As members of the 111th Congress and the new Obama administration consider a wide-ranging package of proposals aimed at bolstering the U.S. economy and creating new jobs, the National 25x'25 Steering Committee and a wide variety of its endorsing partners are working to bring to the attention of policymakers a series of recent recommendations that advocates believe will not only reverse the economic downturn, but insure a clean energy future.

Alliance partners say the recommendations all take aim at the objectives targeted by President Barack Obama and Congressional leadership in their efforts to address the ongoing economic downturn, including research, innovation funding for start-up businesses, financial assistance to established firms, infrastructure development and job growth, all in a wide variety of renewable energy sectors.

And partners say there is "real world" evidence of the benefits that come from the federal renewable energy programs targeted by these 12 recommendations, or in the case of new programs, hard evidence of the potential benefits. "The recommendations target programs that accelerate markets for the wind energy, solar power, biomass, geothermal energy, hydropower and biofuels industries," says Bart Ruth, 25x'25 policy committee chairman. "They represent the best opportunity to address our troubled economic times by implementing renewable-energy and energy-efficiency initiatives that can drive and maintain economic recovery."

Ruth says current projects that benefit from programs targeted by the recommendations or could benefit from new programs with adequate funding will serve as the evidence "that a renewable-energy and energy-efficient future will not only boost our economy, putting hundreds of thousands of people back to work, but also enhance our national security and improve our environment." He cites the national study undertaken by the University of Tennessee Department of Agricultural Economics that shows that if America's farms, ranches and forestlands are empowered with the policies and incentives needed to meet 25 percent of the nation's energy needs with renewable resources – biofuels, biomass, wind energy, solar power, geothermal energy and hydropower – an estimated $700 billion in new, annual economic activity would be generated, and 4 million to 5 million new jobs would be created.

"The 25x'25 economic recovery recommendations will lead to a long-term, comprehensive energy development that will accelerate the production of all forms of renewable energy and create new renewable energy markets," said Ruth. 25x’25 Alliance | 1626 Bellona Avenue | Lutherville | MD | 21093

An examination of the types of projects targeted by the recommendations submitted to Congress and the new administration for a nationwide, clean energy economic recovery are estimated at $4.14 billion but show a wide range of initiatives, from small farmer-owned wind turbines to the development of large renewable energy markets promoted by some of America's largest corporations. For example, the Rural Energy for America Program (REAP), authorized under Section 9007 of the Energy Title of the 2008 Farm Bill, provides grants or loan guarantees for renewable energy systems and energy efficiency improvements for agricultural producers and rural small businesses. The program, formerly known as the Section 9006 program, is currently funded at $255 million over four years, with additional annual authorization of $25 million. In existence since 2002, REAP is continuously oversubscribed and many valid projects are rejected because of limitations on USDA funding.

The 25x'25 recommendations call for increased funding for REAP – up to $250 million annually, $500 million over two years – which advocates say will generate temporary construction jobs in rural America along with permanent jobs operating and maintaining renewable energy facilities. A working example of the program is a wood pellet manufacturing facility recently opened in Appling County, GA. Built with the help of a $10-million, Section 9006 loan, the Appling County Pellets plant is producing up to 130,000 metric tons of wood pellets annually that are sold in domestic and international markets. Owned and operated by Fram Renewable Fuels LLC of Savannah, the biofuel mill near Baxley, GA started out with about 20 new full-time jobs, and plant owners hope to eventually generate more than 100 jobs to support forestry and shipping-related businesses.

For more on the Appling County facility, go to http://www.forestbioenergy.net/case-studies/CaseStudy3Fram.pdf and http://www.framfuels.com/news.html.

Another important program recommended for increased funding in the 25x'25 Economic Recovery Plan includes the Repowering Assistance Program, a new vehicle authorized under Section 9004 of the Energy Title of the 2008 Farm Bill. The program provides loans and loan guarantees to help biofuel plants convert their heating and power fuel supply to biomass and reduce their dependence on fossil fuel-powered boilers. The program is currently funded at $300 million over four years, but 25x'25 has called for $150 million annually over two years.

