Order Code IB10041
CRS Issue Brief for Congress
Received through the CRS Web
Renewable Energy: Tax Credit, Budget,
and Electricity Restructuring Issues
Updated September 25, 2000
Fred Sissine
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

---

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Renewable Energy Concept
Contribution to National Energy Supply
Role in Long-Term Energy Supply
History
Tax Credits
Public Utility Regulatory Policies Act
DOE’s Strategic and Performance Goals
CCTI Tax Credits
FY2001 DOE Budget
Climate Change
Electric Industry Restructuring
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
CRS Reports
FOR ADDITIONAL READING
Web Sites

---

IB10041
09-25-00
Renewable Energy: Tax Credit, Budget, and Electricity Restructuring Issues
SUMMARY
Debate over renewable energy programs
For the FY2001 Energy and Water Ap-
is focused on the FY2001 budget request, the
propriations bill (H.R. 4733), the Senate
Clinton Administration’s Climate Change
approved (S. Rept. 106-395) $444.1 million
Technology Initiative (CCTI), and proposals
(including $47.1 million for programs under
for restructuring the electricity industry.
the Office of Science) for the DOE Renewable
Energy security, a major driver of federal
Energy Program. Relative to the House level,
energy efficiency programs in the past, is now
the Senate would provide an increase of $53.6
somewhat less of an issue.
million, or 14%, in current dollar terms. In the
House, the Salmon/Udall/Boehlert/Kaptur
On the other hand, worldwide emphasis
floor amendment added $40 million, bringing
on environmental problems of air and water
the House-passed total to $392.8 million
pollution and global climate change, and the
(including $47.1 million for OS programs).
related development of clean energy technolo-
gies in western Europe and Japan especially,
Several electricity industry restructuring
have emerged as important influences on
bills propose to eliminate the Public Utility
renewable energy policymaking.
Regulatory Policies Act (PURPA), which
requires utilities to purchase power from
The Clinton Administration views renew-
qualified renewable energy providers. PURPA
able energy as the key part of its energy supply
has been key to the growth of renewable
policy, both for environmental and technology
power facilities. Bills intended to ensure a
competitiveness reasons.
continuing role for renewables in this industry
include some combination of renewable energy
The FY2001 request for the Department
portfolio standard (RPS), public benefits fund
of Energy’s (DOE’s) Office of Energy Effi-
(PBF), and/or an information disclosure re-
ciency and Renewable Energy’s (EERE’s)
quirement that supports green power. Some
Renewable Energy Programs is $456.6 million,
states and electric utility companies have
an increase of $100.0 million (32%) over the
already instituted such measures. Debate is
FY2000 level. This includes $409.5 million
focused on whether there should be a federal
for DOE’s Office of Energy Efficiency and
role in restructuring generally and in creating
Renewable Energy (EERE), an increase of
incentives for renewables specifically.
$100.0 million, and $47.1 million for the
Office of Science (OS), which is the same as
The Senate is considering S. 2557, The
for FY2000. The EERE amount includes
National Energy Security Act of 2000, which
$31.7 million more for biofuels, $18.0 million
contains provisions for increasing federal
more for wind, $16.1 million more for
hydropower capacity, streamlining hydropow-
photovoltaics, $10.2 million more for electric
er licensing, extending wind and biomass
and storage programs, and $7.7 million more
electricity production tax credits, and creating
for international renewable energy programs.
a residential solar tax credit.
(See Table 2 at the end of this brief.)
Congressional Research Service ˜ The Library of Congress

