In our last post, we discussed an emerging trend of corporations and local governments taking decisive action on climate change in the absence of federal leadership.  Since that post, several excellent examples of this commitment have been announced, with perhaps the most compelling coming from the U.S. Conference of Mayors‘ 85th annual meeting this week.  Climate change and renewable energy were among the topics discussed at the meeting by leaders from more than 250 cities, and a number of powerful resolutions were adopted.  The full list of resolutions is well worth a read, but there are two in particular that warrant highlighting.

First, the assembled city officials overwhelmingly adopted a resolution that set a goal for member communities to adopt 100% renewable energy by 2035.  Tellingly, only two mayors recorded votes in opposition to this resolution.

Second, the assembled officials adopted a motion in support of both onshore and offshore wind energy generally, and for extension of the federal Investment Tax Credit more specifically.

The text of both of these resolutions are set forth in full below.  Though largely symbolic, these resolutions highlight a very real ground swell of support for renewable energy, energy efficiency and strong but fair environmental policy in local communities across the country.  These commitments are seen in both red and blue states, because they are founded upon a recognition that these policies create jobs, promote local economies, and help protect the health, welfare and safety of local citizens.  I’m proud that Mayor, Sly James of Kansas City, was among those that supported these excellent resolutions.

Mayor Sly James at US Conference of Mayors

100% Renewable Energy in American Cities

WHEREAS, renewable energy represents an enormous economic opportunity for our nation and our nation’s cities to create jobs in an emerging industry, increase economic security, expand prosperity for local residents, reduce air pollution and associated public health risks, reduce the strain on water resources, save consumers money, and address environmental justice challenges in communities; and

WHEREAS, “renewable energy” includes energy derived from wind, solar, geothermal, and wave technology; and

WHEREAS, some forms of biomass may be considered “renewable energy” after being evaluated for sustainability and environmental justice implications; and

WHEREAS, “renewable energy” specifically excludes energy derived from fossil fuels, nuclear, incineration of municipal and medical waste, and any large-scale future hydroelectric development; and

WHEREAS, the transition to renewable energy will improve air and water quality and protect the health of our families, particularly the most vulnerable across our communities; and

WHEREAS, according to the Department of Energy, the cost of wind power is down 41 percent since 2008 and solar costs are down between 54 percent and 64 percent in that same period; and

WHEREAS, more than twenty-five U.S. cities, including Columbia, SC, San Diego, CA, Salt Lake City, UT, and San Jose, CA have already adopted ambitious 100 percent clean, renewable energy goals, and six U.S. Cities, including Aspen, CO, Burlington, VT, Greensburg, KS, Kodiak Island, AK, and Rock Port, MO have already hit their targets to generate 100 percent of the energy used community-wide from clean, non-polluting and renewable sources; and

WHEREAS, individuals, families, businesses, and institutions throughout the nation seek greater energy freedom through the expansion of local and distributed energy resources like photovoltaic solar and electric vehicles; and

WHEREAS, rooftop solar, low-income community solar, energy efficiency, and demand control technologies offer the opportunity to equitably distribute resources, address poverty, stimulate new economic activity in our nation’s cities, and lift up those most impacted by high energy costs; and

WHEREAS, actions by local government and businesses are already a significant driver of renewable energy growth and can put the country on track to meet its commitment to the Paris Agreement under the United Nations Framework Convention on Climate Change,

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors supports cities establishing a community-wide target of powering their communities with 100 percent clean, renewable energy by 2035; and

BE IT FURTHER RESOLVED, that The United States Conference of Mayors proclaims its commitment to equity, affordability, public participation, and access for all people in America as cities pursue this transition to 100% clean, renewable energy; and

BE IT FURTHER RESOLVED, that priority should be given to the lowest cost measures to meet energy needs including efficiency, weatherization, cogeneration, district heating and cooling, decentralized electricity generation and smart grids/micro grids, the use of industrial waste heat, building controls, automated lighting, solar-powered hot water heaters and programs that create an energy-saving culture in our nation’s cities; and

BE IT FURTHER RESOLVED, that given the economic development, job creation, and job training potential of clean, renewable energy, the transition to 100% clean, renewable energy should include structured mechanisms to include low-income citizens in the benefits to be derived from the transition, including creating quality careers adhering to local source hiring, a just transition for workers displaced by fossil fuel reduction, equitable access through ownership and benefits to create new opportunity for historically marginalized communities, and affordable clean energy options.

