Reaction Mostly Positive to Bush Energy Plan

May 18, 2001

Reaction from agricultural interests to President Bush's energy plan has been mostly positive, even though the proposals from Vice President Dick Cheney's task force did not directly make room for increased biomass or corn-based ethanol production. The plan supports the extension of the ethanol tax incentive, a provision not up for renewal until 2007 and makes more than a few recommendations on increasing renewable and alternative energy sources.

Sen. Dick Lugar (R-IN), chairman of the Senate Agriculture Committee, called the plan an "excellent start." Still, he added, "overcoming our strategic energy vulnerability will take concentrated action over several presidencies. We all must accept that we are facing a fundamental threat to our quality of life, our economy, and our security. Our response to this threat must be commensurate with its gravity. This will require strong leadership that rejects simplistic explanations of the energy problem and rises above narrow feuds between production proponents and environmentalists."

Included in the report were recommendations that:

--the President direct the Secretaries of the Interior and Energy to re-evaluate access limitations to federal lands in order to increase renewable energy production, such as biomass, wind, geothermal, and solar. The proposal supports the increase of $39.2 million in the fiscal 2002 budget amendment for the Department of Energy's energy supply account that would provide increased support for research and development of renewable energy re-sources.

--the President direct the Secretary of Energy to conduct a review of current funding and historic performance of renewable energy and alternative energy research and development programs in light of the recommendations of this report. Based on this review, the Secretary of Energy is then directed to propose appropriate funding of those research and development programs that are performance-based and are modeled as public-private partnerships.

--the President direct the Secretary of the Treasury to work with Congress on legislation to expand the section 29 tax credit to make it available for new landfill methane projects. The credit could be tiered, depending on whether a landfill is already required by federal law to collect and flare its methane emissions due to local air pollution concerns.

--the President direct the Secretary of the Interior to determine ways to reduce the delays in geothermal lease processing as part of the permitting review process.

--the President direct the administrator of the Environmental Protection Agency to develop a new renewable energy partnership program to help companies more easily buy renewable energy, as well as receive recognition for the environmental benefits of their purchase, and help consumers by promoting consumer choice programs that increase their knowledge about the environmental benefits of purchasing renewable energy.

--the President direct the Secretary of the Treasury to work with Congress on legislation to extend and expand tax credits for electricity produced using wind and biomass. The President's budget request extends the present 1.7 cents per kilowatt hour tax credit for electricity produced from wind and biomass; expands eligible biomass sources to include forest-related sources, agricultural sources, and certain urban sources; and allows a credit for electricity produced from biomass co-fired with coal.

--the President direct the Secretary of the Treasury to work with Congress on legislation to provide a new 15% tax credit for residential solar energy property, up to a maximum credit of $2,000.

--the President direct the Secretaries of the Interior and Energy to work with Congress on legislation to use an estimated $1.2 billion of bid bonuses from environmentally responsible leasing to fund research into alternative and renewable energy resources, including wind, solar, geothermal, and biomass.

--the President direct the Secretary of the Treasury to work with Congress to continue the ethanol excise tax exemption.

--the President direct the Secretary of Energy to develop next-generation technology—including hydrogen and fusion; develop an education campaign that communicates the benefits of alternative forms of energy, including hydrogen and fusion; focus research and development efforts on integrating current programs regarding hydrogen, fuel cells, and distributed energy; support legislation reauthorizing the Hydrogen Energy Act.

--the President direct the Secretary of the Treasury to work with Congress to develop legislation to provide for a temporary income tax credit available for the purchase of new hybrid or fuel-cell vehicles between 2002 and 2007.

--the President direct the Administrator of the Environmental Protection Agency to issue guidance to encourage the development of well-designed combined heat and power (CHP) units that are both highly efficient and have low emissions. The goal of this guidance would be to shorten the time needed to obtain each permit, provide certainty to industry by ensuring consistent implementation across the country, and encourage the use of these cleaner, more efficient technologies.

Bob Stallman, president, American Farm Bureau Federation, said the Bush-Cheney plan will help ease the burden of high energy and input costs on America's farmers, ranchers and consumers. America's farmers and ranchers anxiously anticipate hearing more about the role ethanol and other farm-grown renewable energy will play in the President's plan."

Kathryn S. Fuller, president of World Wildlife Fund-U.S., was more cautious in her praise of the proposal. "By relying heavily on the increased production of fossil fuels, while ignoring important opportunities for conservation and efficiency, the authors of this proposal are trying to balance our nation's energy future on a one-legged stool. Simply increasing production, at the expense of the wilderness areas and wildlife we all cherish, will not buy America energy security -- in either the short or the long run."

Fuller added, "We still have time to make a better and wiser choice through conservation and investment in technologies that increase efficiency and utilize non-polluting renewable resources. A more balanced plan would provide major economic benefits by focusing on the transition to a sustainable energy future and by reducing the carbon pollution responsible for global warming."

Following a meeting Tuesday with Chency, the co-directors of the American Bioenergy Association (ABA) and other renewable energy advocates, expressed some disappointment. The plan offered "support but no firm figures for increased research and development funding for bioenergy programs at the Department of Energy ... (and) did not provide any special provisions to jump-start the fledgling biomass ethanol industry, such as a renewable fuels standard, which would increase the market for ethanol three- to four-times its current size, a strategy ABA had requested of the White House."

However, ABA applauded the administration's inclusion of the extension of the ethanol tax incentive, a provision not up for renewal until 2007. "While supporting the ethanol tax incentive, ABA finds it unfortunate that there is no mention of short-term incentives for biomass ethanol at a time when the industry needs a strong sign that this administration stands behind this new technology-luring investors for these new plants to the table, and holding them there," said Megan Smith, ABA co-director.

The proposal is available on the Internet at http://www.whitehouse.gov/energy/