---

IB10041
09-25-00
MOST RECENT DEVELOPMENTS
On September 22, the Senate approved a motion to proceed to consider S. 2557, The
National Energy Security Act of 2000. The bill contains provisions for adding federal
hydropower capacity, streamlining hydropower licensing, extending wind and biomass
electricity production tax credits, and creating a residential solar tax credit. On September
7, the Senate approved $444.1 million for the DOE Renewable Energy Program, under the
FY2001 Energy and Water Appropriations bill. Seven floor amendments created earmarks
for various renewable energy programs, but none of the amendments modified the level of
appropriations. On July 18, the Senate Appropriations Committee recommended (S. Rept.
106-395) $444.1 million (including $47.1 million for programs under the Office of Science)
for the DOE Renewable Energy Program. Relative to the House level, the Senate would
provide an increase of $53.6 million, or 14.0%, in current dollar terms. On February 7,
2000, the Administration issued its FY2001 budget proposal. For FY2001, DOE proposes
to boost solar and renewables funding to $456.6 million — an increase of $100.0 million
(32%) over the FY2000 level. (The budget request documents are available on DOE’s web
site [http://www.cfo.doe.gov/budget/01budget/index.htm].)
BACKGROUND AND ANALYSIS
Renewable Energy Concept
Renewable energy is derived from resources that are generally not depleted by human
use, such as the sun, wind, and water movement. These primary sources of energy can be
converted into heat, electricity and mechanical energy in several ways. There are some
mature technologies for conversion of renewable energy such as hydropower, biomass, and
waste combustion. Other conversion technologies, such as wind turbines and photovoltaics,
are already well-developed, but have not achieved the technological efficiency and market
penetration which many expect they will ultimately reach. Although geothermal energy is
produced from geological rather than solar sources, it is often included as a renewable energy
resource and this brief treats it as one. Commercial nuclear power is not considered to be
a renewable energy resource. (For further definitions of renewable energy, see the National
Renewable Energy Laboratory’s web site information on “Clean Energy 101”
[http://www.nrel.gov/ceb.html].)
Contribution to National Energy Supply
According to the Energy Information Administration’s (EIA’s) Short-Term Energy
Outlook, April 1999, renewable energy resources supplied about 6.7 Q (quadrillion Btu’s or
quads) of the 94.4 Q the nation used in 1998, or about 7.2% of national energy demand.
More than half of renewable energy production takes the form of electricity supply. Of this,
most is provided by utility hydropower. However, in 1998, declining hydroelectric availability
led to a 0.33 Q, or 5%, drop in national renewable energy use and it is projected to result in
a further 0.13 Q, or 2%, drop in 1999. Industrial use of renewables, supplied primarily by
biofuels, accounts for most of the remaining contribution.
CRS-1

---

IB10041
09-25-00
After more than 20 years of federal support, some note that renewable energy has neither
achieved a high level of market penetration nor a growing market share among other energy
sources. A recent review of renewable energy studies by Resources for the Future,
Renewable Energy: Winner, Loser, or Innocent Victim?, concludes that the lower-than-
projected market penetration and flat market share are due primarily to declining fossil fuel
and electricity prices during this period. In contrast, however, it notes that the costs for
renewable energy technologies have declined by amounts equal to or exceeding those of
earlier projections. Further, it says that the declining price of electricity is likely to continue
moving the cost threshold for renewable energy downward, making it difficult for renewables
to capture a larger share of the electricity market.
EIA’s 1999 Annual Energy Outlook projects that current policies would yield an 0.8%
average annual increase through 2020, resulting in a 22% total increase in renewable energy
production. This would amount to about 6.8% of the projected 119 Q total demand in 2020.
(Detailed breakdowns of renewable energy use appear in EIA’s Renewable Energy Annual
1998 and Renewable Energy Issues and Trends 1998.)
Role in Long-Term Energy Supply
Our Common Future, the 1987 report of the World Commission on Environment and
Development, found that “energy efficiency can only buy time for the world to develop
‘low-energy paths’ based on renewable sources...” Although many renewable energy systems
are in a relatively early stage of development, they offer the world “a potentially huge primary
energy source, sustainable in perpetuity and available in various forms to every nation on
Earth.” It suggested that a Research, Development, and Demonstration (R,D&D) program
of renewable energy projects is required to attain the same level of primary energy that is now
obtained from a mix of fossil, nuclear, and renewable energy resources.
The Agenda 21 adopted at the 1992 United Nations Conference on Environment and
Development (UNCED) concluded that mitigating urban air pollution and the adverse impact
of energy use on the atmosphere — such as acid rain, global warming, and climate change —
requires an emphasis on “clean and renewable energy sources.” A 1996 report by the
President’s Council on Sustainable Development, Energy and Transportation, called for
raising the renewable energy share of U.S. energy supply to 12% in 2010 and 25% in 2025.
History
The oil embargo of 1973 sparked a quadrupling of energy prices, major economic shock,
and the establishment of a comprehensive federal energy program to help with the nation’s
immediate and long-term energy needs. During the 1970s, the federal renewable energy
program grew rapidly to include basic and applied R&D, and joint federal participation with
the private sector in demonstration projects, commercialization, and information
dissemination. In addition, the federal government instituted market incentives, such as
business and residential tax credits, and created a utility market for non-utility produced
electric power through the Public Utility Regulatory Policies Act (P.L. 95-617).
CRS-2