 

Supporting Onshore and Offshore Wind Energy Production

WHEREAS, wind energy can help the nation reduce its greenhouse gas emissions, diversify its energy supply, provide cost‐competitive electricity, and stimulate revitalization of key sectors of the economy by investing in infrastructure and creating skilled jobs; and

WHEREAS, according to the U.S. Department of Energy wind accounted for 31% of all new generation capacity installed in the U.S. from 2008 through 2014; and

WHEREAS, this metric is proof that the renewable energy sector is capable of boosting economic growth while enhancing our energy supply; and

WHEREAS,  when it comes to America’s energy future, we should be doing everything we can to generate as much of our power from domestic sources as possible; and

WHEREAS, America needs a secure and diverse supply of home-grown energy resources to power the nation and to create high skilled jobs; and

WHEREAS, despite this booming expansion of onshore renewable energy facilities, the United States still lags industrialized countries when it comes to development of an offshore wind industry; and

WHEREAS, America’s costal cities, with their complex infrastructure, are major consumers of power; and

WHEREAS,  America’s cities need new sources of job growth to reduce high unemployment rates that persist in many of the nation’s urban areas; and

WHEREAS, the Bush and Obama Admiistrations alike expressed their intention to close the gap in offshore wind capacity and took proactive steps in faurtherance of this objective, including a robust permitting system to make land on the outer continental shelf  available for offshore wind development; and

WHEREAS, the development of the wind energy industry including, the offshore wind energy industry, has great potential to become a new sector that can add billions of dollars to the U.S. economy and create tens of thousands of high-skilled jobs that cannot be outsourced overseas; and

WHEREAS, wind energy is developing an impressive record of job creation, and the majority of wind turbines installed in the U.S. last several years were built in the U.S.; and

WHEREAS, in Northern Europe, there are more than eighty active offshore wind farms that supply electricity to millions and have created tens of thousands of jobs; and

WHEREAS,  in May of this year, Senators Edward J. Markey and Sheldon Whitehouse, along with Congressman Jim Langevin, introduced the Offshore Wind Industries for New Development Act (the “Offshore WIND Act”), which would extend the Investment Tax Credit (“ITC”) through 2025, a measure that would hasten the development of the offshore wind industry by helping to defray the significant upfront capital costs of  wind farm development; and

NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors supports greater federal, state and local investment in the development of wind energy; and

BE IT FURTHER RESOLVED, that The United States Conference of Mayors supports a continuation of the ITC for as long as necessary to secure the long-term viability of the domestic wind energy industry, including the offshore wind energy industry, and more specifically, the passage of the Offshore Wind Act.

President Trump’s decision to withdraw the United States from the Paris Accords is disheartening for many that work in and around the renewable energy industries, and believe in the importance of a truly diversified energy portfolio.  While it is certainly not a perfect agreement, 195, now 194, countries from around the world recognized a pressing need to take steps to cut carbon emissions and attempt to turn the tide on climate change.  That level of unity across cultural and national boundaries is unprecedented, and underscores the importance of the ultimate goal.  The withdrawal of the United States from that coalition is disappointing on many levels.

