Small business qualify for the 30% solar and fuel cell investment tax credit, and receive 5-year accelerated depreciation, incentives for 50% lighting reductions, use of combined heat and power are now part of the House and Senate bills.

INTERVIEW - STATUS OF THE ENERGY BILL - SCOTT SKLAR

Scott Sklar | The Stella Group

Earthtoys Interview  Status of E
Small business qualify for the 30% solar and fuel cell investment tax credit, and receive 5-year accelerated depreciation, incentives for 50% lighting reductions, use of combined heat and power are now part of the House and Senate bills.
Status of Energy Bill in this Upcoming Session of Congress
Scott Sklar - The Stella Group

1. While the House-passed and Senate-passed Energy Bills are not exactly alike, they have much in common on renewable energy and efficiency. In regard to residential applications for energy efficiency and renewables, what will likely be available?

According to the Washintgton-based ACEEE, "The two new efficiency provisions in the House bill are the inclusion of energy efficiency as an eligible resource for a national Renewable Electricity Standard (RES), and the addition of walk-in commercial refrigerators and metal halide lighting to the list of appliance efficiency standards. These augment provisions in the bill that was sent to the House floor, which included improvements to national and state building codes, efficiency standards for incandescent lamps and other products, an update and expansion of the federal appliance and equipment standards program, and provisions to increase use of combined heat and power systems in the industrial and institutional sectors. The House bill also includes a tax package that extends and expands energy efficiency tax incentives."

ACEEE further states, "The bill the Senate passed in June does not include many of these House provisions. On the other hand, the Senate bill includes two major provisions not in the House bill - increases to Corporate Average Fuel Economy Standards for cars and light trucks, and steadily increasing mandatory targets for oil savings over the 2016-2031 period. Neither provision is iron-clad, in that both allow substantial regulatory discretion. The Senate Finance Committee also reported out a more comprehensive set of energy efficiency tax incentives than are contained in the House bill.".

The House and Senate bills provide an eight-year extension of the existing 30 percent Investment Tax Credit for businesses under Section 48 of the tax code for solar and fuel cells, a five year extension of the Section 45 Production tax Credit for wind and biopower, provides the ability for corporate and personal filers to claim the Investment Tax Credit against the Alternative Minimum Tax (AMT)emoves the prohibition, barring utilities from using the section 48 Investment Tax Credit. While the Senate bill extended the residential solar and fuel cell tax credit, the House bill provides no extension of the existing 30 percent Investment Tax Credit for homeowners under Section 25 of the tax code, but eliminates the existing $2,000 maximum dollar limitation.

2. How about for small businesses using efficiency or renewables?

Small business qualify for the 30% solar and fuel cell investment tax credit, and receive 5-year accelerated depreciation, incentives for 50% lighting reductions, use of combined heat and power are now part of the House and Senate bills. The Senate also adopted an amendment offered by Senators Sanders and Clinton that provide workforce training in clean energy as a way to assure that there are businesses ready to meet the increased consumer needs of installing clean energy technologies - which will surely be comprised of and benefit the small business sector.

3. Will the House-passed requirements for a Renewable Energy Portfolio Standard (RPS) ever see the light of day? And what would it mean to average consumers? How about the renewable and energy efficiency bonds programs too?

Beyond tax credits, there are some generic polices that condition the market for renewable energy. Clean Renewable Energy Bonds (CREBs) has been promoted by public power utilities and local governments who are not eligible for tax credits. EPACT05 created federal government-sanctioned bonds which the IRS endorsed an issuance $900 million 2006\7, and the House and Senate Energy Bills have authorized another $900 million worth for 2008 and beyond. While nearly half the States and over half of the US ratepayers are subject to Renewable Energy Portfolio Standards (RPS), the Senate was unable to muster the votes to pass an RPS this year in its version of the Energy Bill, and the House of Representatives did pass an RPS in the face of intense lobbying pressure against the measure by the major electric utilities comprising the Edison Electric Institute. The Energy Bills must be reconciled in language (called a Conference), and I do not have high hopes. But with the election coming closer, Congressional Republicans may wish to appear more independent from the traditional energy industries - big oil and electric utilities - so there is hope for an RPS - but it's far from a sure thing.

4. How's this Energy Bill compared to the energy billl passed by Congress in 2005 (EPACT05) and will it reduce US dependency on energy imports?