---

IB10041
09-25-00
The subsequent failure of the oil cartel and the return of low oil and gas prices in the
early 1980s slowed the federal program. Despite Congress’s consistent support for a broader,
more aggressive renewable energy program than any Administration, federal spending for
these programs fell steadily through 1990. Lacking a sustained, long-range policy from the
Administration, Congress first took a major initiative in 1974. Until 1994, Congress led
policy development and funding through legislative initiatives and close reviews of annual
budget submissions. FY1995 marked a noteworthy shift, with the 103rd Congress for the
first time approving less funding than the Administration had requested. The 104th Congress
approved 23% less than the Administration request for FY1996 and 8% less for FY1997.
However, funding turned upward again during the 105th Congress. (A detailed description
of DOE programs appears in DOE’s FY2000 Congressional Budget Request, DOE/CR-0061,
v. 2, February 1999.)
From FY1973 through FY1998, the federal government spent about $11.7 billion (in
1999 constant dollars) for renewable energy R&D. Renewable energy R&D funding grew
from less than $1 million per year in the early 1970s to over $1.3 billion in FY1979 and
FY1980, then declined steadily to $136 million in FY1990. Spending rose from FY1991 to
FY1995, declined in FY1996 and FY1997, then rose again in FY1998, reaching $275 million
in 1999 constant dollars.
This spending history can be viewed within the context of DOE spending for the three
other major energy R&D programs: nuclear, fossil, and energy efficiency R&D. From
FY1948 through FY1972, in 1999 constant dollars, the federal government spent about $22.4
billion for nuclear (fission and fusion) energy R&D and about $5.1 billion for fossil energy
R&D. From FY1973 through FY1998, in 1999 constant dollars, the federal government
spent $43.2 billion for nuclear, $21.1 billion for fossil, $11.7 billion for renewables, and $8
billion for energy efficiency. Total energy R&D spending from FY1948-FY1998 reached
$111.5 billion, including $66 billion, or 59% for nuclear, $26 billion, or 23%, for fossil, $12
billion, or 11%, for renewables, and $8 billion, or 7%, for energy efficiency.
Tax Credits
The Energy Tax Act of 1978 (P.L. 95-618) created residential solar credits and the
residential and business credits for wind energy installations; it expired on December 31,
1985. However, business investment credits were extended repeatedly through the 1980s.
Section 1916 of the Energy Policy Act of 1992 (EPACT, P.L. 102-486) extended the 10%
business tax credits for solar and geothermal equipment indefinitely. Also, EPACT Section
1914 created an income tax “production” credit of 1.5 cents/kwh for electricity produced by
wind and closed-loop biomass systems. P.L. 106-170 expanded this credit to include poultry
waste and extended it through December 31, 2001.
Public Utility Regulatory Policies Act
The Public Utilities Regulatory Policies Act (P.L. 96-917) required electric utilities to
purchase power produced by qualified renewable power facilities. Under PURPA, the Federal
Energy Regulatory Commission (FERC) established rules requiring that electric utilities
purchase power from windfarms and other small power producers at an “avoided cost” price
based on energy and capacity costs that the utility would otherwise incur by generating the
power itself or purchasing it elsewhere. However, to receive avoided cost payments, each
CRS-3

