Colorado Bar Association Environmental Law Section February 22, 2006 David Hiller State Issues Counsel for U.S. Senator Ken Salazar

Colorado Bar AssociationColorado Bar AssociationEnvironmental Law SectionEnvironmental Law Section

February 22, 2006February 22, 2006

David HillerDavid HillerState Issues Counsel forState Issues Counsel for

U.S. Senator Ken SalazarU.S. Senator Ken Salazarwww.Salazar.Senate.Govwww.Salazar.Senate.Gov

Key Renewable Energy Provisions Key Renewable Energy Provisions Energy Policy Act of 2005Energy Policy Act of 2005

Provides $2.7 billion in production tax credits to Provides $2.7 billion in production tax credits to encourage the production of clean electric power encourage the production of clean electric power from wind, closed-loop biomass, open-loop from wind, closed-loop biomass, open-loop biomass, geothermal, irrigation power, landfill gas, biomass, geothermal, irrigation power, landfill gas, and trash combustion.and trash combustion.

$2.7 billion in tax incentives to encourage $2.7 billion in tax incentives to encourage efficiency and conservation, including energy efficiency and conservation, including energy efficient appliances and energy efficient building efficient appliances and energy efficient building construction.construction.


Requires manufacturers to use 7.5 billion Requires manufacturers to use 7.5 billion gallons of ethanol and biodiesel by 2012 gallons of ethanol and biodiesel by 2012 – Reduce oil consumption by 80,000 bbls/day by 2012Reduce oil consumption by 80,000 bbls/day by 2012– Reduce the trade imbalance by $64 billion;Reduce the trade imbalance by $64 billion;– Create 234,840 new jobs in the U.S. economy;Create 234,840 new jobs in the U.S. economy;– Increase U.S. household income by $43 billion;Increase U.S. household income by $43 billion;– Add $200 billion to the GDP; andAdd $200 billion to the GDP; and

Creates $6 billion in new investment in Creates $6 billion in new investment in renewable fuel production facilitiesrenewable fuel production facilities


Extends the biodiesel tax credit for producers for Extends the biodiesel tax credit for producers for five years. five years.

Allows small producer tax credit for biodiesel and Allows small producer tax credit for biodiesel and ethanol producers that generate less than 60 ethanol producers that generate less than 60 million gallons per year.million gallons per year. – Provides credit of 10 cents per gallon for first 15 million Provides credit of 10 cents per gallon for first 15 million

gallons produced. gallons produced. – Up to $1.5 million in tax credits each year.Up to $1.5 million in tax credits each year.

Offers $874 million in tax credits for the purchase Offers $874 million in tax credits for the purchase of alternative-fuel and hybrid vehicles – from of alternative-fuel and hybrid vehicles – from $2,000 for small cars to $40,000 for buses. $2,000 for small cars to $40,000 for buses.


Provides a 30 percent tax credit (up to $30,000) Provides a 30 percent tax credit (up to $30,000) for investments in alternative fuel refueling for investments in alternative fuel refueling stations.stations. – Qualifying fuels include E85 ethanol blend and any Qualifying fuels include E85 ethanol blend and any

mixture of diesel fuel and biodiesel containing at least mixture of diesel fuel and biodiesel containing at least 20% biodiesel20% biodiesel. .

– Credit expires December 31, 2007.Credit expires December 31, 2007.


Provides loan guarantees for up to 4 Provides loan guarantees for up to 4 cellulosic ethanol plants.cellulosic ethanol plants.– Cellulosic ethanol is the ethanol of the future – it Cellulosic ethanol is the ethanol of the future – it

will provide substantial oil savings when it is will provide substantial oil savings when it is economically feasible.economically feasible.

– The loan guarantees are for up to 80% of the The loan guarantees are for up to 80% of the project, up to 250 million. project, up to 250 million.


Mandates DOE biodiesel testing program with diesel Mandates DOE biodiesel testing program with diesel engine makers and biodiesel producers to study the engine makers and biodiesel producers to study the impact of biodiesel on operation of diesel engines and impact of biodiesel on operation of diesel engines and engine emissionsengine emissions

Requires Departments of Commerce, Interior, and Requires Departments of Commerce, Interior, and Agriculture to use energy efficient vehicles, including Agriculture to use energy efficient vehicles, including alternative fuels. alternative fuels.

