Hill Heat

September 18, 2008

Pass Clean Energy Incentives; Strip out Provisions that Support Dirty Fuels

Dear Senator,

On behalf of our millions of members and activists, we urge Congress to pass the clean energy tax incentives included in the Energy Improvement and Extension Act of 2008 and strip the bill of incentives for dirty fossil fuels. Congress should take this opportunity to promote a new energy economy and begin the fight against global warming, and not reward the big oil and dirty coal industries.

The bill would extend federal tax incentives for energy efficiency and renewable energy technologies that have expired or will expire at the end of this year. These incentives must be extended immediately to avoid significant harm to the developing clean energy industries in the United States. The technologies produced by these industries play a vital role in reducing global warming pollution, creating new high-wage jobs in our country, and saving consumers and businesses money on their energy bills.

The extensions would help consumers and businesses reduce their energy consumption immediately, and in so doing blunt the impact of high energy bills. The greater use of energy efficiency and renewable energy spurred by extending the incentives would also decrease demand for natural gas, which in turn would help reduce natural gas prices. High natural gas prices are putting significant upward pressure on inflation and consumer energy bills. The incentives will help create new high-wage jobs in the clean energy technology sector and help the U.S. gain ground on other countries that are already ahead of us in the development and deployment of clean energy technologies.

The renewable energy and efficiency provisions have broad support from the nation’s largest retailers, leading appliance makers, commercial real estate industry, home insulators, architect association, the solar industry, biomass industry, wind industry, and environmental groups. However, the bill currently contains several controversial provisions on dirty fuels that we urge Congress to strip before the bill becomes law. These dirty liquid fuel provisions in the bill would be a major setback in efforts to solve global warming. Extraction of these fuels – tar sands, oil shale and liquid coal – can produce more than twice the amount of global warming pollution as conventional oil. Supporting these fuels through tax incentives is completely at odds with mandatory carbon reductions that we expect Congress will enact in the near future.

The “Refinery Expensing” provision in the bill promotes the production of oil shale and tar sands fuels. This provision expands the Internal Revenue Code Section 179C tax credit to refinery property that is used to directly convert oil shale and tar sands into liquid transportation fuels. The extraction, refining and combustion of oil from shale is likely to generate upwards of four times more greenhouse gasses than conventional fuels and would be mined from some of our most precious wildlands in the Rocky Mountain West.

Tar sands oil from Canada is being extracted from the heart of Canada’s Boreal forest, one of the last large intact ecosystems on Earth. The devastating extraction process turns the pristine forest into a moonscape. Tar sands could be produced in the Western United States as well. Canadian tar sands oil already is being refined in refineries in the Midwest and Rockies regions and makes up 8% of the fuel use in our country. Of the half dozen U.S. refinery expansions in the permitting stage, most are multi-billion dollar expansions to take more tar sands oil from Canada. Supporting these refinery expansions through the tax code will impose high costs on taxpayers when oil companies operating in the tar sands are making record profits.

Provisions that incentivize liquid coal are also problematic. Relying on liquid coal would nearly double the global warming pollution per gallon of transportation fuels and increase the damage of coal mining to communities and ecosystems across the country. This fuel has yet to emerge as a significant transportation fuel in the United States and is not a viable fuel in a world where carbon must be reduced. Congress should therefore not provide any support to the development of liquid coal.

Extending the clean energy tax incentives would maintain the growth of energy efficiency and renewable energy industries, which are essential to reducing global warming pollution. We urge you to support clean energy incentives and strip the dirty fuels provisions before the bill is sent to the president. Sincerely,

Karen Wayland, Legislative Director Natural Resources Defense Council Tiernan Sittenfeld, Legislative Director League of Conservation Voters Cindy Shogan, Executive Director Alaska Wilderness League Jennifer S. Rennicks, Federal Policy Director Southern Alliance for Clean Energy Betsy Loyless, Audubon Shawnee Hoover, Legislative Director Friends of the Earth Marty Hayden, V.P. Policy and Legislation Earthjustice

