December 05, 2007

A WINTRY FORECAST FOR ENERGY

By Senator Mike Crapo

The early season snows that have come to parts of Idaho this year are generally a good thing, but they also bring home the hard reality of rising energy costs. We're already experiencing considerable discomfort at the gas pump; with winter's arrival, heating bills are also increasing. Congress has been working to reconcile differences between House and Senate versions of important energy legislation passed this summer. The best compromise will encourage conservation with incentives, promote cost-effective and reasonably-paced alternative fuel development and move us toward self-sustaining, domestic fuel supplies. This can only be accomplished if policies reflect careful consideration of economic, national security and environmental implications.

 

I supported the Senate-passed energy bill in June, which included reasonable corporate average fuel economy (CAFE) standards. The bill also increased requirements for biofuels, another important step toward conservation and U.S. energy security. Provisions that encourage domestic development of alternative fuels and promote geothermal energy are good for Idaho's economy and environment. However, I have concerns about emerging House legislation. 

 

The House has agreed to a compromise that includes CAFE standards, substantially increased biofuels production and renewable portfolio standards (RPS) that require utilities to include 11 percent renewable fuels in their energy portfolios. It also includes tax incentives that the Senate moved to stand-alone legislation when it passed its version in June.    Forcing utilities to adopt a mandatory minimum percentage of renewable energy will have disastrous consequences for the consumer. Someone has to foot the bill and, often, when government imposes a mandate rather than providing incentives for private industry to accomplish the same outcome, end-users and taxpayers pay.  

 

Similarly, when government imposes taxes on industry, those costs are passed onto consumers. If it's a tax on energy development or production, the consumer will pay. I oppose these tax increases and oppose the current House bill because it contains just such provisions. It will pose substantial problems for our economy in the long run. Paying for provisions by repealing successful tax breaks contained in the 2005 energy bill would significantly discourage investment and development of domestic energy resources, leading to even greater "pain at the pump." I remain opposed to policies that will, in the end, force consumers to bear a disproportionate burden of costs arising from energy policy changes. There is a better way. In a time of energy transformation, effective policy will include tax incentives, a strong compliment to rational regulatory efforts. Tax incentives are a more effective long-term solution to energy needs than traditional federal regulatory command and control or higher taxes. 

 

As a member of the Senate Finance Committee, I worked to include alternative energy tax incentives for wind, solar and geothermal in energy tax legislation that was considered in the Senate in June. I also continue to support increased energy efficiency for commercial and residential buildings, improved transmission facilities and tax credits for alternative fuels and vehicles. These are good for Idaho industries and consumers. I don't support legislation that decreases energy supplies while increasing costs-this unfairly penalizes both the consumer and industry and is counterproductive to fertile energy markets that produce good products at reasonable prices. If federal energy policy disproportionately penalizes industries such as petroleum refining, commercial transportation services, motor vehicles, electricity generation and energy intensive manufacturing, consumers and our economy will suffer.

 

Answers are definitely not easy.  U.S. energy security means domestic energy diversity. A progressive, responsible portfolio will include clean coal, nuclear, wind, biomass, geothermal and solar tax incentives for increased conservation efforts on the part of individuals, private industry and government and expanded research and development of our domestic energy resources.   

 

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