Establishes an Advanced Biofuels Technologies Establishes an Advanced Biofuels Technologies ProgramProgram– To develop value-added bioproducts (e.g. fertilizers, herbicides, To develop value-added bioproducts (e.g. fertilizers, herbicides,

and pesticides) from the production of biodiesel. and pesticides) from the production of biodiesel.

Senator Ken SalazarCOLORADO RENEWABLE ENERGY SUMMIT

JANUARY 11, 2006King Center

Community College of Denver

To increase understanding of the role of energy in America’s national security and economic prosperity.

To provide information regarding renewable energy research, development and production.

To discuss the next steps for renewable energy in Colorado and the Nation.

Energy Solutions are Enormously Challenging

Energy Solutions are Enormously Challenging

We need a balanced portfolio of optionsWe need a balanced portfolio of options

Energy security• Secure supply• Reliability

Energy security• Secure supply• Reliability

Economic productivity• Growth in demand• Price volatility

Economic productivity• Growth in demand• Price volatility

Environmental impact• Land and water use• Emissions

Environmental impact• Land and water use• Emissions

UncertaintyUncertaintyand riskand risk

www.seia.org

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1300

1990

1991

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2004

0%

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10%

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20%

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30%

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ROW

Europe

Japan

U.S.

U.S. Market Share

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Source for market data: Paul Maycock, PV News, Volume 24, No. 3 March 2005

PV Shipments and Market Share

BIODIESEL MARKET SIZE (B100)

0100200300400500600700800900

1,000

2003 2004 2005 2006

U.S.

EU

Mill

ion

Gal

lons

Ethanol Production Has Positive Ethanol Production Has Positive National, State and Local National, State and Local

Economic BenefitsEconomic Benefits

In 2004 the ethanol industry:

Supported the creation of more than 147,000 jobs. Added $1.3 billion to federal tax revenues. Increased tax revenue for local governments by

$1.2 billion. Reduced farm program costs by $3.2 billion due to

increased value of commodities. Lowered fuel costs for consumers.

Faster growth than conventional energy...

RenewablesCoal Oil HydroGas Nuclear

1990-2000growth (%

pa)

-2

0

2

4

6

8

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Increasing Renewables in the Energy Mix

Technologies

Policies Markets

ReducingRisk

ReducingRisk

CapitalMobilization

CapitalMobilization

Ethanol Production

0

1

2

3

4

5

6

7

8

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2002 2004 2006 2008 2010 2012

Cellulosic Ethanol

Conventional Ethanol

RFS

• Renewable Fuels Standard mandates 7.5 billion gallons by 2012

• Total US gasoline market ~140 billion annual gallons

Actual and Projected U.S. Ethanol Production 2002-2012Billion Gallons of Production

U.S. Biodiesel Production

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Total US distillate fuels market is approximately 60 billion gallons per year

2005Estimate

2006Forecast

Based on ORNL & USDA Resource Assessment Study by Perlach et.al. (April 2005) http://www.eere.energy.gov/biomass/pdfs/final_billionton_vision_report2.pdf

The 1.3 Billion Ton Biomass ScenarioBillion Barrel of Oil Equivalents

The emissions challenge

21%

41%38%

22%

44%

34%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Transport Power Heat Transport Power Heat

Overall Capacity• Power capacity up 48% to

5800GW

Fossil Fuels• Gas increases 87% • Coal increases 43% • Oil increases 12%

Low-Carbon• Nuclear stays flat • Hydro increases 29%• Renewables increase 234%

2004 2020

CO2 Emissions By Sector

2020 Scenario

Source: IEA World Energy Outlook, 2004 Source: IEA World Energy Outlook, 2004

www.seia.org

World Class Solar Resources

National Wind MapNational Wind Map

CENTRAL HIGH PLAINS ECONOMIC OPPORTUNITY

5.6 Million Acres Potential ForBiodiesel Energy Crops (W. Wheat)

220 Million Gallons B100 Annually

$3.5 Billion Regional New Income

19,000 Regional Net New Jobs

Renewable Energy: A Potential Engine for Economic Growth in Colorado

• Plentiful resources

• NREL and university R&D centers

• Targeted industry for economic development

VEHICLE AND FUEL CHOICES FOR AMERICAN SECURITY ACT“Set America Free Act”

