Wind Energy Weekly #686 Vol 15, 26 Feb 1996
Vol. 15, #686, 26 February 1996, published by the American Wind
Energy Association. The full text of the WEEKLY is available
in hardcopy form for $595/year and is recommended for those with
a serious commercial interest in wind (the electronic edition
contains only excerpts). A monthly hardcopy publication, the
WINDLETTER, more suitable for those interested in residential
wind systems is included with a $50/year individual membership in
the Association. AWEA's goal is to promote wind energy as a
clean and environmentally superior source of electricity. Anyone
sharing this goal is invited to become a member. For more
information on the Association, contact AWEA, 122 C Street, NW,
4th Floor, Washington, DC 20001, USA, phone (202) 383-2500, fax
(202) 383-2505, email email@example.com. Or visit our World
Wide Web site at http://www.econet.org/awea
Survey finds new, sharp drop in support for nuclear
Australian utility plans to acquire 400 MW of renewables
Minnesota proposal would tax carbon, lower other levies
MINNESOTA BILL WOULD TARGET
CARBON EMISSIONS, SHIFT TAXES
The chairwoman of the House Tax Committee in the Minnesota
Legislature and a colleague have introduced legislation that
would tax carbon emissions from the burning of fossil fuels and
use the revenue obtained to lower property and payroll taxes.
The Economic Efficiency and Pollution Reduction Act of 1996
(EEPRA), described as "a $1.5 billion tax shift" bill, was
introduced February 6 by State Rep. Ann Rest (DFL-New Hope), who
chairs the Committee, and State Sen. Steve Morse (DFL-Dakota),
chairman of the Environment Subcommittee of the Senate Finance
The proposal appears to be in line with recommendations of
author and businessman Paul Hawken, who proposes a series of
environmental taxes in his recent book THE ECOLOGY OF COMMERCE,
and with Worldwatch Institute, which also called for
environmental taxes in its STATE OF THE WORLD 1996 (see WIND
ENERGY WEEKLY #681, January 22, 1996).
The bill would phase in a tax of $50/ton on carbon emissions
over five years. Renewable energy sources such as wind, hydro,
and ethanol would be exempted from taxation, while nuclear power
would be "taxed at the same rate as the average for all non-
nuclear electricity," according to a fact sheet on the bill.
In introducing EEPRA, Rest and Morse acknowledged that the
bill is probably too complex to become law this year. Rest,
however, said she believes the concept is a "visionary" one that
should be considered as the state ponders changes in its system
of taxation. Democratic-Farmer-Labor legislators have been
looking for ways to reduce reliance on local property taxes as a
funding mechanism for local schools, and have talked about sales
and business taxes as alternatives.
Roughly half of the revenue raised by the bill, the two
said, would be used to lower property taxes, with the balance
going toward a payroll tax rebate.
David Morris, president of the Institute for Local Self-
Reliance (ILSR), a nonprofit research group based in Minneapolis
and Washington, D.C., said EEPRA would increase the average
family's energy costs by $220/year. But the same family, he
said, would realize a tax savings of $250/year, based on an
income of $25,000 and a property value of $75,000. The tax
burden would fall most heavily on manufacturing plants with high
energy use and low employment, Morris said.
EEPRA's specific provisions include the following:
An ILSR fact sheet outlining the reasons for the proposal
and its provisions stresses the need to reorient the tax system.
Currently, it says, "we tax activities that we would actually
like to encourage, like employment and investment, while we
undertax or do not tax at all activities we would prefer to
discourage, like inefficiency, pollution, and the consumption of
non-renewable imported fuels. A tax shift that increases the
cost of inefficiency while reducing the cost of employment or
property addresses this perverse result of our tax system."
- A $50/ton carbon tax imposed on all fuels and electricity
consumed in Minnesota.
- A reduction of $750 million in residential and business
- A reduction of $750 million in employer and employee payroll
- An appropriation of $80 million for low-income fuel
assistance and weatherization programs.
- An exemption for businesses from additional taxes beyond an
amount equal to one percent of annual sales.
In testimony last year before a Minnesota House Tax
Committee hearing, Morris elaborated on the point: "While
economists find that our present tax system raises the price of
'goods,' they also increasingly agree that our present pricing
system underprices 'bads' like pollution and resource
inefficiency. When we buy a gallon of gasoline or a kilowatt-
hour of electricity or purchase any product, we are not paying
the full environmental cost of extracting and processing that
product and disposing of it. Internalizing these real
environmental costs into the prices of . . . products can
encourage businesses and households to become more efficient."