Lynn Thorp, National Campaigns Coordinator Clean Water Action Linda Lance, Vice-President for Public Policy The Wilderness Society Debbie Sease, National Campaign Director Sierra Club Elizabeth Thompson, Legislative Director Environmental Defense Fund Steve Porter, Director of Climate Programs Center for International Environmental Law Marchant Wentworth, Legislative Representative Union of Concerned Scientists Anna Aurilio, Director, Washington Office Environment America Judy Duffy, Advocacy Director League of Women Voters of the United States Robert Dewey, V.P. Government Relations Defenders of Wildlife

NWF:

Dear Senator: On behalf of our four million members and supporters and the hundreds of thousands of hunters, anglers and other outdoor enthusiasts in our ranks, we write in opposition to the Energy Improvement and Extension Act of 2008 (H.R. 6049). While we strongly favor the critical extensions of incentives for conservation and renewable energy we oppose H.R. 6049 because it includes substantial new subsidies for dirty fuels that will dramatically increase global warming pollution and threaten millions of acres of wildlife habitat. The clean energy tax incentives have passed both the Senate and House several times, and we applaud the Senate’s efforts to move these into law. Unfortunately, by including sweeping new federal subsidies for oil shale, tar sands and liquid coal refining, the bill no longer represents the kind of progress America needs to confront global warming. We specifically oppose:

Refinery Incentives for Oil Shale & Tar Sands: The “Refinery Expensing” provision in the bill promotes the production of oil shale and tar sands fuels. This provision expands the Internal Revenue Code Section 179C tax credit to refinery property that is used to directly convert oil shale and tar sands into liquid transportation fuels.

Oil shale development would put at risk millions of acres of wildlife habitat throughout the Rocky Mountain West important to hunters, anglers and other wildlife enthusiasts. Moreover, producing transportation fuels from oil shale and tar sands would dramatically increase global warming pollution.

Oil shale production is five times more CO2 intensive than conventional drilling and gasoline production. The United States cannot change course on its rising global warming pollution levels while quintupling the CO2 in our tanks.

A viable shale industry would also have significant direct impacts on wildlife, and inevitably collide with consumer water needs in the arid West. Shale production requires five gallons of water to produce one gallon of fuel, and the vast majority of shale is located in arid states with limited water resources. The federal government reports that a viable shale industry would consume upwards of 315 million gallons of water daily – 130 percent of the City of Denver’s daily water use. Combined with the massive disturbance of land and habitat caused by shale extraction, this fuel presents a grave risk to sensitive wildlife habitat in the Rocky Mountain West.

Tar sands production is four times more CO2 intensive than conventional drilling and gasoline production. Tar sands also threaten wildlife habitat as they are currently being mined from Canada’s boreal forest, and could be produced in the Western United States as well. Of the half dozen U.S. refinery expansions in the permitting stage, most are multi-billion dollar expansions to take more tar sands oil from Canada. Supporting these refinery expansions through the tax code will impose high costs on taxpayers when oil companies operating in the tar sands are making record profits.

Incentives for Liquid Coal: the “Carbon Capture and Sequestration Demonstration Projects” and the “Extension and Expansion of the Alternative Fuels Credit” would promote coal to liquid transportation fuels. The production and use of coal-based transportation fuels would more than double the global warming pollution per gallon as compared to conventional gasoline. It would also increase the devastating effects of coal mining felt by communities and wildlife stretching from Appalachia to the Rocky Mountains.

NWF strongly supports provisions in the bill that would extend federal tax incentives for energy efficiency and renewable energy technologies that have expired or will expire at the end of this year. These incentives must be extended immediately to avoid significant harm to the developing clean energy industries in the United States. The technologies produced by these industries play a vital role in reducing global warming pollution, creating new high-wage jobs here at home, and saving consumers and businesses money on their energy bills.

The extensions would blunt the impact of high energy bills by encouraging greater use of energy efficiency and renewable energy, and therefore decrease demand for natural gas. High natural gas prices are putting significant upward pressure on inflation and consumer energy bills.

However, the increased global warming pollution and destruction of important wildlife habitat that would result from the oil shale, tar sands, and CTL provisions in H.R.6049 outweigh the benefits of these clean energy incentives. The United States cannot change course on its rising global warming pollution levels while dramatically increasing the CO2 in our tanks. We therefore regrettably urge opposition to the bill.

Thank you for your consideration.