The technology is present to justify a boost in spending for the program, advocates say. Dallas-based Panda Ethanol Inc. is nearing completion of a 115-million gallon-per-year ethanol refinery in Hereford, TX. Unlike other plants that burn natural gas or coal to generate the steam used in the ethanol manufacturing process, the Hereford facility will gasify up to 1 billion pounds of cattle manure per year and use the biogas to fuel the plant, conserving the energy equivalent of 1,000 barrels of oil a day. According to the Renewable Fuels Association, there are more than 150 biorefineries in operation today. With USDA assistance, many could be upgraded with biomass boilers using renewable energy technology like that planned for the Panda facility, a move that could generate construction and maintenance jobs, and contribute to cleaner air and environment. For more on the Panda plant, go to http://pandaethanol.com/about/index.html.

Another new program established under the Energy Title of the 2008 Farm Bill that 25x'25 says should receive increased funding is the Biorefinery Assistance Program. The funding vehicle provides loans and loan guarantees to assist with the construction of commercial-scale advanced biofuel facilities. As structured, the program also provides grants for demonstration-scale advanced biofuel plants. However, the 25x'25 recommendations contend that with the recent collapse of the credit markets, the program should be altered to provide grants for large-scale plants to produce cellulosic and other advanced biofuels.

Advocates say the recession has slowed the conversion of existing grain-based ethanol plants to dual feedstock biofuels production 25x’25 Alliance | 1626 Bellona Avenue | Lutherville | MD | 21093 facilities. The economic recession may therefore delay progress toward meeting cellulosic and advanced biofuels targets in the Renewable Fuels Standard and slow progress toward curtailing greenhouse gas emissions.

Additional funding for the Biorefinery Assistance Program – to $500 million in the first year and $1 billion in year two – and expanding use of the grants to facilitate the construction of second-generation biofuel plants, advocates say, will reduce investor risk and provide construction and operations jobs in rural communities. Serving as a roadmap for the federal program is a funding vehicle implemented by the state of Florida, a $25-million Department of Agriculture and Consumer Services program that provides matching grants to bio-energy firms for demonstration, commercialization and research and development projects utilizing Florida-grown biomass or crops. Verenium Corporation, one of the several firms across the country in the race to develop the first "next-generation" biofuels plant, is using a $7 million grant from Florida's "Farm to Fuel" initiative, to help build its first commercial-scale cellulosic ethanol facility in Highlands County, FL. Verenium's planned commercial facility will be the first in the state to use next-generation cellulosic ethanol technology to convert renewable grasses to fuel, rather than processing food crops. The plant is expected in 2011 to start producing the first of up to 36 million gallons of cellulosic ethanol per year and provide the region with about 140 full-time jobs. Additional jobs will be created during the 18-to-24 months of construction on the plant, which is estimated to cost between $250 and $300 million to build. For more on the Verenium plant, go to http://phx.corporate-ir.net/phoenix.zhtml?c=81345&p=RssLanding&cat=news&id=1244987.

Meanwhile, USDA is expected later this year to request proposals for funding under another new program, the Bioenergy Crop Assistance Program. BCAP is designed to support the establishment and production of eligible crops for conversion to bioenergy, and to assist agricultural and forest landowners with collection, harvest, storage, and transportation of these crops to conversion facilities. 25x'25 advocates say that without full and immediate funding of at least $250 million annually for two years, incentives will be lost to farmers to grow dedicated energy crops, restricting the availability of feedstocks and jeopardizing investments and threatening the commercial scale production of advanced biofuels.

The market for those next-generation feedstocks is showing viability: a California company last month launched the first seed sales of non-food, low-carbon crops developed specifically for biofuels and biopower. Ceres Inc. says it has begun booking orders for switchgrass and high-biomass sorghum seed, contending the product offers new options for growers, particularly on underperforming acres. For more on the Ceres line, go to http://www.ceres.net/News/NewsReleases/2008/12-11-08-News-Rel.html. Elsewhere, a USDA Community Wood Energy Program authorized under the new farm bill is also recommended for full, $20-million funding for each of the first two years to provide grants to state and local governments and communities to develop wood energy plans. The grant would also allow for the acquisition or upgrade of community wood energy systems in communal facilities, such as schools, town halls, and libraries using woody biomass as a primary fuel.

A working example of the types of projects targeted by the program is a wood-fired boiler heating system recently constructed by the city of Craig, AK, to supplement propane and oil heating systems for the municipal pool water, pool building, and elementary and middle school buildings. The new facility uses wood shavings, chips and dried planer shavings from local mills as fuel. Maintained by the Craig City School District, the system is expected to save $40,000-$60,000 per year and reduce the reliance on fossil fuels for heating. For more on the system, which will also help local mill owners by purchasing and utilizing wood waste generated by their manufacturing process, go to http://forestry.alaska.gov/pdfs/08DOF_AWEDTGBriefing.pdf.

