Obama, republican leaders meet–no word on needed energy legislation

Washington (Platts)

Republican leaders in the US Congress said after a private meeting with President Barack Obama that they plan to focus on tax issues before legislators adjourn for the year, but did not mention plans for pending energy legislation.

Obama, McConnell and Boehner also said it was crucial for Congress to pass a spending bill to keep the government operating beyond this Friday, when a stop-gap spending measure is slated to expire.

But none of the men said anything about using the lame-duck session to pass several energy-related bills that renewable-energy advocates have long urged Congress to take up. One such program, administered by the Treasury and Energy departments, provides developers up-front cash grants in lieu of after-the-fact tax credits to build wind farms, solar facilities and other renewable-energy projects. The so-called 1603 program, which has been wildly popular with clean-energy developers, is slated to expire at the end of 2010.

Last Monday, more than two dozen senators from both sides of the aisle urged McConnell and Senate Majority Leader Harry Reid to use the lame-duck session to extend the 1603 program for two years.

Another key program set to expire at the end of the year unless Congress acts is the Volumetric Ethanol Excise Tax Credit, or VEETC, which provides fuel blenders with a 45-cent tax credit for every gallon of ethanol that they blend into gasoline. Earlier this month, a host of senators from corn-producing states urged Reid to find a way to extend the soon-to-expire tax credit. The senators, led by Iowa Democrat Tom Harkin and Missouri Republican Christopher Bond, said the VEETC is crucial for weaning the US off of foreign oil.

“We cannot afford to continue to send billions of dollars every year to unstable oil-producing countries, not to spend additional billions to protect those investments,” they wrote in a letter to Reid.

Congress also appears poised to adjourn for the year without passing any significant legislation related to BP’s massive oil spill earlier this year in the Gulf of Mexico. The House passed a bill earlier this year that would bar BP from acquiring new leases in the Gulf of Mexico because of its safety record, but the measure has languished in the Senate. The Senate also failed to act on a House-passed measure that would make oil companies liable for unlimited spill-related economic damages, a huge shift from the current liability cap of $75 million per company.

–Brian Hansen, brian_hansen@platts.com

Our Take:
Washington appears to have blinders on, focusing too narrowly and missing an important opportunity.

Both 1603 and the VEETC are jobs bills. Plain and simple. We don’t have the figures for wind and solar development, but we know that national studies show 400,000 jobs depend on the ethanol industry and the VEETC credits that keep ethanol flowing to the consumer are crucial to keeping those people employed. Some 20,000 of those jobs are here in Minnesota, where ethanol generates an estimated $6 billion in annual economic activity.

The VEETC credit primes the pumps and encourages a vast amount of economic activity–the $4 billion in payments results in economic activity that brings $15 billion into federal, state and local government coffers.

This is not the time to pull the plug on a program that ensures so many jobs. Ethanol has proved itself a vital component of the farm economy and reductions in its production would impact the entire spectrum of jobs from finance industry, to transportation, agribusiness and manufacturing. The additional revenue seen on the farm, from stronger commodity prices and from returns on ethanol ownership, are dollars that go right back into purchasing farm equipment, and buying goods and services on Minnesota’s small town Main Streets.

Let’s keep rural America strong, by keeping the VEETC incentive in place.

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