However, out of that disappointment, an uplifting trend is beginning to emerge.  Where the United States federal government has refused to act, state and local governments are picking up the slack.  There are several fantastic examples.  On June 1, Hiroki Tabuchi and Henry Fountain of the New York Times reported that a group of 30 mayors, 3 governors, more than 80 university presidents and more than 100 businesses are negotiating with the United Nations to enter into an individual commitment that could equal or even exceed the United States’ previous commitment under the Accord.  In that same vein, just yesterday, the New York Times reporter Jonah Engel Bromwich’s published an article on Hawaii’s passage of two pieces of legislation committing to a reduction in greenhouse gas emissions in line with the Paris Agreement.

In many ways, this shift to more locally-driven climate policy is not surprising.  Over the last decade, state and local governments have been arguably the most significant drivers of encouraging renewable energy developments in the United States.  Currently, 29 states have adopted renewable portfolio standards that require a certain percentage of the electricity produced by local utilities come from renewable sources, and 8 more states have adopted voluntary renewable energy goals.  Hawaii and California stand out as particular leaders in this regard.  Hawaii has passed legislation requiring 100% of its net electricity sales to be derived from renewable resources by 2045.  In California, which currently has a 50% renewables by 2030 requirement, the State Senate just last week passed legislation that would require 100% renewables by 2045, with 50% by 2026.  The U.S. federal government, by contrast, has entertained several federal renewable portfolio standard bills since 2009, but has failed to gain any serious traction.

All in all, perhaps it makes sense for state and local governments to take the reins on climate policy.  After all, the economic case for vigorously pursuing a more diversified energy portfolio is strong, and it is the individual localities that host projects that can best gauge the economic benefits received through increased tax revenues, landowner payments, and new jobs.  Where the federal government has dropped the ball, the answer might very well be for state and local governments to take the lead.

As always, if you have any questions about any of the issues discussed herein, please don’t hesitate to reach out to me at lhagedorn@polsinelli.com or give me a call at (816)572-4756.

I am excited to announce that several members of the Polsinelli Energy Group (myself included) will be attending the AWEA Wind Project Siting & Environmental Compliance Conference this week in Austin, TX.  Our energy team has been hard at work with AWEA over the last few months to develop a few exciting new offerings for AWEA members, which we hope to roll out shortly (more on that soon).  We’ll be on the floor throughout the conference, so feel free to flag us down if you’d like some more information.  Also, we’ll be hosting a casual happy hour on Tuesday night, so feel free to reach out or find us on the conference floor for details!

I’m looking forward to seeing you there!

I wanted to provide a quick heads-up to let you all know that I will be participating as a panelist at the Linda Hall Library’s “Second Saturday Conversation”  tomorrow, March 11th, from 11 AM to noon Central Time.  The topic will be the hopes, concerns, and possibilities for research funding, infrastructure projects, and energy development under the new Trump administration, which should prove to be a fruitful topic. I’m looking forward to an excellent discussion.  I will be joined by Gretchen Ivy, ‎Planning Group Director and Associate Vice President for HNTB Corporation and Sarah Zanders, PhD, Assistant Investigator for the Stowers Institute for Medical Research.

For those of you that are not familiar with the Linda Hall Library, it is one of the world’s foremost independent research libraries devoted to science, engineering, and technology, located in Kansas City.  It is a fantastic organization with an admirable mission statement, and I’m thrilled that they’ve asked me to participate in this conversation.

For more information about the event, please visit http://www.lindahall.org/event/second-saturday-conversation-science-outlook-2017/.  I’m also told that the discussion will be live-streamed, so if you are not able to attend in person, feel free to check out their website and view the proceedings online.

Last week the White House released its first installment of the Quadrennial Energy Review (QER) recommending investments in energy transmission, storage and distribution infrastructure.  While the U.S. is now the largest producer of oil and natural gas and is rapidly expanding renewable energy like wind and solar power, this energy must now travel across millions of miles of outdated infrastructure.  Ultimately, the QER envisions ensuring resilience, reliability, safety and security of the transmission, storage and distribution infrastructure by funding various state grant programs.

