Renewable Power Subsidies

Energy Winds Shift in D.C.

By Richard Martin, 6-19-07

	Photo by Dave Morris

Energy producers across the West are watching events in Washington D.C. today as the Finance Committee of the U.S. Senate considers a bill that would reverse years of energy policy favorable to fossil fuels in an effort to boost the nation’s renewable-energy capacity. Democrats are attempting to shift about $14 billion in incentives, tax breaks, and other subsidies from the oil industry to green fuels – an effort that has already been endorsed the top Republican on the Finance Committee, Charles Grassley of Iowa, a state whose corn farmers would benefit from a boost to the ethanol industry.

Provisions in the Senate bill include $1.5 billion in tax-free bonds for advanced coal-fired electricity plants, $332 million in tax credits for plants that make diesel fuel from coal, and $5.6 billion in tax credits for wind and geothermal electricity companies. Passage of the bill, which could well be vetoed by President Bush, would mark the biggest shift in U.S. energy policy since World War II.

New Mexico’s Senator Jeff Bingaman wants to eliminate the loophole that allows companies to drill for oil and gas in federal waters without paying royalties – a change that could raise $10 billion in new taxes.

An amendment from Sen. Jon Tester of Montana would provide subsidies for the nascent coal liquification industry – a technology that could actually add to climate-changing emissions. A Washington Post editorial, noting that Tester’s provision would support coal-to-liquid plants that capture the carbon they produce and store it underground, added, “But large-scale and premature subsidies for this untested and environmentally risky technology may amount to nothing more than a big giveaway to Big Coal.”

The Senate bill includes no subsidies for nuclear power – which many energy experts contend is the only form of generation that offers a way to stave off climate change. 

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