Tuesday, May 17, 2011

Senator Mark Kirk Weighs in on Oil Subsidies, Renewable Energy Tax Credits, and Other Environmental Issues (UPDATED: Kirk a "No" On Ending Subsidies)

Being an environmental lawyer, I like to keep up on the latest trends in energy policy, and I came across a splendid article going into great detail on the economic aspects of environment and energy policy views that are held by our new Illinois Senator, Mark Kirk. The nice folks at Energy and Environment Publishing gave me premission to reprint the article in full, which is set forth below.

UPDATED 5/18/11 9:00 a.m.: Yesterday, in a procedural vote on S. 940, which is a Democratic bill to largely end so-called 'big oil' tax subsidies and loopholes, Mark Kirk voted "no" to continue debate. Two Republicans, Susan Collins and Olympia Snowe, voted yes, and a handful of Democrats voted no, for a 52-48 vote.

Reprinted from ClimateWire with permission from Environment & Energy Publishing, LLC. http://www.eenews.net/. 202/628-6500

POLITICS: One Senate Republican, a climate believer, considers repealing oil subsidies (05/17/2011)

Evan Lehmann, E&E reporter

ROCHELLE, Ill. -- The flat fields here stop reluctantly at old screen doors of farmhouses dotting a countryside that changes mostly when corn covers or bares it. But something else is rising from these plains where trees are sparse: hundreds of wind turbines.

Illinois is among the fastest-growing states for wind power, rivaling competitors with steadier breezes because of its access to transmission lines and a major market in Chicago. The state ranked second in the nation last year in new development, with a 25 percent jump. Its capacity is now more than 2,000 megawatts, located mostly in a rural cluster of counties extending 200 miles from the metropolis. That's seventh-highest in the country.

The ramp-up is changing more than just the contours of the countryside. The turbines are also coloring the early Senate term of Mark Kirk, a Republican who is challenging his party's shifting position on renewable energy at a time when incentives are increasingly seen as an expensive Democratic priority.

The fields stabbed with turbines here represent a "new economy" that is threatened by the temporary life of tax credits that pay clean energy developers a subsidy for every kilowatt-hour produced, Kirk said in an interview. He believes the incentives, including grants that pay for 30 percent of eligible clean energy projects, should be made permanent.

"This sector represents a quintessential way to innovate our way out of a problem," Kirk said. "So you see the vast treasure and effort going in to develop this new American resource, and understand because of the uncertain hand of Congress, it's underperforming."

Kirk also supports rescinding tax breaks for oil and gas companies, which the Navy Reserve commander says reap "hidden subsidies" expended during U.S. military campaigns in oil-rich regions. He stopped short, however, of saying he would support a Democratic bill this week that targets tax deductions for the five biggest oil companies, suspecting that it has "a huge ideological component."

"In the grand scheme of things, I think Congress is slowly moving towards wiping out a lot of tax preferences in return for lowering corporate [tax] rates," Kirk said. "I think that would be a good move in oil and gas."

Climate is a 'long-term' problem

Kirk's energy outlook puts him in a small camp of Republicans, even if other Illinois lawmakers, of the conservative freshman class, too, support tax credits for renewable energy. It's a case of regional interest. Illinois has wind, not oil. Even so, promoting permanent subsidies strikes some as beyond their party's orthodoxy.

Illinois Rep. Adam Kinzinger, a 33-year-old elected in the tea party wave last year, believes clean energy incentives are "important." But to make them permanent would strip Congress of its oversight ensuring "we're getting a bang for our buck," he said.

Kirk is different. He criticizes Congress for not making the tax credits permanent years ago, a step that would give developers a "green light" to invest in energy projects, and also in research on things like advanced batteries for electric cars and in manufacturing plants for turbines and components.

Yet he distressed clean energy advocates last year when he abandoned his support for cap and trade on the campaign trail; he was one of eight Republican House members in 2009 to support legislation limiting greenhouse gas emissions for utilities, industry and transportation. But unlike many Republicans, Kirk did not question the science behind man-made emissions and climate change.

Last week, he said climate change is a "long-term" concern. And the fix should be, too. Instead of the accelerated pace he supported two years ago, Kirk now says the political shape of Congress and the economic status of the country require a softer touch. Clean energy technologies will become competitive, eventually, with cheap coal and natural gas, he says.

"In other words, as you spur innovation and you hit the price points in the economy for an alternative energy technology or use to be cheaper, the economy will flip on its own," he said, noting several times that the Obama administration "wants to use regulation, trial lawyers and higher taxes -- a bludgeon against the economy."

Still, Kirk once supported steps similar to President Obama's newest energy priority, a clean energy standard. Kirk co-sponsored legislation in 2007 with Rep. Edward Markey (D-Mass.) and others to establish a national renewable electricity standard. He also supported legislation to repeal oil and gas tax deductions in 2008.

