) incentive for investment in renewable energy by consumer-owned utilities (COUs) and other tax-exempt entities through Dec 31st, 2013.

Increases funding cap for CREBs to $5 billion/year (currently, $5 billion cumulatively in loans can be granted at any given time, seriously hampering ability of CREBs to incentivize renewable energy development by public utilities)

Expands and Extends Residential and Business Renewable Credits:

Extends to 2017 residential and business tax credits for solar hot water, PV, fuel cells, etc. Makes credit based on system power, not percentage of system cost (as currently). $3k per KW for PV, $1k per KW for fuel cells.

Expands credit to cover "qualified energy storage air conditioning" technologies [I assume this means things like ice-storage AC units that can use off-peak electricity to store cold (in ice blocks) for later use during peak periods.]

Extends Energy Efficiency Credits:

Extends credits to end of 2012 for energy efficient home construction, and for non-business and commercial energy efficiency retrofits.

Promotes Smart Meter Technology:

Allows utilities to recover costs of "smart meters" on a 5-year cost recovery schedule, instead of current 20-year schedule.

This is a good package of expanded credits and incentives for renewable energy and energy efficiency. I'm particularly happy to see my senator, Gordon Smith, co-sponsoring this bill.

The long-term extensions of these important credits will provide the long-term planning and financial certainty the renewable energy industry needs to make investments, both in renewable energy projects, but also in manufacturing facilities in the U.S. The boom-and-bust cycle of the PTC in the past has severely hampered the pace of renewable energy development in the US and has also discouraged significant investment in manufacturing capacity. Without long-term certainty that a strong North American market for wind and other renewable energy technologies exists, manufacturers are reluctant to make major long-term investments in factories in the U.S. This has led to a shortage of wind turbines and other crucial components and meant that many turbines used in US wind farms have to be imported from overseas, increasing costs (especially considering the weakening of the dollar versus the euro and other currencies).

I hope that this bill is incorporated into the package of energy legislation Congress plans to consider and pass in June and July. These incentives are crucial to the accelerated deployment of clean, homegrown, renewable energy technologies and increased energy efficiency. They will help level the playing field between highly subsidized fossil and nuclear energy industries and emerging renewable energy industries and the long-term certainty this bill provides will incentivize both quicken the pace of renewable energy development as well as increased US-based manufacturing of clean energy technologies - a win-win for the U.S. economy.