The 25x'25 recommendations for increased funding go beyond USDA programs, also targeting vehicles like the Clean Renewable Energy Bonds (CREBs) provided under the Energy Policy Act of 2005. So-called "CREBs" provide electric cooperatives and public power systems with the ability to issue investment incentives 25x’25 Alliance | 1626 Bellona Avenue | Lutherville | MD | 21093 comparable to the Production Tax Credit (PTC) that is available to investor-owned utilities but are denied by law to not-for-profit utilities, which serve 25 percent of the nation. CREBs support a wide variety of projects, including wind, biomass, geothermal, solar, municipal solid waste, small irrigation power, and hydropower. The program, which is already over-subscribed at $800 million in current mandatory spending, would be extended through 2010 and be given an additional bonding authority of $2.5 billion under the 25x'25 recommendations.

The program supports both large- and small-scale projects, and would generate jobs both in installation of renewable energy technologies and in manufacturing of the required component parts. An example of CREBs at work is at the University of Minnesota, Morris where the school is using the bonds to construct the second wind turbine on campus, add a steam turbine that will convert to electricity the "green" steam from a biomass facility that is under construction, and to purchase a third wind turbine that will be located in western Minnesota, to be shared with the Mille Lacs Band of Ojibwe. The on-campus wind turbine will bring the campus to nearly 100 percent power by wind. School officials say CREBs help in reducing the campus' carbon footprint by more than 80 percent. For more on the UM-M project, go to http://www.morris.umn.edu/ummnews/View.php?itemID=5178. A key element among the 25x'25 economic recovery recommendations is the call for substantial extension and restructuring of both the renewable energy Production Tax Credit and Investment Tax Credit. Currently, a PTC or an ITC is given in the form of a non-transferrable tax credit to be claimed against income for developers of and investors in renewable energy for electricity projects.

Furthermore, any additional state or local government funding reduces the amount of the tax credit, since the project is considered subsidized. 25x'25 advocates say that while the credits can reduce a company's tax bills, many renewable energy companies are start-ups that are not yet profitable and don't pay enough taxes to benefit from a credit. With the downturn in the credit market, many institutions who previously bought the credits from renewable energy companies are no longer in the market, negating the effectiveness of the credits as incentives. The recommendations would make the tax credits directly refundable, so that if a renewable energy start-up can use its credits to lower its tax bill to less than zero, it would actually receive a check from the government for the difference. According to National Renewable Energy Laboratory, if the PTC were transferable to lending institutions, or if it were applicable as prepayment on any loans, the industry could fully utilize the PTC and the ITC. The recommendations also call for extending the credits universally for at least five years, noting that an unstable PTC/ITC policy serves as a disincentive to investors, particularly in this time of economic distress. The solar industry, for example, estimates that if PTC had not been extended at the last minute in 2008, the solar photovoltaic sector alone would have lost $8.1 billion in investment and a net 39,800 jobs in 2009. The importance of the tax credits to renewable energy production is obvious, say advocates. But equal import, they noted, can be attached from the perspective of the market that seeks to use the renewable energy being produced. The Green Power Market Development Group, a unique commercial and industrial partnership dedicated to building corporate markets for green power, underscore the significant growth in demand for the renewable energy being generated by the use of PTCs and ITCs. As a collaboration of large energy users, the Green Power group is working to transform energy markets to enable corporate buyers to diversify their energy portfolios with green power and reduce their impact on climate change.

The group, which seeks to develop 1,000 megawatts of new, cost-competitive green power in the United States by next year, includes Alcoa Inc., Delphi Corporation, The Dow Chemical Company, DuPont, FedEx Kinko's, General Motors, IBM, Interface, Johnson & Johnson, NatureWorks LLC, Pitney Bowes, Staples, and Starbucks. The group is pursuing electricity from renewable resources including wind, solar, geothermal, biomass, landfill gas, and certified low-impact hydro; heat from renewable resources including solar thermal systems and direct use of landfill gas; and clean energy technologies. The group sends a clear signal to the marketplace that demand for cost-effective renewable resources exists and, by extension, the implementation of strong PTC and 25x’25 Alliance | 1626 Bellona Avenue | Lutherville | MD | 21093 ITC policies is a good business decision. For more on the Green Group, go to http://www.wri.org/project/green-power-markets.