---

IB10041
09-25-00
renewables facility must file for, and obtain, qualifying facility (QF) status from FERC. EIA’s
Renewable Energy 1998: Issues and Trends (p. 4-5) reports that, by the end of 1996,
nonutility renewable power capacity reached 17,200 MW, of which 12,600 MW came from
QFs, including 3,420 MW of small hydropower facilities. These renewable power facilities
generated nearly 90 billion kwh, of which 69 billion kwh was produced by QFs, including
about 12 billion kwh of small hydropower. Thus, in 1996, QFs accounted for about 73% of
nonutility renewable power capacity and about 76% of nonutility renewable power
generation. QFs provided about 1.8% of national electric capacity and about 2.2% of national
electricity generation.
DOE’s Strategic and Performance Goals
The Government Performance and Results Act (GPRA, P.L. 103-62) requires each
federal agency to produce and update a strategic plan linked to annual performance plans.
DOE’s active Strategic Plan was issued in 1997. On February 18, 2000, DOE issued a new
Draft Strategic Plan. Renewable energy objectives and strategies appear under strategic goal
#1 “Energy Resources.” On March 30, 2000, DOE released its Accountability Report, which
assesses the results of DOE’s performance goals for FY1999. In the DOE Annual
Performance Plan for FY2001, strategic objective ER2 aims to “Promote reliable, affordable
electricity supplies that are generated with acceptable environmental impacts.” Goals for
2010 include: triple non-hydro renewable generating capacity, increase distributed power to
20% of new annual capacity additions, and complete one million solar roofs. Two related
performance goals for FY2001 are: increase non-hydro generating capacity to 9.3 million
kilowatts, and install 20,000 solar roofs, bringing the total to 90,000 solar roofs installed.
Six other FY2001 performance goals involve thin film photovoltaics, small dish concentrating
power systems, a Kalina Cycle geothermal demonstration plant, testing of biomass
gasification cofiring with coal, wind hybrid control technology, and demonstration of electric
torch hydrogen production without carbon dioxide. Also, in April 2000, the Office of Energy
Efficiency and Renewable Energy (EERE) released a strategic plan, Clean Energy for the 21st
Century. Further, in early 2000, the National Academy of Public Administration issued A
Review of Management in the Office of Energy Efficiency and Renewable Energy and the
National Research Council issued Renewable Power Pathways: A Review of the U.S.
Department of Energy’s Renewable Energy Programs.
CCTI Tax Credits
The Administration’s Climate Change Technology Initiative (CCTI) for FY2001
proposes several tax incentives for renewable energy production and equipment. First, it
proposes an extension and broadening of the electricity production tax credit. This includes
a 2.5-year extension of the 1.5 cent/kwh wind energy and closed-loop biomass production tax
credit from its current expiration date of December 31, 2001, through June 30, 2003. It
would also broaden the credit to include open-loop biomass from forest and agricultural
residues, through 2005. Further, it would create a 0.5 cent/kwh credit for cofiring biomass
with coal, through 2005, and a 1.5 cent/kwh credit for using methane from landfills to
generate electricity, through 2006. (The CCTI tax proposals are available on the White
House web site [http://www.pub.whitehouse.gov/retrieve-documents.html].)
CRS-4