The proposal is limited to carbon, the fact sheet says,
because "a carbon tax is easier to administer than [a series of]
taxes on individual pollutants. Equally important, a carbon tax
is an excellent surrogate for many kinds of pollution. For
example, the single largest source of mercury emissions is coal-
fired power plants. Sulfur emissions largely come from burning
coal and diesel fuel. Volatile organic compound (VOC) emissions
come from the evaporation of gasoline . . . "
EEPRA's $50/ton tax on carbon and accompanying tax on
nuclear power will increase the cost of electricity from coal and
nuclear by about 1.2 cents/kWh, the fact sheet said: "The price
of gasoline will rise by 13 cents per gallon. The price of
natural gas will rise by 15 cents per thousand cubic feet (Mcf).
The price of fuel oil will go up by about 13 cents per gallon."
Nuclear power would be taxed, it adds, because "Although nuclear
power does not generate carbon emissions, it does generate
significant pollution in the form of radioactive wastes, which
must be stored and protected for hundreds of years."
A second fact sheet addresses one question that is likely to
receive significant attention as EEPRA is debated:
"Q: Won't pollution taxes make Minnesota's industries less
"A: The fastest growing industries in most states, both in terms
of jobs and sales, are the service and knowledge-intensive
industries. Minnesota's largest industry is health services and
medical technology. Energy-intensive and mineral extraction
industries will play a diminishing role in the nation's and the
state's future . . . "
Additional information about EEPRA can be found at the ILSR
World Wide Web site, http://gopher.great-lakes.net:2200/partners/ILSR/ILSRhome.html
NEW POLL FINDS PESSIMISM
ON OUTLOOK FOR NUCLEAR
Nuclear energy's long slide from grace with utilities is not
over yet, according to a poll of power company executives and
independent power producers released in early February by the
Washington International Energy Group, a consulting firm.
The survey, which shows a steep drop in positive views of
nuclear over the past year, suggests that nuclear is being
hammered by some of the same forces related to utility
restructuring as wind. While both wind and nuclear are more
expensive than the cheapest fossil-fired power plants--making the
short-term outlook problematic in a market that is increasingly
driven by spot prices--nuclear has two added problems: (1)
reactors are large and costly, requiring investments in the
billion-dollar range and up; and (2) cost overruns and
environmental protests make the construction of new nuclear
plants extra risky from a financial point of view.
When asked "Will there be a resurgence of nuclear power?"
just eight percent of respondents said yes, while 80 percent said
no. This compares with 31 percent yes and 46 percent no on the
same question in 1995.
To the question "Would you consider ordering a new nuclear
power plant?" only two per cent of those surveyed said yes, while
89 percent said no. Again, this marks a further drop from a
level of 10 percent yes, 74 percent no in 1995.
Forty-one percent of respondents said they expect to
relicense reactors already operating, while 30 percent said they
do not and 29 percent were not sure.
According to the report, "The sharp decline in the number of
respondents expecting a resurgence of nuclear power is
significant. It leaves little hope that new nuclear generation
will remain an option for utilities in a time frame that has any
Copies of the entire survey may be obtained at a cost of $45
from the Washington International Energy Group, phone (202) 331-
QUEENSLAND COMPANY TO BOOST
RENEWABLES BY 400 MW BY 2010
The Queensland Transmission and Supply Corporation (QTSC)
has called for the supply of 200 MW of electricity by the
year 2001 from Queensland's sugar mills and has also committed to
encouraging the development of other renewable energy sources
with plans to purchase 400 MW of capacity by 2010, according to a
report from the U.S. Department of Commerce.
Total generation for the State of Queensland is 6,600 MW.
The state government will call for tenders early next year for
the supply of renewable and alternative energy to produce 200 MW
of power progressively over the next decade.
QTSC is one of Queensland's largest enterprises with fixed
assets of A$5 billion and annual turnover of A$2 billion. The
company employs 6,400 employees and supplies electricity to 1.4
million customers, mainly households, and owns 185,000 km of
electricity transmission and distribution lines. It commenced
operation on 1 January 1995 with a plan to coordinate and
forecast the state's existing and future electricity needs. The
company is a holding company for eight subsidiary corporations,
responsible for major transmission and electricity distribution
services in Queensland.
The group plans to sell its expertise to other Australian
states and offshore, participate in competitive interstate
markets, and use existing infrastructure to enter new markets as
well as develop environmentally-friendly supply options.
Favorable progress has been made with the following alternative
forms of energy:
- wind energy monitoring at five coastal locations;
- funding for investigations into coal seam methane
- providing support to the National Energy Research &
Development Corp for a second coal methane program near
Moura in Central Queensland;
- development of high temperature fuel cells capable of
generating electricity from natural gas or similar fuels;
- continued operation of a power plant using hot artesian
- collaboration with the Australian National University to
develop a large solar dish collector.