Kirk never 'too conservative'

Those things were possible, perhaps even required, for a Republican representing Illinois' 10th District, an affluent collection of north Chicago suburbs with a hands-on approach to selecting its lawmakers.

And Kirk saw it from the beginning. His first job in Congress was working as an aide for his own congressman, John Porter, a moderate Republican who promoted "debt for nature swaps" and opposed oil drilling in Alaska's Arctic National Wildlife Refuge after traveling to the remote region.

The nature swaps never took hold, but Porter describes them as if they still make sense. He uses Rwanda as an example. The United States would forgive Rwanda's debt -- knowing it would never be paid back anyway -- in exchange for permanently preserving large stretches of natural areas.

At about the same time, in the mid-1990s, Kirk was working on Porter's foreign policy initiatives. He used to visit the State Department, where he would later work, for discussions on international climate policy, recalls Eileen Claussen, president of the Pew Center on Global Climate Change.

"Mark is a serious person, and maybe because he was a staff guy and maybe because he was at the State Department, I think he understands this in a way that a lot of other members do not," Claussen, who was an assistant secretary of State at the time, said of Kirk's climate position.

Several years later, in the months before Porter's retirement in January 2001, the veteran lawmaker wanted to stay neutral in the race to succeed him. All of the candidates had connections to him, and "I tried to stay out of it," Porter said in an interview.

He reconsidered out of concern that a candidate who was "too conservative" would win the GOP primary, handing the district he had represented for 20 years to a Democrat. So he endorsed his chief of staff, Mark Kirk.

"The district is very independent and always has been," Porter said. "People are very, very attuned to business and government both, and a lot of other pursuits. And [they] take the time to learn the issues and the candidates and aren't really much party-oriented."

Hearing, and hating, those towers

Now Kirk has other worries. He represents a state that hasn't voted for a Republican presidential candidate since George H.W. Bush in 1988. But the balance is thin between Chicago's Democratic gravity and the Republican countryside, with coal mining in the south, industry in hardscrabble river towns, and rural Republicans throughout. Kirk won last year's Senate election by 1.01 percent.

His political base is among the turbines that rise in clusters, or sometimes alone, randomly sprawling for 10 miles along the muddy fields in this section of Lee and DeKalb counties. But the 145 turbines raised here two years ago by NextEra Energy Resources are fiercely opposed.

They whir in the wind, cast rotating shadows when the sun is low, and raise concerns about eroding property values. Some turbines are about 1,400 feet from homes, making them some of the highest objects this side of Chicago.

And they cost a lot of money to taxpayers, who pay 2.2 cents for every kilowatt-hour of power the project produces through the production tax credit. Other subsidies exist, and for what? some residents ask. The wind-slashing towers out here can produce 217 megawatts at maximum capacity, which is not often, residents say.

"The whole climate change thing is still highly debatable," said Dave Hulthen, 34, who built his house on a 4.5-acre patch of grass about 10 years ago. It was always surrounded by endless fields, and now is surrounded by turbines, too.

"Is there proof they've taken coal off the grid?" he asks. "Is it really good for America, or is it good for people who make money?"

Economists say that taken together, the Illinois wind industry is having a positive effect. The increased tax revenue benefits schools and police and fire departments, says David Loomis, director of the Center for Renewable Energy at Illinois State University in Normal, Ill.

Wind biz didn't 'turn out'

A report by the center last June found that the state's wind industry has created almost 10,000 construction jobs and 494 permanent jobs. The latter category has an annual payroll of $25 million, the report says. Altogether, the industry as it was last year will generate about $3.2 billion over the next 25 years.

Two hours away in Peoria, those aspirations haven't been realized yet. A Lucas & Sons Steel, a 150-year-old iron and steelwork facility near the banks of the workman Illinois River, received a federal grant of about $300,000 to buy equipment to build ladders and elevator cage systems for the inside of wind turbines.

Executives in the family company have been trying to land their first deal for six months. But European turbine manufacturers are still importing their own systems, despite the costs in freight, insurance and time delays, says Todd Cordes, the company's sales director.

"We've always kind of looked at the wind industry where our next bang would be. That didn't necessarily turn out," he said, adding that he still expects it to be "a great future business for us."

That illustrates the limitations of renewable energy tax credits, says Claussen of Pew. They're beneficial, but she believes they're not strong enough to spark the contagious expansion of clean energy that will drive the level of demand needed to quickly create new manufacturing and development. A clean energy standard or a price on carbon dioxide would stimulate the sector, in her view.

On the other hand, Lucas & Sons found an unexpected opportunity earlier this year. It began making steel components for truck-sized boxes containing generators used to produce electricity from methane gas at landfills. It now accounts for 20 percent of the company's annual business.

"That's a real nice setup for us," said Cordes.

Landfill gas projects receive federal subsidies that expire in 2013, unless Kirk realizes his aspirations to make them permanent.


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