---

IB10041
09-25-00
Second, CCTI proposes a 15% investment tax credit for consumers and businesses. For
photovoltaic rooftop systems, the credit would be limited to $2,000 and apply through 2007.
For solar water heaters, the credit would be limited to $1,000 and apply through 2005.
Business taxpayers would have to choose between this credit and the existing 10% investment
tax credit for solar water heaters.
Third, CCTI proposes an accelerated 15-year depreciation schedule for distributed
power equipment at industrial sites with a rated capacity under 500 kilowatts (or 12,500
pounds per of steam). This incentive is focused primarily on energy efficient system
equipment, but may also apply to renewable energy-powered generation equipment.
The Clinton Administration has estimated the impacts of CCTI credits on revenue at the
Department of the Treasury. This is shown in the table below:
Table 1. CCTI Tax Credits: Projected Revenue Reduction at Treasury
Department
($ millions)
FY2001
Total
Production Credits (wind, biomass, landfill)
91
976
Solar Investment Credits
9
132
Accelerated Depreciation (all equipment)
1
10
Total
101
1,118
Source: White House Fact Sheet on CCTI Tax Incentives. February 3, 2000.
In the first session, there was debate over the recently enacted extension of the wind and
closed-loop production tax credit. Extension supporters, such as the American Wind Energy
Association, said the credit brings renewable energy costs down, improving competitiveness
and enabling industry to improve technology to drive costs down even further. In contrast,
opponents, such as the Cato Institute, contended that the production credit has not been
successful at encouraging investment and thus its drain on the Treasury is not cost-effective.
At the end of the first session, budget negotiators for the FY2000 Consolidated
Appropriations Act (P.L. 106-113) agreed to enact H.R. 1180, which included in Section 507
an energy production tax credit extension for wind and closed-loop biomass, and added a new
credit for poultry waste, for 2½ years, retroactive to June 30, 1999, and effective through
December 31, 2001. Section 507 of H.R. 1180 incorporated an amended version of the credit
extension proposed in S. 1792. H.R. 1180 was enacted into law (P.L. 106-170). The energy
production tax credit for wind and certain biomass equipment had expired on June 30, 1999.
In 1992, EPACT Section 1914 established an income tax “production” credit of 1.5
cents/kwh (adjusted for inflation) to be paid to businesses for electricity produced by wind
and closed-loop biomass systems (biomass used solely for power production). The credit
applies to energy produced from new facilities for the first 10 years.
Also, DOE funds a separate Renewable Energy Production Incentive (REPI) that was
created with the parallel purpose of encouraging renewable energy use by state and local
CRS-5

---

IB10041
09-25-00
governments and by non-profit electric cooperatives. Unlike the tax credit, this incentive
must be funded annually, through the appropriations process.
FY2001 DOE Budget
President’s Request. The FY2001 budget request for the Renewable Energy Program
“ ... will contribute to strengthening the Nation’s energy security, providing a cleaner
environment, enhancing global sales of U.S. energy products, and increasing industrial
competitiveness and federal technology transfer. The solar and renewable energy program
is a major component of the Administration’s activities to address global climate change,”
according to the Appendix to the U.S. Government’s FY2001 Budget (p. 403). In
accordance with that policy, DOE proposes to boost solar and renewables funding to $456.6
million — an increase of $100.0 million (32%) over the FY2000 level. This includes $409.5
million for DOE’s Office of Energy Efficiency and Renewable Energy (EERE), an increase
of $100.0 million, and $47.1 million for the Office of Science, which is the same as for
FY2000. The EERE amount includes $31.7 million more for biofuels, $16.1 million more for
photovoltaics, $18.0 million more for wind, $10.2 million more for electric and storage
programs, and $7.7 million more for international renewable energy programs.
Under the Biofuels Program, $12 million is sought for the new Integrated Bioenergy
Technology Research and Technology Initiative. Its goal is the co-production of power,
fuels, chemicals, and other bio-based products from crops, trees, and wastes. This initiative
follows from President Clinton’s August 1999 Executive Order 13134, Developing and
Promoting Biobased Products and Bioenergy. It aims “to develop a comprehensive national
strategy, including research development and private sector incentives, to stimulate the
creation and early adoption of technologies needed to make biobased products and bioenergy
cost-competitive in large national and international markets.” Also, the Biofuels Program
seeks an $8.3 million increase for ethanol production, which is focused on converting
agricultural and forestry residues to ethanol and electric power.
Under the Wind Program, most of the requested increase is for three new programs: $5
million for a new “Wind Powering America” initiative, which would accelerate use through
regionally-based partnership strategies; $5 million for a new “Regional Field Verification”
program, which would competitively bid 3-5 projects aimed at unique regional siting,
technical, or market barriers; and $4 million for the “International Clean Energy Initiative,”
which is focused on competitively bid partnerships to enhance wind energy and wind-hybrid
systems use in developing countries.
Under the Photovoltaic Program, basic research would increase by $8.4 million, mainly
for work on large area thin films, multi-junction concentrator cells, and other topics that could
lead to major cost reductions. This appears to be a response to falling U.S. world market
share in 1998. Also, the request seeks an increase of $1.5 million for the Million Solar Roofs
Initiative.
Under the Electric Energy and Storage Program, $8.0 million of the requested increase
aims to ensure and enhance electric power system security and reliability. Of this, a $5.5
million increase targets development of power electronics technology, which would be used
CRS-6