S. 2025Introduced November 16, 2005

VEHICLE AND FUEL CHOICES FOR AMERICAN SECURITY ACT

“Set America Free Act”S. 2025

Introduced November 16, 2005


Sponsors: Senator Salazar (D–CO), Senator Bayh (D–IN),

Senator Brownback (R-KS), Senator Coleman (R–MN), Senator Graham (R-SC), Senator Isakson (R-GA),

Senator Lieberman (D- CT), Senator Lugar (R–IN), Senator Nelson (D-FL), Senator Obama (D – IL), Senator Sessions (R-AL)

Set America Free Act presents an action plan to save:

2.5 million barrels per day by 2016

7 million barrels per day by 2026

10 million barrels per day by 2031


By 2012, 10 percent of each auto manufacturer’s fleet must include technology that will result in a 25 percent increase in fuel efficiency over and above CAFÉ standards.

Acceptable technologies include flexible fuel, clean diesel and electric or hybrid engines.

The percentage of the fleet required to have these technologies will increase by 10 percent annually until it reaches 50 percent in 2017.

S. 2025 includes specific methods for achieving these goals:

Retooling tax credits for manufacturers and suppliers of advanced diesels and hybrids.Tire efficiency program for tires used on light duty vehicles.Efficiency standards for heavy duty vehicles (trucks, buses, etc).Lifts the per manufacturer cap on consumer tax credits for the purchase of hybrids and advanced diesels.

Allows hybrids to qualify under the Energy Policy Act of 2005 alternative fuels fleet requirements.Provides a tax credit for large private fleets for purchasing more efficient vehicles for their fleets.Creates an R&D program for electric drive transportation and light-weight materials.Closes the SUV tax loophole, which provides perverse incentives to small businesses to purchase SUVs over other vehicles. (This section is taken verbatim from Senator Salazar’s Reduce Incentives to Guzzler Gas bill, S. 1852)

Sen. Salazar’s Recommendations Sen. Salazar’s Recommendations For Federal ActionFor Federal Action

1.1. Set an Energy Independence Target of Set an Energy Independence Target of 25x2525x25

2.2. Provide full funding for NRELProvide full funding for NREL

3.3. Extend Production Tax Credits for Extend Production Tax Credits for renewables through 2012renewables through 2012

4.4. Increase use of flex-fuel vehiclesIncrease use of flex-fuel vehicles

5.5. Expand transmission for electric power Expand transmission for electric power from renewable resourcesfrom renewable resources

Sen. Salazar’s Recommendations Sen. Salazar’s Recommendations For Federal ActionFor Federal Action

6.6. Accelerate R&D to produce hydrogen with Accelerate R&D to produce hydrogen with renewable energyrenewable energy

7.7. Support small, locally and community Support small, locally and community owned renewable energy projectsowned renewable energy projects

8.8. Help REAs increase use of renewablesHelp REAs increase use of renewables

9.9. Increase funding for clean coal R&DIncrease funding for clean coal R&D

10.10. Promote safe, secure nuclear energy, Promote safe, secure nuclear energy, including permanent waste storageincluding permanent waste storage

Colorado Bar AssociationColorado Bar Association

Environmental Law SectionEnvironmental Law Section February 22, 2006February 22, 2006

David HillerDavid HillerState Issues Counsel forState Issues Counsel for

U.S. Senator Ken SalazarU.S. Senator Ken Salazarwww.Salazar.Senate.Govwww.Salazar.Senate.Gov

Documents

Colorado Bar Association Environmental Law Section February 22, 2006 David Hiller State Issues Counsel for U.S. Senator Ken Salazar