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Energy Bill Standoff Holds Renewables Hostage

Clint Wilder's picture

Most people in the renewable energy business have probably never heard of Lyondell Chemical Co. of Houston, Texas. Even fewer see a connection between this company and the future of clean energy in the United States. But there is one--albeit indirect-- and it speaks volumes about the appalling way we go about formulating so-called energy "policy" in this country. The energy bill killed by a filibuster in the U.S. Senate last month was an expensive, bloated mess, with an estimated $24 billion in tax credits and subsidies for fossil fuel- and uranium-based producers of energy. Yet despite that sad comment on our energy priorities, the bill still had the support of all the major renewable energy industry trade associations: solar, wind, geothermal, and hydropower. The bill did contain a number of items that provided needed boosts to the production of renewables, including a crucial three-year extension of the wind energy production tax credit (PTC); expansion of the PTC to include solar energy; a $300 million program for federal buildings to install solar PV; $210 million in funding for hydrogen production from solar; and a five-year, 1.8 cent per kilowatt-hour PTC for producers of geothermal power. But when the bill emerged from the secretive, Republican-controlled House-Senate conference committee, even some senators who had fought for these renewable energy provisions, such as influential Nevada Democrat Harry Reid, supported the filibuster to kill the bill. There were many reasons, but most political analysts agree that the deal-breaker was the one that leads us back to Lyondell Chemical. Lyondell is the largest producer of the gasoline additive MTBE (metyl tertiary butyl ether), now a suspected carcinogen whose underground storage has allegedly led to water contamination in 1,500 cities and towns across the country. As most people know, the energy bill--thanks to a provision drafted and inserted in the conference committee--would have exempted MTBE makers from most liability lawsuits and retroactively nullified some 20 suits filed by municipalities since Sept 5. And it would have handed some $1.75 billion in "transition funds" to MTBE producers while they switch to production of alternative chemicals. Talk about wrongheaded subsidies. Unless I'm missing something, I don't quite see how granting immunity from MTBE liability lawsuits enhances the energy security of the United States, reduces our dependence on foreign oil, or has anything to do with energy policy at all. But I do know, thanks to the campaign finance trackers at the non-partisan Center for Responsive Politics, that Lyondell is the No. 1 business contributor to the 2004 re- election campaign of House Majority Leader Tom DeLay. The Houston-area Republican congressman was considered the driving force behind the MTBE lawsuit exemption and refused to budge on the issue, even under lobbying pressure from the White House and Senate energy bill champion Pete Domenici (R-N.M.) after the bill's defeat. Lyondell is far from the only well-connected corporation to receive a handsome business payoff in the energy bill. But that's precisely the point. Our political leaders may talk about the need for comprehensive energy policy, but what we end up with is a mishmash of special-interest giveaways - the MTBE provision being among the most outrageous. Politics, of course, is always compromise, and if the good outweighs the bad in a major bill, you go with it. But this time, those who loaded up on the bad went a little too far, and it cost them the ballgame. Sen. Maria Cantwell (D-Wash.) said it well: "You can't have good energy policy held hostage for bad energy policy." So what's next? Barring a miracle, the wind energy industry's PTC will expire Dec. 31, a real kick in the teeth for wind power in the U.S. Already North Dakota wind turbine power manufacturer DMI Industries has laid off half of its workforce, and Danish turbine maker Vestas's plans to open a major U.S. manufacturing facility in Portland, Ore., remain on hold. The American Wind Energy Association estimates that even if Congress reinstates the PTC sometime next year, the delay may cost the industry billions of dollars in revenue and thousands of jobs. Other renewable sectors face similar troubles and uncertainty. In whatever new energy bill that Congress takes up in 2004, the renewable power industries and their champions on Capitol Hill must continue to fight for the best provisions supporting clean energy in this year's stalled bill. Unlike some parts of the ill-fated legislation, they actually are relevant to America's energy future. Clint Wilder is Clean Edge's contributing editor. E-mail him at wilder[at]cleanedge[dot]com..