---

IB10041
09-25-00
to develop rapid (real-time) measurement and control systems. Also, a $2.5 million increase
focuses on competitive bids for distributed power systems, which would include
interconnection and control technology for fuel cells, photovoltaics, and other distributed
power equipment.
The International Renewable Energy Program aims to support the U.S. International
Joint Implementation Initiative (USIJI), equipment exports, and a new “International Clean
Energy Initiative (ICEI).” The Program request includes $5.5 million for ICEI, which would
focus on regional renewable energy resource assessments that could be integrated into
country energy plans and a strategy for private sector partnerships. Also, a $2.2 million
increase for USIJI would encourage private sector “clean energy” projects and support
national action plan preparation in developing countries as a way of seeking “meaningful
participation” in the United Nations Framework Convention on Climate Change.
Energy and Water Appropriations Bill. On June 28, the House passed H.R. 4733,
the Energy and Water Appropriations bill for FY2001. The House Appropriations
Committee recommended $352.8 million (including $47.1 million for programs under the
Office of Science) for the DOE Renewable Energy Program. In contending that the
Renewable Energy Program request does not merit a large funding increase, the House
Appropriations Committee’s report cites funding constraints, a lack of sufficient program
justifications, and a recent critique of Program management by the National Academy of
Public Administration. However, voice vote approval of the Salmon/Udall/Boehlert/Kaptur
amendment (H.Amdt.920, A006) added $40 million, bringing the House-passed total to
$392.8 million. Relative to the FY2000 appropriation, the House level would provide an
increase of $30.6 million, or 8%, in current dollar terms. This includes $9.0 million more for
Photovoltaics, $6.8 million more for Biofuels-Transportation, $4.3 million more for Wind,
and $3.6 million more for Electric/Storage. However, relative to the request, the House level
would provide $63.8 million (14%) less for the Program. This includes $14.5 million less for
Biofuels-Power, $13.2 million less for Wind, $8.2 million less for Biofuels-Transportation,
$7.5 million less for International programs, $6 million less for Photovoltaics, and $6 million
less for Electric/Storage.
Relative to the House level, the Senate would provide an increase of $53.6 million, or 14.0%,
in current dollar terms. This includes $17.1 million more for Electric/Storage, $14.1 million
more for Biofuels-Power, $8.0 million more for Hydrogen, $6.7 million more for Wind, and
$4.6 million more for Renewable American Indian Resources. Relative to the request, the
Senate would provide a decrease of $10.7 million, or 2.4%, in current dollar terms. This
includes $10.4 million less for Biofuels-Transportation, $6.5 million less for Wind, $5.0
million less for Photovoltaics, $5.5 million less for International Renewables, and $3.5 million
less for Program Support. However, the Senate level also includes $11.1 million more for
Electric/Storage and $8.0 million more for Hydrogen.
Other Legislation. S. 2557, The National Energy Security Act of 2000, aims to reduce
oil import dependency to 50% of national oil use by 2010, mitigate recent oil price impacts,
and encourage energy efficiency and more domestic energy supply, including renewable
energy. Section 401 calls for an inventory of federal hydropower facilities and their capability
to produce additional electric power. Section 402 directs FERC to study options for reducing
the cost and time required for obtaining an hydropower operating license. Section 901
extends the wind and biomass electricity production tax credit from December 31, 2001, to
CRS-7