The 25x'25 economic recovery recommendations also call for improving tax incentives for Community Wind, a type of wind development that focuses on investment from local communities, rather from an outside investor. The National Renewable Energy Laboratory estimates that smaller community wind projects contribute twice as many jobs and income to a local community than a larger wind plant financed by outsider investment, showing that an average community wind plant of 20 MW can provide up to 41 jobs and $4 million in local income, as opposed to an outside-investment 40 MW plant’s 18 jobs and $1.3 million in income for the community.

However, community wind investors’ income off the plant is often passive and under current regulations passive income has to be quite large to fully use Production Tax Credits. 25x'25 calls for a change in regulations to allow for local wind investment projects to count against active income of the local investors, generating more interest in, and investment by communities in local clean electricity sources, such as the Minwind III-IX community wind project in Luverne, MN. The Minwind projects are a series of nine farmer-owned wind projects in southwestern Minnesota, all based around the idea that local ownership is central to maximizing local benefits, and the projects are intended to both generate new income for farmers and benefit the local community’s economy. The first two projects, Minwind I and II, were completed in the fall of 2002 and consist of two NEG Micon 950 kW turbines, among the first farmer-owned turbines in the nation. Minwind III through IX came online in 2004, each of these consisting of a single, 1.65 MW NEG Micon turbine. The success of projects such as Minwind has generated interest throughout the country in community wind investment opportunities and a change in the application of PTCs, advocates say. (It should also be noted that the Minwind projects also used USDA Section 9006 – now REAP – funds to help with engineering, transmission, equipment, and construction costs.) For more on the Minwind project, go to http://www.windustry.org/minwind-iii-ix-luverne-mn-community-wind-project.

Finally, the 25x'25 recommendations call on the federal government to appropriate funds for the Smart Grid Investment Matching Grant Program created under the Energy Independence and Security Act of 2007. The program provides reimbursement for 20 percent of qualifying Smart Grid Investments. Advocates say that within two years, the stimulus effect of this provision will become apparent through significant new job creation in the renewable energy electricity sector as more electricity sources will be able to capitalize on a better grid system. An estimated 300GW of wind power are awaiting grid connection and in order for the wind industry to expand, sector officials say, 12,000 miles of new transmission lines are needed, as well as a smart grid management system. With the DOE reporting that transmission is the number one barrier preventing rapid long-term expansion of wind energy use, 25x'25 says at least $1.3 billion is needed to provide a more efficient, reliable transmission grid, which will also reduce electricity costs to consumers in states with high peak rates. To underscore the need for the Smart Grid program, a recent study from the Energy Policy Initiatives Center at the University of San Diego School of Law, finds that implementing "smart" communication and control technologies on the electric grid in the San Diego Region is not only technically feasible, but would also be cost effective.

The report identifies key technologies needed to create an intelligent framework in the region and recommends a timeline for implementation, including several near-term research, development and demonstration projects. The report identifies numerous potential benefits of implementing a Smart Grid, including reduced service outages, congestion costs and peak demands, along with increased system asset utilization, improved security and tolerance to natural disasters. In addition, the study says, implementing the Smart Grid could increase integration of distributed energy resources (e.g., rooftop solar system), and reduce emissions. For more on the study, go to http://www.gridwise.org/pdf/061017_SDSmartGridStudyFINAL.pdf. 25x’25 Alliance | 1626 Bellona Avenue | Lutherville | MD | 21093

"These are not pie-in-the-sky recommendations. They are not academic exercises," said 25x'25 Policy Chairman Ruth. "These recommendations are underscored by projects and 'on-the-ground' experience from all renewable energy sectors and areas across the country. It's important that Congress and President Obama understand that that with some relatively small shifts in policy and a small influx of new money, huge returns to our economy, to our energy security and to our environment are within our grasp."

A copy of 25x'25's economic recovery recommendations can be viewed at www.25x25.org. 25x’25 is a diverse alliance of agricultural, forestry, environmental, conservation and other organizations and businesses that are working collaboratively to advance the goal of securing 25 percent of the nation’s energy needs from renewable sources by the year 2025. 25x’25 is led by a national steering committee composed of volunteer leaders. The 25x’25 goal has been endorsed by nearly 800 partners, 30 governors, 14 state legislatures and the U.S. Congress through The Energy Independence and Security Act, which was signed into law by President Bush on December 19, 2007. 25x’25 is a special project of the Energy Future Coalition (EFC). The EFC is a broad-based non-partisan public policy initiative that seeks to bring about change in U.S. energy policy to address overarching challenges related to the production and use of energy.

Category: News