White House officials tout the QER as a two-pronged tool:

  1. Assess the effect of recent developments such as widespread hydraulic fracturing and the decreasing costs of renewable energy technologies like solar and wind.
  2. Recommend various policies that would improve the reliability of the electric grid, secure domestic supplies of oil and gas, and drive the types of GHG reductions that will be necessary for the president’s overall climate goals.

The QER makes several specific recommendations.

  • Given how renewables and fossil fuels have developed away from population centers, establish a new grant program called the Actions to Support Shared Energy Transport Systems (ASSETS), dedicated to improving energy transportation infrastructure connectors. Estimated cost: $2 billion to $2.5 billion over 10 years.
  • Create a DOE program to support state energy assurance plans to help respond to current and future energy disruptions. Estimated cost: $350 million to $500 million over 10 years.
  • Establish a DOE grant program to award states for creative approaches to infrastructure hardening and resilience. Estimated cost $3 billion to $5 billion over 10 years.
  • Create a program to award states that cooperate with public utility commissions, energy offices and environmental regulators; other states; and infrastructure owners and operators to modernize the grid. Estimated cost $300 million to $350 million over 5 years.
  • Create a competitive program at DOE to accelerate pipeline replacement and enhance maintenance programs. Estimated cost: $2.5 billion to $3.5 billion over 10 years.
  • Coordinate between federal agencies and states to mitigate the loss of electric transformers—in part by creating a “transformer reserve” in case of emergency.
  • Improve grid communication through standards and interoperability by increasing cooperation amongst DOE, NIST, industry, state officials, and other stakeholders to identify efforts to promote open standards that enhance grid connectivity and interoperability.
  • Enact financial incentives for the construction of CO2 pipelines, such as the Administration’s proposed Carbon Dioxide Investment and Sequestration Tax Credit which would authorize $2 billion in refundable investment tax credits for carbon capture technology and associated infrastructure at electric generating units that capture and sequester CO2.

While the QER touches on concerns regarding the siting and permitting requirements associated with building new transmission, it does NOT propose an overhaul of the National Environmental Policy Act (NEPA).  The QER also does not address the controversial issue of granting FERC “backstop” authority to site powerful transmission lines along high priority corridors.

Going Forward

In the long term, the need for a more resilient grid is necessary not only because of climate-related threats, but also because of potentially more disastrous dangers from cyber or physical attack. These efforts will be part of a formal national strategy—planned for release later this year—for strengthening the security and resilience of the entire electric grid.

Republican energy leaders in both the House and Senate welcomed the QER as an important contribution to the broader energy policy debate and said they are eager to keep working with the administration.  Chairman Upton’s House Energy and Commerce Committee has already begun a series of legislative hearings with the goal of completing a comprehensive measure this year.  Senate Energy Chairwoman Lisa Murkowski (R-AK) has asked her panel’s members to introduce legislation they’d like to see in a broad energy bill in short order to allow for hearings and markups, so that an energy bill can reach the Senate floor this summer.  In addition, five members of Murkowski’s committee, including Ranking Democrat Maria Cantwell (D-WA), are expected to drop legislation in the coming days to modernize the grid and bolster storage to help stabilize the generation of intermittent renewable energy.

A bipartisan, comprehensive energy bill is still considered a long shot in the 114th Congress, but the reactions from Capitol Hill to the QER may have improved the odds.  Although the QER calls for billions in new spending, its overarching focus on energy infrastructure needs—to capitalize on domestic production, secure a reliable electric grid, and ensure safe transport of renewables as well as fossil fuels—coincides with many of the priorities being addressed by bipartisan lawmakers.

If you would like any information about the federal renewable energy policy, please reach out to the Polsinelli Public Policy or Energy practice groups, or contact us directly at:

Tracy Hammond, 202.626.8322, thammond@polsinelli.com

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

On Nov 4th, Congressional Republicans beat back their Democratic opponents in nearly every part of the country.  Because of this resounding victory, Republicans have a tighter control of Congress than they’ve enjoyed since America teetered into the Great Depression at the end of the 1920s.  (Hopefully this is not foreshadowing).