---

IB10041
09-25-00
January 1, 2004. Further, it makes certain power purchase contracts ineligible for the credit.
Section 905 creates a 15% residential solar energy tax credit, not to exceed $2,000, available
for tax years 2000 through 2004.
S. 935 (and companion bill H.R. 2827) would fund a six-year research effort involving
national laboratories, universities, and industry. It would also create a Biomass R&D Board
to increase coordination of federal programs to promote biobased products. R&D would
cover gasification technologies, including coproduction of power and heat, advanced turbines
and fuel cells, and corn-based ethanol research.
Climate Change
Since 1988, the federal government has accelerated programs that study the science of
global climate change and created programs aimed at mitigating fossil fuel-generated carbon
dioxide (CO ) and other human-generated emissions. (For more details, see the CRS
2
e l e c t r o n i c b r i e f i n g b o o k o n G l o b a l C l i m a t e C h a n g e a t
[http://www.congress.gov/brbk/html/ebgcc1.html].) The Clinton Administration has
identified renewable energy as a significant part of the strategy for curbing carbon dioxide and
other greenhouse gas emissions. This is reflected in its CCTI proposals for increased
renewable energy R&D spending, tax credits, and other policy mechanisms at DOE and other
agencies.
The federal government funds programs for renewable energy as a mitigation measure
at DOE, EPA, the Agency for International Development (AID), and the World Bank. The
latter two agencies have received funding for renewable energy-related climate actions
through Foreign Operations appropriations bills.
Because CO contributes the largest share of greenhouse gas emission impact, it has
2
been the focus of studies of the potential for reducing emissions through renewable energy
and other means. DOE’s 1997 report by five national laboratories entitled Scenarios of U.S.
Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond
estimated the possible emissions impact from renewables. Also known as the Five-Lab Study,
it estimated that the development and use of cellulosic biofuels could curb from 12 million to
17 million tons of carbon (MtC). Further, it estimated that, with a $50/metric ton carbon tax,
renewable energy electric power technologies (mainly wind energy and biomass cofired with
coal) could reduce CO emissions by 25 to 50 MtC. However, for the longer-term beyond
2
2010, the Five-Lab Study concluded that renewables could make a much larger contribution
to CO reduction.
2
On March 25, 1999, the Senate Committee on Energy and Natural Resources held a
hearing on Economic Impacts of the Kyoto Protocol. It focused on contending views of
potential costs to implement the 7% reduction in U.S. greenhouse emissions called for in the
Protocol. Also, EPA, DOE, and DOE’s Energy Information Administration (EIA) testified
at an April 14, 1999, House Science Committee hearing, Fiscal Year 2000 Climate Change
Budget Authorization Request. EIA contended that the CCTI provisions would provide
minimal reduction in greenhouse emissions. In contrast, EPA and DOE stressed the urgency
of action, noting that CCTI provisions would provide immediate savings in energy, costs, and
emissions.
CRS-8

---

IB10041
09-25-00
S. 882, introduced April 27, 1999, proposes R&D funding increases for renewable
energy and other energy technologies as a partial alternative to the CCTI. It would provide
$200 million per year over 10 years to accelerate development of energy efficiency, fossil
energy, nuclear energy, and renewable energy R&D. Through this means, the bill focuses on
a long-term strategy for curbing greenhouse gas emissions.
Except for biofuels and biopower, wherever renewable energy equipment displaces fossil
fuel use, it will also reduce carbon dioxide (CO ) emissions, as well as pollutants that
2
contribute to water pollution, acid rain, and urban smog. In general, the combustion of
biomass for fuel and power production releases CO at an intensity that may rival or exceed
2
that for natural gas. However, the growth of biomass material offsets this release. Hence,
net emissions occur only when combustion is based on deforestation. In a “closed loop”
system, biomass combustion is based on rotating energy crops, there is no net release, and its
displacement of any fossil fuel, including natural gas, reduces CO emissions.
2
On August 12, 1999, the President issued Executive Order 12124 on biobased products
and bioenergy. The main stated purpose is to increase the market competitiveness of these
products, while reducing air pollution and greenhouse gas emissions. Additionally, a council
would be created, charged with creating a strategic plan with national goals for bioenergy
development and use.
Electric Industry Restructuring
Several electricity industry restructuring bills propose to eliminate the Public Utility
Regulatory Policies Act (PURPA), which has been key to the growth of renewable power
facilities. Bills intended to ensure a continuing role for renewable energy sources have been
introduced in the 106th Congress that include some combination of a renewable energy
portfolio standard (RPS), a public benefits fund (PBF), and/or an information disclosure
requirement that supports “green” pricing and marketing of renewable power. Some states
and electric utility companies have already instituted such measures.
Debate is focused on whether there should be a federal role in restructuring generally
and in creating incentives for renewables specifically. The Administration’s bill,
“Comprehensive Electricity Competition Plan,” introduced by request as S. 1047 and H.R.
1828, includes elements of all three policies described above. Also, H.R. 2050 sets provisions
for renewables, which are defined to include solar, wind, geothermal, and biomass power, but
it excludes all forms of hydropower. Inside Energy of July 26, 1999, reports (p. 5-6) that on
July 23, Chairman Barton of the House Commerce Subcommittee on Energy and Power
released a proposed bill outline that excludes a renewable energy portfolio standard, but
includes in its place an incentive for owners or operators of “qualified renewable energy
facilities.”
On May 13, 1999, FERC issued a proposed rule to create voluntary regional
transmission organizations (RTOs). Comments from several "green" groups argued that the
proposal should address access and pricing barriers for renewables and that RTOs be required
to provide data needed to verify green marketing claims, track information disclosure
requirements, and monitor compliance with state RPS provisions. In contrast, the Edison
CRS-9

