Finance Committee to examine tax breaks
The Energy, Natural Resources and Infrastructure Subcommittee will consider the issue tomorrow, a day after the Senate votes on the latest effort to extend expiring measures like the production tax credit for wind. The Monday vote, on a bill from Sen. Robert Menendez (D-N.J.) that would extend the PTC while eliminating certain tax benefits for large oil companies, is widely expected to fail, but lawmakers say the issue of how to provide incentives for renewable energy likely will remain prominent on Capitol Hill for the rest of the year.
On the witness list are John Purcell, vice president for wind energy at Leeco Steel, which manufactures wind turbine components, and two experts who focus on the economics of renewable energy — Ethan Zindler, head of policy analysis at Bloomberg New Energy Finance, and Benjamin Zycher, a visiting scholar with the American Enterprise Institute.
Purcell has lobbied Congress on behalf of the American Wind Energy Association, of which his company is a member. At an AWEA-organized event in February, he and other manufacturers said companies would begin laying off workers soon if Congress did not act to extend the 2.2-cent-per-kilowatt-hour PTC for wind because orders for turbines and other components are typically placed 12 to 18 months before wind farms begin construction and that the project pipeline would soon begin to dry up if developers could not count on the credit being there next year. Purcell was not available for an interview last week.
Zycher is likely to be the most skeptical of the three witnesses of government efforts to subsidize renewable energy. In a brief interview last week, he said his testimony would explain that renewable energy continues to have a relatively small market share, despite a bevy of state and federal supports, because of inherent problems with the intermittency of such generation and problems siting wind and solar farms.
He also said he plans to rebut arguments commonly advanced in favor of renewables support, such as the idea that the industry needs support because it is still relatively small. Plenty of industries started small and were able to grow because capital markets were able to anticipate that potential growth and could provide private financing to make it happen, he said.
In the interview, Zycher also questioned whether renewable energy could ever be competitive with traditional sources of generation in the current environment of extremely low natural gas prices. He said new discoveries of massive shale gas deposits meant low prices were likely here to stay, making it virtually impossible for wind farms or solar arrays to compete with gas-fired power plants, absent a substantial technological breakthrough.
“I don’t see any reason to believe that [gas] prices will be higher or lower than they are now,” he said. “The best estimate of the price tomorrow is the price today for a depletable resource.”
Zindler will be making his second appearance before Congress this session to discuss the economics of renewable energy markets, after appearing before the Senate Energy and Natural Resources Committee last year. He is a frequently cited analyst on investment trends in clean energy companies, but he could not be reached for comment last week
Speaking earlier this year at a conference at U.N. headquarters sponsored by the investors coalition Ceres, Zindler presented Bloomberg New Energy Finance’s evaluation of clean energy investments in 2011, which showed a 5 percent growth from the previous year to about $260 billion globally, with the solar industry netting the largest share. Zindler was particularly bullish on solar’s prospects, even if efforts to reach a global climate change agreement ultimately falter (ClimateWire, Jan. 13).
“I’m not convinced we need a global agreement,” he said in January. “We need lots of innovative thinking and investment.
Schedule: The hearing is tomorrow at 2:45 p.m. in 215 Dirksen.
Witnesses: John Purcell, vice president for wind energy at Leeco Steel; Ethan Zindler, head of policy analysis at Bloomberg New Energy Finance; and Benjamin Zycher, a visiting scholar with the American Enterprise Institute.