Renewable Energy: Tax Credit, Budget, and Electricity Production Issues

Publication Date: May 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Energy

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Abstract:

Energy security, a major driver of federal renewable energy programs in the past, came back into play as oil and gas prices rose late in the year 2000. The terrorist attack in 2001 and the Iraq war have led to heightened concern about energy security, energy infrastructure vulnerability, and the need for alternative fuels. Further, the 2001 electricity shortages in California, the northeast-midwest blackout of 2003, and continuing high natural gas prices have brought a new emphasis to the role that renewable energy may play in producing electricity, displacing fossil fuel use, and curbing demand for power transmission equipment.

Also, worldwide emphasis on environmental problems of air and water pollution and global climate change, the related development of clean energy technologies in western Europe and Japan, and technology competitiveness may remain important influences on renewable energy policymaking.

The Bush Administration’s FY2007 budget request for the Department of Energy’s (DOE’s) Renewable Energy Program seeks $359.2 million for renewables, which is $84.0 million, or 30.5%, more than the FY2006 appropriation. In support of the President’s proposal for an Advanced Energy Initiative, the request includes major funding increases for solar energy (to support the Solar America Initiative) and biomass (to support the Biorefinery Initiative). The main increases are for Solar Photovoltaics ($79.5 million) and Biomass ($59.0 million). The main cuts are for Geothermal (-$23.1 million), Solar Heat & Light ($1.5 million), International Renewables (-$1.4 million), and Small Hydro (-$0.5 million). Further, the request would eliminate all congressional earmarks under the DOE Renewable Energy Program, which amount to $80.0 million for FY2006.

Compared with FY2006 funding, the FY2007 House recommendation (H.R. 5427, 109-474), as amended, seeks an increase of $160.8 million for R&D and deployment programs. This reflects support for the Advanced Energy Initiative, including increases for Hydrogen ($40.2 million), Biomass/Biorefineries ($59.0 million), and Solar ($65.3 million). The main cuts for R&D and deployment programs include the Geothermal program (-$18.1 million), termination of the Small Hydro program (-$0.5 million), and a reduction of the Vehicle Technologies Program (-$9.6 million).

The “Legislation” section below provides a summary of the key renewable energy legislation enacted during the first session of the 109th Congress.