Sincerely,

Larry Schweiger
President & CEO
National Wildlife Federation

VOTE NO ON H.R. 2764, THE CONSOLIDATED APPROPRIATIONS ACT, 2008

Dear Representative:

On behalf of our millions of members and activists, we regretfully ask you to vote no on H.R. 2764, the State, Foreign Operations, and Related Programs Appropriations Act, 2008 (Consolidated Appropriations Act, 2008) because it would take America down a dirty energy path. Although Congress started with the promise of leading our country into a new energy future, H.R. 2764 breaks faith and continues the misguided, polluting policies of the past.

While Congress is poised to take historic steps to slow global warming, those positive steps would be undermined by approving H.R. 2764, which would invest taxpayer dollars in loan guarantees for polluting, expensive energy technologies. If passed, almost $30 billion would go to subsidizing dangerous, costly, and polluting industries, like nuclear power and coal. Rather than promoting clean energy resources, the bill wastes money to help launch an industry that produces liquid fuels from coal (“liquid coal”), which emits about twice as much global warming pollution as gasoline. We acknowledge that key oversight provisions were included, but we still believe that Congress should reject this proposal and keep its promise to forge a clean energy future.

It is also unfortunate that the bill also contains dramatic cuts to the Clean Water State Revolving Fund. The omnibus also includes a bad rider, which the environmental community was told would be deleted, that would interfere with judicial review of aspects of the U.S. Army Corps of Engineers St. Johns Bayou/New Madrid Flood control project, which would drain tens of thousands of acres of wetlands and put neighboring communities at risk. While we were pleased to see that there were increases for important environmental priorities like National Wildlife Refuges, the National Park Service, Forest Service road decommissioning, and the Diesel Emissions Reduction Act, these positive improvements are outweighed by the short-sighted investment of billions of dollars of loan guarantees that will increase global warming pollution. It is for this reason that we respectfully ask for you to join us in opposition to H.R. 2764.

Sincerely,

• Kristen Miller, Alaska Wilderness League
• Caitlin Love Hills, American Lands Alliance
• Peter Raabe, American Rivers
• Lynn Thorp, Clean Water Action
• Bob Shavelson, Cook Inletkeeper
• Yochi Zakai, Co-op America
• Marty Hayden, Earthjustice
• Mike Ewall, Energy Justice Network
• Anna Aurilio, Environment America
• Shawnee Hoover, Friends of the Earth
• John Passacantando, Greenpeace
• Tiernan Sittenfeld, League of Conservation Voters
• Karen Wayland, Natural Resources Defense Council
• Michael Mariotte, Nuclear Information and Resource Service
• Bonnie Raitt & Harvey Wasserman, NukeFree.org
• Tyson Slocum, Public Citizen
• Debbie Sease, Sierra Club

From EE News:

The Energy and Natural Resources Committee yesterday cleared in a largely bipartisan fashion the first major energy bill of the Democratic-controlled Senate, but only after a testy battle over coal-based transportation fuels highlighted the divisive nature of such debates.

After several hours of back and forth, the committee approved the underlying bill, 20-3. It deals with biofuels, energy efficiency and carbon sequestration. Only three Republicans voted against the bill: Sens. Craig Thomas (R-Wyo.), Richard Burr (R-N.C.) and Jim DeMint (R-S.C.).

But even with the overwhelming committee vote, it appears the legislation could be the subject of several heated fights as it moves to the floor, especially over a renewable portfolio standard (RPS) and coal-to-liquids (CTL) technology.

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) told reporters after the vote he does not know exactly when the bill will come to the floor. He does, however, anticipate floor time before the Memorial Day recess.

Aides for Majority Leader Harry Reid (D-Nev.) said there is no specific schedule for the bill, adding it will not be on the floor next week as the Senate is expected to take up the Water Resources Development Act (see related story).

A refining industry lobbyist said he thinks Reid may have to shelve the energy package until after the recess, citing the possibility of a sprawling debate. The lobbyist noted the fierce coal-to-liquids battle that is certain to resurface on the floor. The source also noted the full Senate must deal with Bingaman’s plan for a renewable portfolio standard, which the committee sidestepped, and the possibility of multiple amendments on ethanol and other issues.

“This bill is not ready for primetime,” the lobbyist said.