In 2005, Congress passed the Energy Policy Act, known as EPACT'05, which actually increased energy imports. Of the $14.5 billion in tax incentives, nearly $7 billion went to the electric and nuclear industries, $1.3 billion went to alternative transportation fuels, $1.2 billion went to energy conservation and renewable energy (primarily in buildings) comprised of 2-year tax credits, and oil and natural gas industries received $2.8 billion of subsidies. And $3.1 billion was directed to the investment tax credits for wind and biopower, of which $900 million was for renewable energy bonds (CREBS). While the efficiency and renewable tax incentives were extended for 2-years, natural gas pipeline tax incentives were extended for 16 years and nuclear for 20 years. Bottom-line, since the Bill has no vehicle mileage standards and it subsidized infrastructure to import liquified natural gas (LNG), energy imports were actually increased with this earlier Energy Bill. In contrast, the Bills, each House of Congress passed this year directs over half the incentives for efficiency and renewables with 8-year tax extensions, both investment tax credits and production tax credits. But the Bill is still loaded with incentives for coal and nuclear, subsidizing mature industries, with mature technologies in mature markets.

5. What other important renewable energy bills or developments are coming up that we should be aware of?

Continued pressure for adoption of a national Renewable Energy Portfrolio Standard and the sister policy tool for a Efficiency Standard (RES), as well as greater requirements on interconnection and net metering, and electric grid reliability, safety, stability -- all seem certain for greater policy direction and incentives for the future.

6. What other important renewable energy bills do you think we need to see in the near future?

We need to adopt a national interconnection standard, already approved in 29 States, for clean distributed energy electric generation, with fast track approval under 2 MW, and easy interconnection under 20 MW, and no impediments for larger installations. Currently, risk in electricity rates, electric power reliability (outages), and electric power quality (surges, sags, transients) -- all the costs are all borne by the consumer, which means electric utilities bare no risk in maintaining the status quo. In the future, those risks need to be borne by the electric utilities and their investors, which will create market inducements towards high value energy efficiency, renewable and distributed energy options within the electric grid, rather than in spite of it.


Scott Sklar runs his strategic marketing and policy firm, The Stella Group, Ltd, which he founded in 1995 and came on full-time to lead in 1999. The firm specializes on blending clean energy technologies and financing for projects, assisting companies to scale-up market penetration, and facilitate federal and state polices to expand markets. The firm is located Washington, D.C. (1616 H Street, N.W., 10th floor, Washington, D.C. 20006, 202-347-2214, fax –2215) and in Virgina (706 North Ivy Street, Arlington, VA 22201, 703-522-1195, fax –0638). From May – August 2004, Sklar served (part time) as Interim Executive Director of the Solar Energy Industries Association (SEIA) assisting the industry in finding a new Executive Director and tracking policy and being their national spokesperson.

Previously, Sklar served as Executive Director for 15 years of two national trade associations concurrently, the Solar Energy Industries Association and the National BioEnergy Industries Association. He also cofounded and ran for three years the US export consortium of all the renewable energy trade associations, the US Export Council for Renewable Energy, and cofounded its sister energy efficiency entity where he served on its Board of the US Export Council for Energy Efficiency.

Prior of running trade associations, Sklar was Political Director of The Solar Lobby for two years, -- a renewable energy advocacy group founded by the big nine US environmental organizations. And for three years previous to joining the advocacy organization, served as Washington Director for two years and Acting RD&D Director for one year of the National Center for Appropriate Technology (NCAT), a federally-funded applied technology institution promoting renewables and energy efficiency for local communities both in the US and globally.

Sklar started his energy career serving as a military and energy aide to Senator Jacob K Javits (NY) on his Washington personal and Committee staff for nine years, and cofounded the Congressional Solar caucus in the mid-1970’s where most of the renewable energy legislation first was passed by the US Congress as a result of the first and second oil embargos.

Sklar has coauthored two books, “The Forbidden Fuel: A History of Power Alcohol, published in 1985, and a “Consumer Guide to Solar Energy” first published in 1998 and is in its third publishing released in 2005.

Scott Sklar serves as Steering Committee Chair of the Sustainable Energy Coalition, composed of the renewable energy and energy efficiency trade associations, national advocacy and analytical groups, and sits on the national Boards of Directors of the non-profit Business Council for Sustainable Energy, Renewable Energy Policy Project, and the Sustainable Buildings Industry Council. Sklar was appointed in 2006 to the North American Advisory Committee of REEEP, a G-8 and United Nations- sponsored clean energy initiative.

He lives in a solar home in Arlington, Virginia incorporating passive solar features, solar water heating, photovoltaics, and high-value energy efficient lighting and appliances. His Arlington office building appeared in the April 2007 issue of Fortune Small Business magazine which has photovoltaic roofing shingles, ductless energy efficient heat pump, small wind turbine, advanced battery bank, and a 5kW hydrogen-powered fuel cell.

 

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