Although Republicans already enjoyed a solid, governing majority in the House heading into the 2014 midterms, the party still managed to gain more than a dozen seats (a few contests sill remain too close to call, so a final tally isn’t yet known).  The Senate—as is generally the case—is a bit tighter, but Republicans managed to pick up at least 8 seats with the possibility of a 9th if Bill Cassidy (R) defeats Mary Landrieu (D) in the Louisiana runoff on December 6th (as he’s expected to do).  While legislating is much more difficult to do in the Senate, particularly when the majority party lacks the 60 votes necessary to overcome filibusters, Republicans will now have effective control over the Senate floor and all committee work, where the party can set priorities and push favored legislation.

So, what does this all mean for renewable energy?  In a word: Trouble.

It’s no secret that Republicans generally view renewable energy less favorably than their Democratic colleagues.  While it’s true that several Republicans have voted in the past to support renewable incentives and programs, many in the GOP have more recently opposed government support for renewable energy.

Renewable energy’s first test will come during the current Lame Duck session when Congress must decide whether or not to approve a package of tax “extenders” that includes the Production Tax Credit for wind and geothermal energy; as well as separate credits for cellulosic ethanol and biodiesel fuels.  These credits expired at the end of 2013, and have been stuck in limbo since.  Since November 4th, several conservative organizations and some lawmakers have called for an end once and for all to the PTC. Although it’s ultimately likely that Congress passes this suite of tax extensions, pressure is mounting to end, or at a minimum phase out, the PTC.  Republican leadership in the next Congress will likely look for ways to make this happen.

If history is any guide, Congressional Republicans will also attempt to trim spending on renewable energy programs.  These include the now-solvent loan guarantee programs at the Departments of Energy and Agriculture; as well as ongoing efforts at the Department of Defense to incorporate more renewable power into its own energy mix.  The GOP-controlled House has continually tried to shift money from renewable energy over to fossil-fuel programs, and it’s expected the incoming Republican Senate will do the same

Besides tax incentives, the two biggest federal programs driving renewable energy development will be the ongoing Renewable Fuels Standard (RFS) and the Environmental Protection Agency’s proposed Clean Power Plan to limit greenhouse gas emissions from the utility sector.  With many Midwestern Republicans and Democrats alike supporting the RFS, repeal is all but impossible.  Substantial revisions could be on the way; however, as reformers are looking to scale back the mandates for as-yet-to-be produced advanced (cellulosic) fuels and perhaps even opening up the standard to nonconventional petroleum products.

Unlike the RFS, EPA’s efforts face near-unanimous Republican opposition.  Speaker Boehner and incoming Majority Leader McConnell have already promised action to stop the agency from moving forward with GHG regulations.  It’s very unlikely McConnell will have the 60 votes needed to overcome a certain filibuster—much less 67 votes to overcome a veto—but he does have alternative ways to get at his goal.  First, Republicans could attempt to use the Congressional Review Act (CRA) to override agency action.  Although using the CRA is immune from Senate filibuster and only needs 51 votes for passage, this tactic has only been used successfully a single time since its creation.  Further, the CRA can only be implemented once a rule has been finalized (at least 18 months away in this case) and Republicans will not want to wait until then before acting.  Their second alternative is to use the appropriations process to prevent EPA from implementing rules related to reducing GHG emissions.  This tactic faces better odds, although success isn’t guaranteed.   It’s unlikely a full repeal of the Clean Power Plan would be enacted, but Republicans might find some bipartisan support—and a less confrontational White House—if they craft more targeted changes that could lead to additional state flexibility or longer compliance timelines.

With Congress unable to move significant legislation, the RFS and the Clean Power Plan could still push renewable energy development; however, Congressional interference or repeal of these efforts could create additional uncertainty and drive away investment.

