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Wyden predicts success of small bills as report shows industry growth

By Nick Juliano, E&E News
Published: February 1, 2013

The era of the comprehensive energy bill is over, at least for now, but Congress may still be able to pass smaller bills aimed at fully exploiting the benefits of natural gas, shoring up renewable energy and further reducing greenhouse gas emissions, Senate Energy and Natural Resources Chairman Ron Wyden (D-Ore.) said last night.

"You're going to see a big push, in the Senate in particular, to promote what I call a low-carbon economy," Wyden said at a reception in Washington.

Wyden said he is still making the rounds in meetings with his colleagues before rolling out any concrete proposals. For example, yesterday he met with freshman Sen. Tim Scott (R-S.C.), who was appointed last month to replace retired Sen. Jim DeMint. Wyden said he also met recently with his House counterparts, Energy and Commerce Chairman Fred Upton (R-Mich.) and Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.).

Expressing optimism at the chances of breaking the partisan impasse that prevented much legislation from making it through both chambers in the last Congress, Wyden said he's also hopeful about working with ranking member Lisa Murkowski (R-Alaska) on bipartisan legislation. The initial focus of the committee will be natural gas, including proposals to export liquefied natural gas, which will be the subject of a Feb. 12 hearing.

Wyden spoke at a reception last night celebrating the release of the "Sustainable Energy in America 2013 Factbook," which was compiled by the research firm Bloomberg New Energy Finance and funded by the Business Council for Sustainable Energy, a coalition of companies and trade associations in the renewable, natural gas and efficiency sectors. He delivered brief remarks and fielded questions from the crowd.

The factbook compiles data on growth in various clean energy sectors over the last several years, showing dramatic gains in wind, solar and gas installations in the electricity sector; falling costs for key renewable technologies; and increased use of energy efficiency, among other findings.

"What a quaint theory, that people actually have some facts," Wyden quipped, praising the publication as a valuable resource for policymakers and stakeholders.

Gas and renewables together provided 58 percent of the U.S. power mix last year, up from 56 percent in 2011 and 54 percent in 2007, according to the report. And nonhydro renewable sources -- primarily wind and solar -- nearly doubled their capacity since 2008, growing from about 44,000 megawatts to nearly 86,000 MW.

Energy efficiency also has seen significant gains in recent years, with total energy use down 6.4 percent since 2007. Part of that drop can be attributed to the economic recession, but energy demand continues to fall even as the economy is recovering.

The cost of renewable energy also is falling. The levelized cost of large-scale solar projects has fallen from 31 cents per kilowatt-hour in 2009 to 14 cents/kWh last year, while wind has dropped from 9 cents/kWh to 8 cents/kWh over the same period, the report says.

The industry's growth comes largely as a result of supportive government policy, such as federal tax incentives and stimulus spending or state-level renewable portfolio standards, the report says.

"It's being done through energy policy, and in large part it's being done through tax policy," Rhone Resch, head of the Solar Energy Industries Association, said at a press briefing earlier yesterday.

The wind industry scored a last-minute victory in its long-running effort to extend the 2.2-cent/kWh production tax credit through at least the end of this year, and solar has a 30 percent investment tax credit in place through 2016.

But the energy industry as a whole faces a relatively uncertain long-term future, with key lawmakers gearing up for a potential sweeping overhaul of that tax code that could have sharp implications for the temporary renewable credits, as well as permanent incentives in the tax code to benefit fossil fuel industries.

Wyden last night reiterated his interest in tax reform to fix an existing code he called a "dysfunctional, god-awful mess."

As a senior member of the Finance Committee, in addition to chairing Energy, Wyden will be a key player in the tax reform debate. On energy, he said he wants to emphasize parity and technological neutrality across all sectors, and to move away from the existing paradigm in which traditional sources like oil have permanent incentives in the tax code while renewable sources have to rely on short-term extensions to their temporary credits year after year.

Despite broad interest, the prospects for tax reform remain unclear, as Republicans and Democrats start off sharply divided over key issues such as whether an overhauled tax code should deliver more revenue to the federal government. But clean energy supporters are gearing up to protect their incentives, which are potential targets for cuts amid rising concern over the federal debt.

"If you have policy that's completely out of line with economic reality, it's not going to work," said Dave McCurdy, president of the American Gas Association. "Bringing the costs down in the renewables is an important part of this. But there's a totally new energy finance picture out there, and I think government is going to have to do a reset."

Resch noted that the wind and solar industries generated $30 billion of economic activity last year, and said solar projects deliver $10 in economic benefits for every $1 in tax incentives.

"That kind of stimulus, for that type of incentive that is used to grow the economy, is a smart investment," he said. "So I think as we look at corporate tax reform structurally, it's going to be done in a way that can continue to meet the investments in our strategic infrastructure industries like energy that are so critical to the growth of our economy overall."