Senate Ag Committee hears how federal delay & rules are blocking renewable energy

By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, July 21 – “Rural America is often the first to feel the impact of economic downturns and is often the last to reap the rewards of economic recoveries.” That's how Senate Agriculture Committee Chair Blanche Lincoln (D-AR) opened her hearing on “Empowering Rural Communities” Wednesday. Lincoln then said that “development and deployment of renewable sources of energy produced in rural America presents an opportunity to change that trend.”

Senate Agriculture Committee Chair Blanche Lincoln (D-AR) presiding over the “Empowering Rural Communities” hearing. Photo: Senate Agriculture Committee.

Next, one after another, the hearing's witnesses all talked up the great promise of renewable energy – and then detailed why current federal regulations and policies present major barriers to developing renewable energy.

National Rural Electric Cooperative Association (NRECA) CEO Glenn English explained that electric co-ops face the challenge of adjusting to “a carbon constrained environment” just when projections call for NRECA members to double their generation capacity by 2020. He said that “It's clear we need new generation and it needs to be as clean as practicable, but we are also dealing with multiple environmental regulatory hurdles, from the Clean Air Act to the Clean Water Act, for existing coal generation, and barriers to the construction of transmission that is especially needed to support new renewable resources. . . Whether from Congress, the bureaucracy or the courts, electric co-ops have to figure out how to produce and deliver electricity under more difficult conditions.”

Questioned by Senate Ag Committee Ranking Member Saxby Chambliss (R-GA) who asked about “over-reaching federal regulation, English said that with so much uncertainty and even conflicts among government agencies regarding renewable energy, electric co-ops “don't now which way to go” on new generation. English said that due to the uncertainty – and with no sign that renewable-energy transmission lines can be built in the face of NIMBY concerns – co-ops may be forced to opt for higher-cost natural gas plants to meet rising demand. English noted that even basic requirements – such as having federal agencies agree on how to define “biomass” – present serious hurdles.

General Wesley Clark, Co-Chair of the ethanol-promoting Growth Energy trade group, detailed similar problems strangling the ethanol industry which he called “this incredible jewel of innovation in America's agricultural community.” He said that if EPA finally acts to allow an E15 (15%) blend of ethanol with gasoline instead of the current E10 limit, the change will create thousands of new jobs and “a wave of investment in rural America.” He said that with both corn yields and ethanol refinery efficiency constantly improving, the only limit on the industry's growth is market access. He said allowing E15, mandating more production of flex-fuel vehicles, and blender pumps to let drivers choose higher ethanol blends would dramatically increase the market for ethanol – which in turn would unleash private investment.

Clark noted that he's also an investment banker. He said the uncertainty about the future U.S. market for ethanol has led ethanol-savvy investors to invest in Brazilian ethanol over the past two years, rather than investing here at home. Clark said serious flaws in the 2007 Energy Bill include its indirect land use rules which penalize American farmers for supposedly causing deforestation overseas and its advanced biofuels definition which discriminates against corn-based ethanol. He called ethanol “our innovation and gift to the world” but said that flawed federal policies are making it impossible to tap ethanol's potential benefits.

National Alliance of Forest Owners (NAFO) President Dave Tenny told a similar story about the nation's forests. He explained that current rules and narrow biomass definitions lock away and waste valuable forest resources. He said that “investment in biomass energy is stagnating” due to uncertainty over biomass regulations and that it's flawed federal policies which are “chilling investment.”

Tenny told Sen. John Thune (R-SD) that the concern in writing narrow definitions was that unrestricted biomass could decimate U.S. forests. On the contrary, Tenny explained that “Markets are good for forests. Markets maintain the forests long term” and “help forest health.” He called for long-term certainty about the use of forest resources because planting and maintaining a forest is a long-term investment with no return for perhaps 40 to 80 years. Once there is long-term certainty of fair returns, foresters will “put marginal land into forests” and grow more trees to meet clear market demand.

Sen. Lincoln painted a picture of what could be done with better federal policies: “The Farm Bill energy programs provide a model which should be the basis of our national energy policy. We need to develop biofuels and biomass energy policies that work for rural America. In May of this year, just one month, we sent $27.5 billion overseas to purchase oil – much of that to hostile foreign governments. Imagine if we invested $27.5 billion in renewable and clean energy development in rural America every month.” Narrowing the picture to her home state, she said that “In Arkansas if we used only a fraction of that money to build just 10 cellulosic ethanol facilities, we would create 2,090 long-term jobs, generate $216 million in economic activity and reduce Arkansas’s need to import oil by 50%. That sounds like a great story and a good, sound investment to me.”

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