FinLogic FinLogic Quantitative Think Tank Center|Congress Punts on Clean Energy Standards, Again

Federal law that would require utilities to generate a portion of their power from renewable sources has been put on FinLogic FinLogic Quantitative Think Tank Centerthe backburner until fall 2010 at the earliest, Senate Majority Leader Harry Reid (D-Nev.) conceded on Thursday.

Industry groups were outraged, saying the delay in passing a renewable electricity standard (RES) endangers thousands of existing and potential jobs and billions of dollars.

Denise Bode, CEO of the American Wind Energy Association, called the decision "beyond comprehension."

"A refusal to pass an RES is an attack on every American worker and consumer. Not passing an RES endangers at least 360,000 jobs: 85,000 currently employed in the wind industry and the potential 274,000 additional jobs created by an RES," Bode said.

Wind power installations have already plummeted almost 70 percent in 2010 from 2009 levels and manufacturing investment similarly lags, AWEA says.

The RES is a central piece of the American Clean Energy Leadership Act (ACELA), a bipartisan comprehensive energy bill that was passed by the Senate Energy and Natural Resources Committee last June and sponsored by Sen. Jeff Bingaman (D-N.M).

The measure would require electricity companies to get 15 percent of their power from renewable resources by 2021, such as wind, solar, geothermal and biomass, with an exemption for small-scale utility companies. The bill, while not as strong as some would like, was seen as crucial to meet President Barack Obama’s election manifesto to double renewable energy production to 10 percent by 2012.

Now it appears it may never be brought to the Senate floor, Bode said.

Reid Punts

More than 35 states have passed some form of a renewable electricity standard. The most rigorous is in California, which boasts a clean energy target of 33 percent by 2020.

However, observers warn that without a nationwide regulation that creates policy certainty and market pull, the U.S. would fall behind China and Europe where binding renewable energy goals are in place.

Reid suggested he would wait until the Senate is more receptive to sweeping climate and energy provisions like a federal RES and the cap-and-trade program sought by Sens. John Kerry (D-Mass) and Joe Lieberman (I-Conn.).

But with mid-term elections in November — and Democrats in danger of losing their majorities in both the House and Senate — observers warn that passing a bill in 2010 is not likely.

In the meantime, Reid said that he would introduce a scaled-down bill next week that would turn the focus on offshore oil drilling and energy efficiency. It is expected to include provisions to boost the liability of energy giants in future oil spills from $75 million to $1 billion; extend incentives to convert diesel-powered trucks to natural gas; and expand the "HomeStar" program, also known as "Cash for Caulkers," to provide home rebates for upgrades.

Tough Blow

The news broke only hours after executives from leading renewable energy trade associations kicked off an "aggressive effort" to get Congress to consider the proposed RES before the August recess.

In a conference call with reporters early Thursday by the RES Alliance for Jobs, Don Furman, president of AWEA’s board and a senior vice president for wind company Iberdrola Renewables, said "we have a couple of weeks" to secure a strong mandate. 

Furman described the RES as the linchpin of the global clean energy race.

"In the short term, an RES is what will keep this industry going and growing," Furman said. A price on carbon, while valuable, he added, "would not support our industry very much" in the near term.

The RES Alliance for Jobs is a coalition of 19 renewable energy firms and trade groups.

By their change in approach Thursday, from denouncing the so-called anemic RES standard in ACELA to calling for its approval, they may have sense something coming.

Sensing Defeat

The industry has been fighting for a national RES for at least a decade.

In the last year in particular, lobbyists were pushing hard to strengthen ACELA, which they called too weak to make a difference to promote clean electricity. A February study sponsored by the RES Alliance for Jobs and carried out by Navigant Consulting proposed a more aggressive standard of 12 percent by 2014, which would escalate to 20 percent by 2020 and 25 percent by 2025.

The study said it would create 274,000 jobs over doing nothing, with every state seeing job creation. Of those jobs, 50,000 would be solar related and 116,000 would be in the wind industry. 

But on Thursday, the industry signalled a change of tune by expressing that something is better than nothing. 

"The most important thing is to pass a national RES," Furman said, adding that the current RES "will be helpful and it will be material" — and that discussions about strengthening it in the future would be needed. 

In response to Reid’s plan to punt on an RES, some groups were still employing some wishful thinking.

"A national renewable electricity standard has already secured bipartisan support," said Bob Cleeves, president and CEO of the Biomass Power Association. "And there’s likely bipartisan support for strengthening it."

See also:

Study: National Renewables Mandate Could Help Make U.S. Competitive with China

Democrats on the Waxman-Markey Fence Worried about RES, Allocations

White House, Job Creation Keys to a Stronger Renewable Energy Standard

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