If you would like any information about the federal renewable energy policy, please reach out to the Polsinelli Public Policy or Energy practice groups, or contact us directly at:

Tracy Hammond, 202.626.8322, thammond@polsinelli.com

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

 

 

 

 

 

 

 

 

 

As part of our continuing effort to provide current, topical information relating to renewable energy projects, RenewableEnergyLawInsider provides a series of posts from individuals with a wide range of experience and expertise. Today, Tracy Hammond from the Polsinelli Public Policy Group in Washington D.C. provides an update about the impact that the federal government shutdown will have on renewables in the United States.

The federal government shutdown is now in its fourth day, and there is no quick resolution of the   partisan standoff in sight.  Both Republicans and Democrats appear to be digging in instead of reaching out, and it is likely that this shutdown could last two to three weeks, with a breakthrough coming only as the U.S. approaches its borrowing limit (or debt ceiling) October 17th.

Although there’s enough speculation, prognosticating and second-guessing to fill volumes; I’ll focus here on how this shutdown will impact renewable energy.

In thee near term, the government shutdown could delay the release of federal renewable fuel requirements for 2014.  Renewable fuels stakeholders expected the U.S. EPA to release its proposed targets—levels of conventional and advanced biofuels that must be blended into gasoline and diesel—in mid-October.  The release will almost certainly be delayed and the longer the shutdown, the longer the delay.  A long delay in the release of the requirements will increase  uncertainty in the fuels market, giving critics of the RFS additional opportunities to call for repeal or modifications to the program.  A delay will also affect efforts in Congress, where a group of lawmakers from the House Energy and Commerce Committee are crafting legislation to reform the standard. However, their efforts will hinge  on what EPA decides to do with its 2014 numbers.

Other rules that could drive renewable energy development, like EPA’s efforts to draft emissions caps for greenhouse gases will also be delayed, making it even more difficult to meet the timeline laid out by President Obama earlier this year.

During the shutdown, many Congressional offices are working with significantly reduced staffs.  And with much, if not all, of the attention focused on funding the government and raising the debt ceiling, work is not being done on a host of other legislative priorities.  Just one example is the renewable energy Production Tax Credit (PTC), now set to expire in less than three months.  In addition to wind, the PTC provides a 2.3 cent-per-kilowatt-hour credit for geothermal energy and closed-loop biomass, and a 1.1 cent-per-kilowatt-hour credit for qualified hydropower facilities, marine and hydrokinetic power, landfill gas, trash combustion, small irrigation power facilities and open-loop biomass. The Congressional Joint Committee on Taxation found that a one-year extension of the tax credit would cost about $6.1 billion over 10 years. A five-year extension would cost roughly $18.5 billion.  Given the current budget pressures, these are not insignificant amounts.  Without some sort of as-yet-unknown “grand bargain”, it seems very unlikely that the PTC will be extended before the end of 2013.

Because nearly all other legislation has taken a back seat to the funding and debt discussions, the Farm Bill remains in limbo.  With no new Farm Bill agreement, programs like the Renewable Energy for America Program (REAP), the Biomass Crop Assistance Program (BCAP) and the Advanced Biorefinery Assistance Program are attempting to operate with only leftover money from previous years.  Soon, these programs will expend all of their resources and be forced to shut down until Congress passes a Farm Bill authorizing new funding.

Speaking of REAP, BCAP and other similar programs, with no one at USDA, DOE and other agencies to review and approve applications, no new funds will likely be released to worthy recipients.  Projects will be put on hold and construction will stop on efforts to increase energy efficiency and deploy new renewable energy across the country.  Although this may only be a short term hiccup lasting a few weeks, delays take a toll on project financing, increase expenses and push off potential completion.  As the budget battles continue, federal departments and agencies will almost certainly continue to try to do more with fewer resources—both human and monetary.  This trend will inhibit deployment and make it more difficult for deserving projects to move forward.