* from the *
* AMERICAN WIND ENERGY ASSOCIATION *
For immediate release - May 30, 1996
Contact: Randall Swisher or Jessica Maier, (202) 383-2500
STATEMENT OF RANDALL SWISHER
EXECUTIVE DIRECTOR, AMERICAN WIND ENERGY ASSOCIATION
ON KENETECH WINDPOWER'S BANKRUPTCY FILING
The American Wind Energy Association (AWEA) is saddened by
Kenetech Windpower's filing for bankruptcy protection.
Kenetech Windpower has been a leader in wind energy in the
United States and in the world since 1980, when it first began
installing wind power plants in northern California. Its present
financial difficulties are a clear signal that America is in
danger of losing out in a rapidly-growing, multi-billion-dollar
global energy market that it dominated during the 1980s.
Unfortunately, that danger is heightened by constantly shifting
federal energy policies and a domestic playing field where the
rules are written by the established energy interests of today to
stifle those of tomorrow.
Wind energy is one of the great technology success stories
of the past decade--costs have plummeted by more than 80 percent
since the early '80s. Now the world market for wind turbines is
taking off, as European nations give strong backing to renewable
energy and overall energy demand surges in the developing world:
The U.S. should be mobilizing a coordinated effort between
government and industry to capture a share of this market, which
is expected to grow steadily through at least the first third of
the next century as energy demand increases and environmental
concerns mount. Instead, federal lawmakers and regulators have
undercut the domestic industry with a series of cross-cutting and
misguided decisions. In 1995 alone,
- In 1995, global sales of wind equipment first surpassed a
yearly total of $1.5 billion.
- In 1994, wind turbine installations outside the U.S.
increased by 42 percent over the previous year. In 1995,
they rose even more sharply, by 64 percent. Wind
installations worldwide now total more than 5,000 MW.
- AWEA estimates that the value of worldwide wind markets will
reach $18 billion by 2005.
At this writing, the U.S. is virtually the only
industrialized nation whose government is failing to effectively
support domestic wind energy development as a foundation for
improved international competitiveness in the future. Even India
is moving ahead of America, installing nine times as much
capacity as the U.S. did in 1995.
- The House of Representatives attempted to repeal the 1.5
cents/kWh wind energy production tax credit--the only
federal measure that provides tax parity for wind with
- The Federal Energy Regulatory Commission (FERC) struck down
California's Biennial Resource Plan Update (BRPU)
proceeding, which had been five years in the making and
which would have provided approximately $1 billion worth of
new business to several leading wind companies, including
- Congress held hearings on repeal of the Public Utility
Regulatory Policies Act--the law that is the foundation of
the wind and other renewable energy industries..
- Congress slashed the federal wind energy research and
development (R&D) budget by 35 percent.
- Earlier this month, the House approved a budget which will
zero out the federal wind energy R&D program.
- In addition to these federal actions, the California Public
Utilities Commission has allowed the avoided cost of energy
payments to renewable energy companies such as Kenetech to
fall below two cents per kWh, levels which have placed the
entire wind industry under enormous financial stress.
Responsibility for Kenetech's problems cannot be laid solely
at the feet of the federal government. As Kenetech has
acknowledged, its most recent turbine, the 33-KVS, had many
problems. But this technical failure is in striking contrast to
the performance record of a host of U.S. and European wind
turbine manufacturers, whose strong, consistent performance over
the last decade has contributed greatly to the growing worldwide
interest in wind energy technology. Kenetech's failure should in
no way be taken as a failure of the wind industry as a whole.
Despite Kenetech's missteps, the fact remains that our
government's inconsistent policies and its overwhelming emphasis
on short-term fixes to problems at the expense of long-term
policies has made managing a growing company in the renewable
energy business far more difficult than it should be.
For America's wind industry to prosper and compete
effectively in the growing world market, the following policies
must be pursued, and pursued consistently, over at least the next
- Adequate federal R&D funding to provide a superior
technology base and leverage private research efforts.
- Tax parity through the current production tax credits, until
the wind industry reaches some minimum level of penetration
that will provide the basis for a sustainable industry.
- A Renewables Portfolio Standard, as a key component of
electric industry restructuring. This will provide a
market-oriented mechanism for ensuring that some minimum
level of deployment of renewable energy technologies--
technologies desirable because of their low environmental
impact and their price stability--takes place.
- Use of federal international aid and trade programs to
encourage sustainable energy projects.
AWEA, formed in 1974, is the national trade association of the
U.S. wind energy industry. AWEA's membership of over 800
includes turbine and component manufacturers, project developers,
utilities, academicians, and interested individuals from 49
Information and policy resources are available through AWEA's
World Wide Web site at http://www.econet.org/awea