Energy Practice - New Energy Bill Supports Renewable Fuels, Renewable Energy, and Smart Grids
Yesterday, President Bush signed the Energy Independence and Security Act of 2007. Apart from provisions that increased the Corporate Average Fuel Economy standards and established new efficiency standards, the legislation contains language that increases the Renewable Fuels Standard, promotes certain renewable energy technologies, and supports the creation of smart grids.
The Renewable Fuels Standard (RFS) was initially established in the Energy Policy Act of 2005, which had provided for the use of more than 7.5 billion gallons of ethanol and biodiesel by 2012. The new legislation increases the RFS to 9 billion gallons of renewable fuels in 2008 (from the current 5.4 billion gallons) and to 36 billion gallons by 2022. Within the 36 billion gallon mandate, 21 billion gallons must come from advanced biofuels (those derived from biomass other than corn starch). And of that 21 billion gallons, 16 billion must come from cellulosic biofuels and 1 billion from biomass-based diesel. The legislation also establishes greenhouse gas emissions reduction requirements for such fuels. Biofuels facilities built after the date of enactment must achieve at least a 20 percent reduction in life cycle greenhouse gas (“ghg”) emissions in comparison to gasoline, advanced biofuels and biomass-based diesel must meet a 50 percent reduction in lifecycle ghg emissions, and cellulosic biofuels must achieve a 60 percent lifecycle ghg emissions reduction.
The legislation further promotes certain renewable energy technologies through the establishment of programs and the commission of studies. Specifically, Congress established programs and directed studies to promote solar, geothermal, and marine and hydrokinetic energy technologies. Absent from the final bill were a host of provisions promoting renewable energy, which had been approved by the House but defeated in the Senate. These provisions would have imposed on electric utilities a “renewable energy standard” requiring the utilities to source a percentage of their energy from renewable sources. The failed tax title would have expanded and extended the Production Tax Credit for wind and biomass and other renewable energy technologies, and the Investment Tax Credit for solar, both of which will expire at the end of 2008. Congressional leaders have expressed their intention to revisit these provisions early in 2008.
The legislation directs the establishment of a Smart Grid Advisory Committee and a Smart Grid Task Force to support the modernization of the Nation’s electricity transmission and distribution system. The Smart Grid Advisory Committee will advise Federal officials concerning the progress of smart grid technologies, while the Smart Grid Task Force will insure coordination among relevant Federal government agencies related to smart-grid technologies and practices. DOE is further directed to carry out a program for smart grid technology research, development and demonstration. And the legislation requires State Commissions to consider requiring utilities to consider investment in a qualified smart grid system before undertaking investments in nonadvanced grid technologies.
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Contact:
Bonnie Suchman
202.274.2908