Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - May 11, 2007)

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By Ms. CANTWELL (for herself, Mr. SMITH, and Mr. KERRY):

S. 1370. A bill to amend the Internal Revenue Code of 1986 to ensure more investment and innovation in clean energy technologies; to the Committee on Finance.

Ms. CANTWELL. Mr. President, I rise today to introduce legislation that I believe is an important component of comprehensive energy policy. In order to transition away from an overreliance on fossil fuels, we must promote investments in clean energy generation using renewable resources and reduce the growth in demand for energy by stressing efficiency.

I think every Member of the Senate recognizes that while there is no single technological silver bullet for our energy problems, there are many emerging technologies that if adopted and deployed could go a long way in meeting our vexing energy security and climate challenges.

We also know that Government can play a key role setting technology standards and clean energy goals, but shifting our Nation's and the world's energy system to clean energy alternatives will take substantial private sector investment. Here, too, the Government can play a key role by enabling the market conditions that will take the technology from the laboratory and turn it into fully operational energy producing facilities.

A number of reports have suggested that private investment in energy technologies is on the rise. While estimates vary widely, New Energy Finance has reported that 1,246 private equity funds put more than $70 billion into clean energy technologies in 2006--a 43-percent increase relative to 2005. Similarly, a survey conducted late last year by the National Venture Capital Association found that more than 90 percent of respondents expect to increase investment in the energy sector in 2007.

This is a unique time. There is growing consensus that our Nation's energy demands need to be better and more smartly managed and, more importantly, consensus that those growing energy demands should be met using clean, renewable energy resources.

The Clean Energy Investment Assurance Act of 2007, which I introduce along with my colleagues, Senators GORDON SMITH and JOHN KERRY, responds to the clear message that was delivered to both the Senate Energy and Senate Finance Committees by businesses that are on the cutting edge in this area. What we heard from the renewable energy community and the investment community is that what they need most is some certainty in the Tax Code.

This type of Federal assistance will support the needed long-term investments that ultimately will drive down the costs of electricity from renewable sources. Once the market for these new technologies is up and running, such facilities will be economically self-sustaining and profitable.

Our legislation adheres to the following principles:

Certainty. We put the existing tax incentives in place long enough to drive investment dollars so these new technologies can be commercialized. The core of this bill is a 5-year extension and modification of the production tax credit. This tax credit is designed to help businesses and utilities diversify their sources of energy and promote energy production using biomass, wind power, hydropower, geothermal power, and other clean, renewable resources. In addition, we extend for 8 years the investment tax credit that is so important in encouraging the large upfront outlay of capital that is required for solar and fuel cell power plants.

Technological neutrality. This bill levels the playing field by providing an incentive to both thermal energy production and electricity production that use renewable resources. It also modifies the tax credits to increase the incentive effect for all renewable technologies that can produce energy with zero carbon emissions.

Parity between investor-owned utilities and consumer-owned public power utilities. The bill provides a powerful, complementary incentive through the Clean Renewable Energy Bond Program so that public power and consumer-owned utilities that cannot benefit from tax credits are not financially disadvantaged when they invest in renewable facilities. Public power utilities are required to meet State renewable portfolio standards in the same way as investor-owned utilities, and Government should provide comparable financial incentives so that ultimately the cost of electricity can be reduced for all customers.

Importance of efficiency. This bill includes provisions that better utilize the incentives in the Tax Code to promote energy efficiency in manufacturing, construction of ``green buildings,'' and more efficient homes. These tax incentives help defray the additional costs associated with using new energy-efficient technologies, systems, and materials to construct and retrofit factories, commercial buildings, and houses in order to reduce energy demand. I know Senator SNOWE has done a great deal of work in this area, and I look forward to working with her on these important provisions.

Another key component in this regard is an inducement for customers and utilities to upgrade to ``smart meters.'' A ``smart meter'' is a device with an electronic circuit board containing computer chips and a digital communications device. It allows a customer to interact with a utility in real time. This interaction allows the utility to better forecast and manage energy load and the customer can manage his energy use to lower the cost.

The electromechanical meter, the device that measures energy use with the little wheels turning inside it that is hooked up to almost every home and business in America, is almost the same as when it was invented in the 1930s, when FDR was President.

Inefficient use of energy forces utilities to invest millions in building plants that operate only when energy demand peaks. As a result, the power these plants

generate costs far more than power from other sources. This means more expensive power when demand is high.

Our bill would allow a faster recovery period for the costs of installing these new ``smart meters,'' which will make it easier for consumers to reduce energy use during these peak periods and shift their energy use to low-demand, low-cost times of the day.

We know that we don't have an unlimited pool of Federal resources, and I believe strongly that the Finance Committee should redirect subsidies that historically have propped up the oil and gas industry to now support this new direction in energy policy.

Our tax policy here should be driven by our energy policy goals. We cannot make a long-term difference with start-and-stop tax policy. But we must be mindful that after a reasonable period all tax incentives should be reexamined to see whether we have gotten the results we anticipated and whether the marketplace is ready to function on its own.

We should focus tax incentives where they will have the greatest impact in helping meet those goals. While this bill seeks to address renewable power and efficiency, I plan to continue working on legislation to effectively align the other incentives in the Tax Code that are designed to promote alternative fuels and vehicles.

We all witnessed how innovation in information technologies served as a forceful driver of productivity and economic growth in the recent past.

Energy technology innovations now have similar potential to fuel a new wave of economic growth and job creation.

I would like to note that this bill has already received the support of the following organizations: American Forest Resource Council; American Public Power Association; Biomass Investment Group; Energy Northwest; Large Public Power Council; Northwest Public Power Association; Southern California Public Power Authority; Solar Energy Industries Association; USA Biomass Power Producers Alliance; Chelan County PUD, Snohomish County PUD, Tacoma Power, and Seattle City Light; Washington Public Utility Districts Association; Simpson Investment Company, Tacoma; National Hydropower Association; Seattle Steam; and TechNet.

We have a tremendous opportunity in this Congress to set a new course in energy, environmental, and economic policy for the 21st century, and I hope we aggressively move forward and meet this challenge.

I ask unanimous consent that a section-by-section summary of the Clean Energy Investment Assurance Act of 2007 be printed in the RECORD.

The PRESIDING OFFICER. There being no objection, the material was ordered to be printed in the RECORD as follows:

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