Pickens' Pullout Underscores the Need for Renewable Electricity Standard
After T. Boone Pickens' stunning decision to shelve his ambitious plan to build the world's largest wind farm in the Texas panhandle, does anyone still think converting from fossil fuels to renewable energy will be easy? One year ago, Pickens was the toast of the green movement. The Texas oil man, foe of Al Gore, identified a common cause that both climate changers or doubters could get behind: energy security.
The stated goal of the "Pickens Plan" was to reduce America's dependence on foreign oil by one-third over a ten-year period. To achieve this goal, Pickens would replace natural gas now used to generate electricity with wind power and then use the saved natural gas to power vehicles that presently run on gasoline. His $60 million ad campaign draped the American flag around his Plan: "at current oil prices, we will send $700 billion out of this country this year alone - that's four times the annual cost of the Iraq war." He described adoption of his Plan almost as an act of patriotism. Why send all that money to our enemies in the Middle East when right here in the US we have a massive untapped resource - a wind corridor stretching from North Dakota all the way through Texas?
So what went wrong in the space of a year? Pickens' company's spokesman cited "the collapse of the capital markets" and "the steep downturn of natural gas prices" as the primary reasons. Pickens himself cited a lack of transmission lines. A drop in oil prices and decreased demand for energy also likely played into Pickens' decision to abandon the wind farm.
This development is particularly troubling when one considers the federal resources being thrown at renewable energy. The Stimulus Package passed in February 2009 includes: $2.5 billion in grant money to be doled out by the Department of Energy; $3.1 billion for State energy programs; $6 billion in "rapid deployment" loan guarantees for both renewable energy power generation and electric transmission projects; and most importantly a 30 percent investment tax credit for renewable energy projects and renewal of the production tax credit.
What more could you ask for? The answer is a national renewable electricity standard. Government incentives are nice, but precipitous drops in oil and natural gas prices has sidelined the already scarce investors. A renewable electricity standard - such as the provision in the House-passed American Clean Energy and Security Act - would force utilities to buy renewable energy. Only a guaranteed market for renewable energy will coax investors off the fence.
Breaking News: Climate Compromise in the House
The big news today in Washington is that the House committee working on climate change legislation has actually reached a major compromise that allows significant progress toward federal climate legislation this year.
The new deal calls for a 15 percent renewables target for a Renewable Electricity Standard by 2020, with an additional 5 percent to come from energy efficiency measures. The deal will expand the amount of biomass generation included, a crucial concession for southern lawmakers who worry their region might suffer economic impacts dispropornal to the rest of the nation.
On the structure of cap-and-trade, electric utilities will get 35 percent of the system's pollution allowances for free. The administration has pushed for auctioning all of the pollution allowances, while the House discussion draft distributed earlier remained silent on the issue.
A full version of the bill is expected as early as today with debate in House Energy and Commerce committee expected next week. Chairman Henry Waxman promised to get a bill to the House floor by Memorial Day. He now appears on track.
Is a Climate Deal Imminent?
Here in Washington, every day brings a new rumor about the fate of the attempt to pass comprehensive climate change legislation this year.
Today, the same day The New York Times ran an editorial supporting quick action on climate change, the Capitol is abuzz with the possibility that a deal is in the works.
The focus of speculation is, as it has been for months, the House Energy and Commerce committee, where members have been wrangling over the details of the Waxman-Markey discussion draft introduced this March.
Soon after, House leaders all held hands and said they thought it could get done this year. Then in late April, we heard leaders suggest that the focus was shifting to health care legislation, and that cap-and-trade would get shelved. (The leaders indicated they might push ahead with one piece of the bill: a federal Renewable Electricity Standard that is arguably a more potent short-term solution. That is looking increasingly palatable politically as well as a new wind industry poll indicates that 75 percent of votes support it.)
Now, according to Carbon Control News, a deal to advance the Waxman-Markey discussion draft is being worked out under which utilities would receive emission allowances free (rather than having to purchase them at auction).
We cannot assess the strength of this latest rumor, but it has always been our view that 2010, rather than 2009, was the year to circle on your calendar.
Despite energetic efforts by groups such as Al Gore's Alliance for Climate Protection -- whose director (Cathy Zoi) was tapped to lead energy efficiency and renewable energy programs at DOE -- nothing we have heard has caused us to change our view on this.
