Oiling the wheels of renewable energy

Sydney Morning Herald
Friday 5/1/2007 Page: 6

DEMOCRATS in the US House of Representatives are working on an energy package that would roll back billions of dollars worth of oil-drilling incentives and plough the money into new tax breaks for renewable energy sources.

The move would set off a feeding frenzy among advocates of hydropower, nuclear, biofuels, geothermal and solar power, renewable energy lobbyists said on Wednesday. Solar producers, for example, are looking to expand and extend tax credits for residential solar installations for eight years, which would cost $US400 million ($506 million).

"The Democrats are appropriately shifting money from the 20th century technologies to the 21st century industries," said the president of the Solar Energy Industries Association, Rhone Resch. "If we want to see solar, wind and biofuels, we have to make that investment today." Democratic leaders said the new House Speaker, Nancy Pelosi, would introduce the energy package on January 18, towards the end of a packed "first 100 hours" of legislative initiatives.

After a dozen years of Republican control, the new House leadership has prepared a "100 hours" agenda that also includes ethics rules that ban gifts from lobbyists and forbid politicians from using corporate jets. Democratic leaders were targeting a 2004 manufacturing tax cut they said gave unnecessary incentives to the oil industry, said the majority leader, Steny Hoyer.

They are also planning to force oil companies to pay royalties on deep-water Gulf of Mexico tracts leased in 1998 and 1999. The leases inadvertently failed to include provisions for royalty payments once oil prices rose above certain levels. The repeal of the tax cuts for the oil and gas industry is expected to generate nearly $US5 billion. Details of the energy package remain in flux, in part because of disagreement over how the revenue would be used.

Deciding how to distribute renewable incentives could be controversial. Some Democrats want to exclude nuclear power from the list of eligible renewables. Environmental groups were happy about the prospective legislation.

"The oil and gas bill is a clear departure from the previous Congress's infatuation with oil and gas handouts," said Erich Pica, of Friends of the Earth.

The advocacy group Union of Concerned Scientists took a shot at climate change sceptics on Wednesday, in a report accusing ExxonMobil of funding a $US16 million campaign to create doubt about the scientific underpinnings of climate change theory. "ExxonMobil has manufactured uncertainty about the human causes of global warming, just as tobacco companies denied their product caused lung cancer," said Alden Meyer, the group's director of strategy and policy.