The first rule of medicine is do no harm.  As Congress continues to fail at its most basic task—funding the federal government—renewable energy and those that earn a living in the sector won’t be mistaking their congressional leaders for doctors anytime soon.

As part of our continuing effort to provide current, topical information relating to renewable energy projects, RenewableEnergyLawInsider provides a series of posts from individuals with a wide range of experience and expertise. Today, Tracy Hammond from the Polsinelli Public Policy Group in Washington D.C. provides an update about the ongoing attention being paid to the Renewable Fuel Standard by the U.S. House of Representatives.

The House Energy and Commerce Committee this week completed 2 days of hearings on the renewable fuel standard (RFS), the federal mandate to blend 36 billion gallons of biofuels into the nation’s gasoline supply by 2022.  Multiple industries and interests weighed in on the economic, environmental and technical impacts of the law. The hearing capped off an effort that began with a series of white papers the panel released this summer to gather information and feedback on the program.

The RFS is one of the largest and most controversial renewable energy program ever mandated by the federal government.  Since its creation in the 2005 and expansion in 2007, interest groups have launched major lobbying campaigns both supporting and opposing the standard. It has suffered additional criticism since last summer’s record drought badly damaged the nation’s corn crop, raising questions about the viability of corn-based ethanol, the most common biofuel in the U.S.

For the first time since 2007, Congress is taking a very serious look at revising the standard.  Although some, like the oil and refining sectors and their congressional allies, are calling for a full repeal of the law, there is not sufficient support for such a dramatic policy reversal.  This sentiment was summed up best by senior Democrat Rep. Gene Green (D-TX), “I would probably vote for repeal of the RFS, but I don’t just see where we’re going to get there.”

There does, however, seem to be support—at least in the committee—for making changes to the standard to address rising ethanol credit prices and the 10% “blend wall,” or the technically feasible limit to the amount of ethanol that can be blended into the nation’s fuel supply.  This is echoed by Rep. John Shimkus (R-IL), “You don’t have enough for a repeal, but you do have enough for a reform.”

Other Members complained that U.S. EPA, which administers the RFS program, sets excessively high targets for cellulosic biofuels.  These fuels made from purpose-grown plants, ag waste, algae, energy grasses and other feedstocks that don’t conflict with food crops are 2nd generation biofuels and were hoped to eventually displace corn ethanol and soybean biodiesel.  Unfortunately, the development of these fuels has been agonizingly slow.  For example, the mandate calls for 1 billion gallons of cellulosic biofuels made this year. Instead, EPA has proposed revising that number down to just 14 million—and that target will not likely be met by the advanced biofuels industry.

Senate Democrats from the Mid-Atlantic states are also wading into the debate.  Sen. Ben Cardin (D-MD) is working on legislation to reform the RFS, while senators from neighboring states, including Delaware and Pennsylvania, are urging the EPA to temporarily waive some blending requirements for obligated parties (refiners) in their states.  Like their House counterparts, oil-patch Republicans in the upper chamber have also called for a full repeal.

As with many things involving Congress, this process will take a long time to play out.  After 6 years of “fuel vs. food” fights, questions about the sustainability of corn ethanol, and the near non-existence of a cellulosic biofuels industry; however, we may be reaching a tipping point that will force lawmakers to make changes to the most contentious parts of the RFS both in order to appease critics and perhaps even prevent the standard’s total collapse.

As part of our continuing effort to provide current, topical information relating to renewable energy projects, RenewableEnergyLawInsider provides a series of posts from individuals with a wide range of experience and expertise. Today, Tracy Hammond from the Polsinelli Public Policy Group in Washington D.C. provides an update about the U.S. House of Representative’s failed Farm Bill and its impact on the renewable industries.