At the close of the markup, the ranking member of the committee, Sen. Pete Domenici (R-N.M.), said lawmakers will continue to try to move the bill in a bipartisan manner, but he also admitted it may take a while to get the legislation past the Senate.

“When it gets to the floor … you should not expect such a short session of the Senate, it will be there for quite a few days,” Domenici said.

Bingaman several times during the course of the markup emphasized he does not view the measure as a comprehensive energy bill. More opportunities for lawmakers to move their energy priorities will present themselves, he said.

“We have a number of areas we were trying to address, this is not a comprehensive energy bill,” Bingaman added. CTL debate dominates markup session

Much of the debate yesterday centered on an amendment offered by a pair of coal-state senators that would have created a new federal mandate for the use of CTL.

After a 90-minute debate on the matter, the panel – in a 12-11 party-line vote – defeated the amendment from Sens. Craig Thomas (R-Wyo.) and Jim Bunning (R-Ky.) that would have established a coal program to mirror the existing federal mandate for biofuels.

The amendment attempt seemingly ended a bipartisan truce that reigned over the committee’s first effort of the 110th Congress to create an energy bill. Bingaman and Domenici had tried to keep CTL a renewable portfolio standard off the table during the markup.

Early on, Bingaman attempted to assure lawmakers they would have an opportunity to offer their proposals either on the floor or in other legislation down the road. But Thomas said he decided the markup was the appropriate venue to move his CTL bill.

“That’s what this committee is for, to deal with these issues,” Thomas said after the vote. “We’re going to continue to work on it.”

Bingaman told reporters after the markup that he expected the CTL issue to again become a point of contention when the bill is brought up before the full Senate.

The Thomas-Bunning bill would create a new federal mandate requiring the use of 21 billion gallons of coal liquids by 2022. Additionally, in an effort to deal with the environmental concerns, the senators included a provision stating that the greenhouse gas emissions levels of CTL fuels would not exceed that of conventional gasoline.

That language did little to assuage committee Democrats, who balked at the legislation over lingering questions about GHG emissions and the feasibility of carbon sequestration from CTL.

“If we move forward fast with coal-to-liquids, and we don’t have carbon capture [and] carbon sequestration ducks in a row, we’re setting ourselves up for a disaster,” said Sen. Jon Tester (D-Mont.).

But Republicans argued that even as Congress attempts to deal with climate change, it must also deal with pressing energy security concerns. “There is a reality that we’re facing, and that is the reality of energy security,” said Sen. Larry Craig (R-Idaho). “Here’s an opportunity to vote for U.S. coal and against Saudi oil.”

Bingaman questioned whether the committee had done enough research to endorse such a significant mandate for CTL, essentially the same level as the mandate for advanced biofuels. And three Democrats who have previously endorsed the use of CTL – Sens. Byron Dorgan (N.D.), Ken Salazar (Colo.) and Tester – said they could not support the amendment either because of the timing or their concerns on how it would affect GHG emissions. All three ended up voting against the amendment but said they could support other CTL language in the future.

The committee did adopt a Bingaman amendment, 15-8, that would create a program to study large-scale capture of carbon from industrial sources. Bingaman touted the provision as a potential step toward testing the feasibility of carbon sequestration from CTL development.

The amendment authorizes $100 million per year over five years for the program. But the language also states that only projects that capture at least 85 percent of CO2 would be eligible for the grants.

The majority of committee Republicans voted against the amendment, arguing it would essentially delay the use of CTL for five years or more. “Senator Bingaman has found a nice way to stop the development of coal-to-liquids by an amendment that puts into place something that we don’t even understand how to do,” Domenici said. Panel adopts measures on GHG standards, biofuels studies

Only one other amendment during yesterday’s markup broke the committee along party lines and required a voice vote.

That amendment – sponsored by Bingaman – would require that any renewable fuel facility built after the bill is signed into law should produce fuels that achieve at least a 20 percent reduction in lifecycle GHG emissions.

Bingaman described such a target as “very achievable” and said the Renewable Fuels Association – the main lobbying group for the biofuels industry – has endorsed the language.

Yet Domenici called the provision largely unnecessary, given that the committee has already received assurances that cellulosic ethanol and other advanced biofuels produce fewer emissions than conventional gasoline.

