Legislative update: Energy Act of 2008

Late Tuesday, the U.S. House of Representatives passed The Comprehensive American Energy Security and Consumer Protection Act - H.R. 6899 .

The Act was passed largely along party lines (236 - 189) with thirteen Democrats joining Republicans in voting against the measure. The bill sponsored by John Dingell (D-MI) and Nick Rahall (D-WV), includes several highly controversial policy actions as follows:

1) States could permit drilling in waters between 50 and 100 miles offshore and the federal government can allow for drilling from 100 to 200 miles offshore;

2) Repeal of the current ban on leasing federal lands for oil shale production if states enact laws providing to such leases and production;

3)  A ONE year extension of the production tax credit for wind energy development thus extending the expiration date from Jan 1, 2009 to Jan 1, 2010. Tax incentives for renewable energy total $19 billion over ten years, including the one-year extension for wind energy at a cost of $7 billion.

4) Enact a federal renewable portfolio standard that requires power companies to generate 15% of their energy from renewable sources by 2020.

The cost of the tax incentives, according to the bill, are entirely offset by rolling back tax benefits to oil companies and by changing the tax treatment of foreign earnings of U.S. oil companies.

The Senate is scheduled to debate this bill later this week.

The controversial elements, including the limits on where offshore drilling can occur, the cost for renewable incentives, and a national renewable portfolio standard may well prove non-starters. It's worth noting that we are entering the election season and politics can be the determining factor, with both sides seeking to blame the other for failing to address the energy issues facing the country.

Windaction.org maintains that the PTC should be adjusted to incent those generators who can reliably produce electricity closer to load and at the time of day and year when the energy is most needed rather that rewarding those who place energy on the grid regardless of demand.