I was prepared to title this piece “A Tale of Two Farm Bills” after the U.S. House of Representative’s presumed-passage of comprehensive farm legislation this week.  I would have reported on the drastic differences between the Energy Titles within the House and Senate Farm Bills while speculating on what a future compromise might look like.  However, after the House failed to pass its version of the bill (H.R. 1947) 195-234, it is now unclear if we will even see legislation enacted at all.  While the Senate approved its bill (S. 954) on June 10th by a bipartisan vote of 66-27, the House’s failure leaves the fate of the Farm Bill and its energy provisions uncertain at best.  This, coupled with the expiration of current programs at the end of September, leaves us all with an option no one wants—an extension of current policy with no real funding for renewable energy in rural America.

How did we get here?  Well, in addition to setting federal agriculture policy, the Farm Bill also has a dramatic impact on rural, renewable energy. In 2002, Congress began shaping energy policy through farm legislation.  Then—and again in the 2008 bill—Congress has used the Farm Bill to create renewable energy programs for rural America and incentivize ethanol and biodiesel production.  This year; however, many of these innovative programs are likely to receive reductions in funding or may be ended completely.

The 2008 Farm Bill expired in 2012; however, Congress approved a bare-bones extension (to September 30, 2013) of current policy in the year-end “Fiscal Cliff” deal.  Unfortunately, this deal failed to include any funding for the bill’s energy programs, essentially suspending them for 9 months.

Even if Congress can get the Farm bill back on track, the House and Senate bills treat their respective energy titles very differently in terms of funding levels and prioritization.  The Senate bill provides $880 million in mandatory funding (over 5 years) for various energy programs like the Rural Energy for America Program, the Biorefinery Assistance Program, and the Biomass Crop Assistance Program. S. 954 would also authorize another $1.12 billion in discretionary funds. H.R. 1947, on the other hand, would eliminate all mandatory funding and authorize $1.4 billion in discretionary funds.  By comparison, the current 2008 farm bill authorized $1.1 billion in mandatory funds and $1 billion in discretionary funds.

Although these figures sound like a lot of money, Congress rarely (if ever) actually appropriates any of the discretionary funds included in these bills.  Thus, the only money that will ever go to farmers and rural small businesses must come from mandatory funds.  Because of their budgetary concerns, House Republicans have essentially called for the end of several energy programs aimed at rural America even if they can pass a bill out of their chamber.

It is still possible that the House can approve a bill and that some funding will survive a House-Senate compromise later this year; however, it’s increasingly likely that several energy programs will receive dramatically reduced funding and may end altogether if Democrats and Republicans can’t compromise and cobble together a path forward.

I wanted to drop in to quickly announce that the June edition of North American WindPower includes a cover article drafted by yours truly, Alan Claus Anderson and Britton Gibson of the Polsinelli Energy Group.  The article, entitled “On the Front Lines: Advocates Prevail in State RPS Fight,” provides an overview of the recent legislative battles that have occurred in Kansas in relation to the state Renewable Portfolio Standard.

As part of the combined legislative efforts of the wind industry, the Wind Coalition, the Climate and Energy Project, the Kansas Energy Information Network, and many other groups, Polsinelli and Scott White of KEIN prepared a report that detailed the economic benefits of wind generation for the state of Kansas.  We presented that report before several Kansas House and Senate Committees, as well as at a series of Business Leader Forums hosted by the Climate and Energy Project across the state to help educate business owners and community leaders about the numerous economic benefits of wind energy.

Ultimately, I’m happy to report that the efforts to repeal the Kansas RPS were unsuccessful.  However, there are numerous other states all across the United States that are facing very similar legislative challenges to RPS policies.  We believe that the lessons we have learned in Kansas can translate well into defending RPS policies in other states, and hopefully this article can serve as a template of sorts for organizing a successful defense of these important policy initiatives.

If you have any questions about the national or state-level attacks being raised against RPS policies, or about the economic benefits of the wind industry for a particular state or region, please feel free to write a comment, email me at lhagedorn@polsinelli.com, or call me at (913)234-7416.