“We’ve been told we have no worries, clearly we’re going to come in better than gasoline. Now all of a sudden in the last week or so we have someone coming along, ‘Well we want to put in an EPA condition,’” Domenici said. “I don’t think we should do it, it’s a far cry from where we started.”

The committee also adopted by a voice vote an amendment from Sen. Jim DeMint (R-S.C.) directing several federal agencies to conduct a study on increasing the ethanol blend in gasoline to more than 10 percent.

The Engine Manufacturers Association and the Alliance of Automobile Manufacturers backed the amendment, saying in a letter to the committee that the use of “mid-level” blends would be “entirely new products that will raise new questions, risks and challenges across a multifaceted range of energy, environmental, legal, safety and economic issues.”

The committee then adopted by a voice vote amendments to establish a research program for electric vehicles and a slew of other noncontroversial measures, including those authorizing studies for the distribution of biofuels, to allow federal agencies to acquire electric vehicles and to promote the use of new materials in industrial processes to improve energy efficiency. Offshore drilling measure shelved

A pair of senators – Dorgan and Craig – offered an amendment that would expand offshore drilling around the United States and neighboring nations. The lawmakers withdrew their amendment without a vote, saying they did not want to jeopardize the bipartisan nature of the legislation. They then expressed interest in pursuing the issue down the road.

“Many are hiding in the illusion that we don’t need more production in our standard fuels, and they are denying the reality that we do,” Craig said.

The bill would allow new oil and gas drilling in the eastern Gulf of Mexico within 45 miles of Florida’s coast. It also includes language granting U.S. companies the right to participate in exploration and production off Cuba’s coast and asking the Interior Department to conduct an inventory of outer continental shelf resources off the southeastern United States.

Even though the language was never voted on, the amendment drew a quick negative reaction from several coastal state lawmakers.

“It would be a really bad idea, it would break faith for those who negotiated in good faith on that issue [last year],” said Sen. Mel Martinez (R-Fla.), in reference to legislation approved last year allowing for new eastern gulf drilling for areas off the Florida coast. Bill’s focus remains on biofuels mandate, efficiency

The centerpiece of the bill that cleared the committee yesterday – the portion that is likely to receive the most attention when the bill hits the floor – is the dramatic expansion of the existing federal biofuels mandate.

The Bingaman-Domenici bill would put in place a 36-billion-gallon biofuels mandate by 2022 as well as provide a series of incentives for the industry’s development, such as loan guarantees for renewable fuel facilities, grants for the creation of renewable fuel corridors and transport of biomass to refiners.

Moreover, the legislation sets specific targets for the use of cellulosic ethanol, specifically hitting a mandate of 21 billion gallons by 2022.

In addition to the biofuels mandate, the legislation includes provisions aimed at spurring research and construction of renewable fuels infrastructure.

The bill would provide a federal loan guarantee of up to $250 million for renewable fuel facilities, grants for creation of renewable fuel corridors and grants for transport of biomass to refiners.

It calls for a 50 percent increase in bioenergy research through 2009, creates seven bioenergy research centers and directs the Energy Department to conduct several studies having to do with additional expansion of biofuels.

The legislation also contains an efficiency component that would codify efficiency standards for several products, boosting programs that spur use of efficient lighting technologies, and increasing conservation in federal buildings.

On the transportation side, the bill sets an overall goal of reducing gasoline use by 45 percent by 2030. The bill provides loan guarantees for plants that make fuel-efficient vehicles and their parts.

Other steps include grants to automakers to help retool current plants to make advanced technology vehicles and authorized funding for new research into batteries and lightweight vehicle materials.

Lawmakers also brought into the fold two carbon sequestration measures.

One of the measures would require the Energy Department, U.S. EPA and U.S. Geologic Survey to conduct a sweeping assessment of the potential for underground CO2 storage in all corners of the country, including Alaska and Hawaii. DOE would be required to estimate potential volumes of oil and gas that could be recovered after the carbon injections, as well as the potential risks if the CO2 leaks back into the atmosphere.

The other portion authorizes DOE to establish seven regional CO2 sequestration partnerships that bring together the work of federal, state and local governments, as well as industry and academia. The programs now run through fiscal 2009; under the bill, it would stretch through 2012.