Washington Energy Update

Congress

Congress is set to go into recess at the end of this week until early September with the annual August recess starting early to accommodate the Republican and Democratic presidential nominating conventions held the last two weeks of July.

Just ahead of a July 15 deadline, the House and Senate approved a Federal Aviation Administration (FAA) reauthorization that runs through 2017. There had been some hope that the FAA measure would include the orphaned energy tax extenders that were left out of last December’s consolidated appropriations bill, which did include an extension of the investment tax credit for solar. While the extenders for these orphaned energy technologies – including small wind, combined heat and power properties, thermal energy, and fuel cells – didn’t make it into the FAA bill, there is still an effort to include them in a possible end of year tax package.

Several bills were introduced the week of July 11 which indicate that some in the Senate are gearing up for an end of year tax package:

• Sens. Heidi Heitkamp (D-ND) and Sheldon Whitehouse (D-RI) introduced a bill to incentivize the development and use of carbon capture, utilization and storage technologies and processes. S. 3179 would promote carbon capture technologies by extending the 45Q tax credit, which encourages investment in carbon capture, utilization, and sequestration. Among other provisions, the bill also increases the “commence construction” window for carbon capture projects from five to seven years and increases the number of years to claim the credits from 10 to 12 years. The bill is cosponsored by Sens. Jon Tester (D-MT), Brian Schatz (D-HI), Cory Booker (D-NJ), and Tim Kaine (D-VA).
• Sens. Chuck Grassley (R-IA) and Maria Cantwell (D-WA) introduced the Biodiesel Tax Incentive Reform and Extension Act (S. 3188), which would reform the biodiesel tax credit and extend the credit for three years. The bill bipartisan bill is cosponsored by Sens. Pat Roberts (R-KS), Heidi Heitkamp (D-ND), John Thune (R-SD), Sheldon Whitehouse (D-RI), Mark Kirk (R-IL), Martin Heinrich (D-NM), Joni Ernst (R-IA), Joe Donnelly (D-IN), Roy Blunt (R-MO), Mazie Hirono (D-HI), Al Franken (D-MN), and Patty Murray (D-WA).
• Sens. Martin Heinrich (D-NM) and Dean Heller (R-NV) introduced the Energy Storage Tax Incentive and Deployment Act (S. 3159), which would establish investment tax credits for business and home use of energy storage. The bipartisan bill is cosponsored by Sens. Brian Schatz (D-HI), Al Franken (D-MN), Jeff Merkley (D-OR), Angus King (I-ME), Jack Reed (D-RI), and Mazie Hirono (D-HI).
• Sens. Lamar Alexander (R-TN) introduced legislation that would end the wind production tax credit (PTC) at the end of 2016, instead of on December 31, 2019 as currently scheduled. S. 3169 would instead divert $8.1 billion in savings toward basic energy research at the Department of Energy’s Office of Science.

In a long anticipated move, the Senate on July 12 voted to appoint conferees to the energy bill, naming Sens. Murkowski (R-AK), Barrasso (R-WY), Risch (R-SD), Cornyn (R-TX), Cantwell (D-WA), Wyden (D-OR), and Sanders (I-VT). House conferees were named in May and include Reps. Upton (R-MI), Barton (R-TX), Whitfield (R-KY), Shimkus (R-IL), Latta (R-OH), McMorris Rodgers (R-WA), Olson (R-TX), McKinley (R-WV), Pompeo (R-KS), Griffith (R-VA), Flores (R-TX), Mullin (R-OK), Bishop (R-UT), Young (R-AK), Lummis (R-WY), Denham (R-CA), Westerman (R-AR), Smith (R-TX), Weber (R-TX), Conaway (R-TX), Thompson (R-PA), Hardy (R-NV), Zeldin (R-NY)), Pallone (D-NJ), Rush (D-IL), Capps (D-CA), Matsui (D-CA), Castor (D-FL), Sarbanes (D-MD), Welch (D-VT), Lujan (D-NM), Tonko (D-NY), Loebsack (D-IA), Grijalva (D-AZ), Huffman (D-CA), Dingell (D-MI), Peterson (D-MN), Johnson (D-TX), and DeFazio (D-OR). The House-passed bill (H.R. 8) faces a veto threat from the White House, while the Senate-passed bill (S. 2012) is seen as a more bipartisan effort. Over the upcoming congressional recess, lasting until early September, congressional staff will work to prepare for the conference committee to formally meet when congress returns. A final bill is expected after the November elections.

Rep. Evan Jenkins (R-WV) has introduced legislation to prohibit the Environmental Protection Agency from taking into account the social cost of carbon or the social cost of methane when taking any action. The Transparency and Honest in Regulations Act (H.R. 5668) is cosponsored by Reps. Steve Womack (R-AR), John Culberson (R-TX), Darin LaHood (R-IL), and Markwayne Mullin (R-OK).

The House approved the Electricity Storage Innovation Act (H.R. 5640) which was introduced by Rep. Lamar Smith (R-TX) and would create a new Electricity Storage Basic Research Initiative to expand theoretical and fundamental knowledge to control, store, and convert electrical energy to chemical energy and the inverse; and the Solar Fuels Innovation Act (H.R. 5638) which was introduced by Rep. Stephen Knight (R-CA) and would require the Department of Energy to carry out the Solar Fuels Basic Research Initiative to expand scientific knowledge about converting solar energy into chemical energy. Both bills authorize annual funding of $150 million.

The House Natural Resources Committee unanimously approved bipartisan legislation aimed at modernizing the Bureau of Ocean Energy Management’s (BOEM) offshore leasing process by allowing a transfer of oil and gas lease sales to an online system. The Innovation in Offshore Leasing Act (H.R. 5577) was introduced by Reps. Garret Graves (R-LA) and Alan Lowenthal (D-CA),  and is cosponsored by Reps. Charles Boustany (R-LA), Ralph Abraham (R-LA), John Fleming (R-LA), and Gene Green (D-TX).

The House defeated two amendments to the Fiscal Year 2017 Interior-EPA appropriations bill that would have prohibited offshore oil and gas drilling of the Florida coast. Specifically, the amendments would have blocked coastal Florida seismic testing which is needed before drilling could commence and would have blocked funding for studying offshore drilling in the Gulf of Mexico.

The House Natural Resources Subcommittee on Energy and Mineral Resources held a hearing July 13 on the Public Land Renewable Energy Development Act (H.R. 2663) which would encourage geothermal, solar, and wind energy projects on public lands. The bill is sponsored by Rep. Paul Gosar (R-AZ) and has 67 bipartisan cosponsors.  On July 14, the House Natural Resources Subcommittee on Oversight and Investigations held a hearing on the status of Ivanpah and other federal loan-guaranteed solar energy projects on Bureau of Land Management lands.

Administration

The National Renewable Energy Laboratory has released a report titled “Deployment of Wind Turbines in The Built Environment: Risks, Lessons, and Recommended Practices.”

The Department of Energy announced up to $15 million to help improve the security and resilience of the nation’s power grid from cyber and physical attacks. The project, subject to congressional appropriations, is aimed at supporting efforts by the American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA) to “further enhance the culture of security within their utility members’ organization.” The funding will allow APPA and NRECA, over the next three years, to develop security tools, educational resources, updated guidelines, and training on common strategies that can be used to cultivate an improved cyber and physical security culture.

The Department of Energy has also announced nearly $16 million in funding aimed at helping businesses move promising energy technologies from the department’s National Laboratories to the marketplace. This is the first DOE-wide funding through the Technology Commercialization Fund (TCF) and will support 54 projects at 12 national labs involving 52 private-sector partners.