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Charlie KubertEnvironmental Law & Policy Center

* * *Kansas Renewable Energy Conference

September 26, 2007

Meanwhile, back in D.C.:

Update on Federal Renewable Energy Legislation

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•Federal RPS

•Farm Bill Energy Title

•Energy Tax Bill

Three Key Legislative Initiatives

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•22 States already had a state RPS

•RPS addresses global warming and economic development (and energy security)

•RPS easier to swallow than carbon caps or taxes

Federal Renewable Energy Standard

Legislative Drivers

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•20% by 2020

•State policies take precedent if stronger

•RECs as alternate compliance mechanism

•Included in overall Energy Bill: Passed 241-172

•Boyda, Moore-yes; Moran, Tiahrt-no

Federal RPS: House Version

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•15% by 2020

•Bingaman amendment did not make it into final Senate Energy Bill

-could not overcome threatened filibuster-opposition from Southern Senators

•Next Step: House-Senate Conference in Fall?

•Brownback-maybe; Roberts-no

Federal RPS: Senate Version

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•Domestic Fuel Security•25 x ’25 Resolution•High Energy Costs•Global Warming•Rural Economic Development•Reluctance to reduce traditional farm support•Energy vs. Conservation “Food Fight”

2007 Farm Bill Energy Title

Key Policy Drivers

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•Farm Bill Passed in July

•Included $ 3.2 billion in new funding for Energy Title

•Funded through offshore oil royalties

•Heroes: Speaker Pelosi, Chmn. Peterson, Rep. Herseth-Sandlin

Energy Title: House Version

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•Biorefineries: Loan guarantees up to $250 million

•Increased funding for Renewable Energy and EE Program (up to $250 million per year)

Rebate program for small projectsEligibility expanded to rural schoolsFeasibility studies fundedFixes PTC “Haircut”

What’s In It

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What’s In It

•Bioenergy Feedstock Program (Section 9010): Expands (but doesn’t limit) eligibility to cellulosic fuels and biomass-powered

plants

•Biomass Energy Reserve Program:Provides incentives to encourage farmers to

cultivate and harvest energy crops if they have a demonstrated market for them.

•Continuation of Biomass R&D Program

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•Still being proposed by Chairman Harkin•Similar to House Version•Differences include:

Grant program for pilot-scale, loan guarantees for commercial scale cellulosic ethanol plantsRestriction of bioenergy program to cellulosic ethanol and bio-powered plants (GHG reduction criteria)“Rural Repowering” grants to encourage substitution of biomass for natural gasEnergy audit and technical assistance program

Energy Title: Senate Version

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•Major drop-off in funding for wind and digesters

•3 States and Energy Efficiency Dominated Awards•Iowa (grain dryers)• Mississippi (poultry farms)• Nebraska (irrigation pumps)

•USDA rule changes impacted applications

Section 9006: Results from 2007

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How Did Kansas Do?

•12 Projects ($3,800-$42,000)

•Total Funding: $174,000

Note: excludes any grant/loan guarantee combinations received in first round

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Energy Tax Credits

Context: Baucus and Grassley on both Finance and Ag Committees

Proposed Clean Energy Tax Credits for Electricity:

•Extension of PTC through 2013

•Extension/Expansion of CREBs through 2011

•Extension of solar tax credit to 2014/2019 with addition of residential small wind systems

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Energy Tax Credits-2

Other Clean Energy Tax Credits:

•CO2 Capture and Geologic Sequestration (clean coal)

•Cellulosic ethanol production credit

•“Fossil-free” ethanol production credit

•Reduction in ethanol tax credit after RFS target is reached

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Energy Tax Credits-3

Energy Efficiency Credits:

•Energy efficient commercial buildings credit extended to 2013

•Energy efficient appliances credit through 2009

•Energy efficient homes credit through 2011

•Overall package is revenue neutral through changes in tax treatment of oil and gas production

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What’s Wrong with Tax Credits?

•Not Assignable

•Limited value for those with limited tax liability

•No substitute for grants/loans for risky technology

•Discourage local ownership

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For more information