RL34162 - Renewable Energy: Background and Issues for the 110th Congress
5-Oct-2007; Fred Sissine; 37 p.
Abstract: Renewable energy can be used to produce liquid fuels and electricity. A variety of funding, tax incentives, and regulatory policies have been enacted to support renewables as a means for addressing concerns about energy security, air pollution, international competitiveness, and climate change. This report reviews the background for renewables and describes the current congressional debate.
Budget and funding issues are key concerns. The Energy Policy Act of 2005 authorized several new renewable energy demonstration and deployment programs, but most of them have not been funded. Both the House-passed (H.R. 2641) and Senate Appropriations Committee-approved (S. 1751) energy and water development appropriations bills for FY2008 would provide a major increase over the Administration’s request for the Department of Energy’s renewable energy program. The Administration has indicated that it intends to veto the appropriations bills due to the increases and the lack of funding for the Asia Pacific Partnership.
Tax and regulatory policies are also at issue. The interaction of the federal renewable energy electricity production tax credit (PTC) with state renewable portfolio standard (RPS) policies has forged a strong incentive for wind energy development. The major House-passed energy bill (H.R. 3221) would extend the PTC for four years past its scheduled expiration at the end of 2008, and it would establish a national RPS with a target of 15% by 2020. Further, it would establish $2 billion in a new category of clean renewable energy (tax credit) bonds, extend for eight years the 30% level for the commercial solar tax credit, and remove the dollar cap on the residential solar tax credit. Also, H.R. 3221 would establish $15.3 billion in revenue offsets from oil and natural gas provisions to support tax incentives for renewable energy and energy efficiency. The major Senate-passed energy bill (H.R. 6) has no RPS or tax provisions.
The ethanol fuel issue has intensified. Corn ethanol production is rising rapidly, but appears to be causing food price increases. Concerns about rising food prices and apparent limits to the long-term potential for corn ethanol have brought a focus on cellulosic ethanol. Cellulosic sources avoid the limits on corn and appear to have much lower net CO2 emissions, but they require an extensive and costly conversion process. The Senate-passed version of H.R. 6 would establish a modified renewable fuels standard (RFS) that starts at 8.5 billion gallons in 2008 and rises to 36 billion gallons in 2022. H.R. 3221 has no RFS provision.
Key challenges to the omnibus energy bills remain. First, there are significant
differences between H.R. 3221 and H.R. 6. Second, because the House and Senate
have passed different measures, further action would be required in at least one
chamber before a conference committee could be arranged. Third, concerns about
the oil and natural gas revenue offset provisions, and the lack of measures to increase
oil and gas production have led the Administration to threaten to veto each bill. (The
major provisions of these two bills are compared in CRS Report RL34135.) [read report]