---

IB10041
09-25-00
Electric Institute expressed concern about RTOs becoming too powerful, especially in
assessing RPS's.
More details about the debate over renewable energy provisions in federal legislation to
restructure the electric power industry are described in CRS Report RS20270 on Renewable
Energy and Electricity Restructuring. (For a discussion of broader electricity restructuring
issues, see CRS Electronic Briefing Book on Electricity Restructuring at
[http://www.congress.gov/brbk/html/ebele1.html] and CRS Issue Brief IB10006, Electricity:
The Road to Restructuring.)
LEGISLATION
P.L. 106-60, H.R. 2605
FY2000 Energy and Water Development Appropriations bill. Senate bill reported
(S.Rept. 106-58) June 2, 1999. Passed Senate, June 16. House bill reported (H.Rept. 106-
253) July 23. Passed House, amended (H.Amdt. 350), July 27. Conference Committee
reported (H.Rept. 106-336) September 27. Approved in House September 27. Approved
in Senate September 28. Signed into law September 29.
P.L. 106-170, H.R. 1180
Work Incentives Act. Section 507 extends the production tax credit for wind and closed
loop biomass, and it adds a new credit for poultry waste. This section was derived as an
amendment of S. 1792 that was incorporated in conference. Conference reported (H. Rept.
106-478) November 17. Passed Senate November 19. Signed into law December 17, 1999.
H.R. 1465 (Salmon)/S. 1634 (Allard)
Residential Solar Energy Tax CreditAct. Creates 15% credit for photovoltaics and solar
water heating equipment. House bill introduced April 15, 1999; referred to Committee on
Ways and Means. Senate bill introduced September 24, 1999; referred to Committee on
Finance.
H.R. 2050 (Largent)
Electric Consumers’ Power to Choose Act. Provides for a more competitive electric
power industry. Would create production tax credit for renewable energy and establish a
Renewable Portfolio Standard (RPS) that may begin on January 1, 2005, and would sunset
in 2015. Introduced June 8, 1999; referred to Committee on Commerce, and to the
Committees on Ways and Means, Transportation and Infrastructure, and Resources.
H.R. 2380 (Matsui)
Energy Efficient Technology Tax Act. Amends Internal Revenue Code to create tax
incentives for energy efficiency and renewable energy measures. Introduced June 29, 1999;
referred to Committee on Ways and Means.
H.R. 2819 (M. Udall)
Biomass Research and Development Act. Promotes R&D for using biomass as fuel and
industrial product. Introduced September 8, 1999; referred to Committee on Science.
Subcommittee on Energy and Environment held hearing October 28.
CRS-10

---

IB10041
09-25-00
H.R. 4035 (Gekas)
National Resource Governance Act. Establishes a Commission to study options for
achieving energy self-sufficiency by 2010, including a focus on renewables. Introduced
March 27, 2000; referred to House Commerce Committee, Subcommittee on Energy and
Power.
H.R. 4733 (Packard)
FY2001 Energy and Water Appropriations Bill. Reported (H. Rept. 106-693) June 23.
Passed House, amended, June 28. Senate Appropriations Committee reported July 18;
written report (S. Rept. 106-395) issued Aug. 30. Passed Senate, amended, September 7.
S. 882 (Murkowski)
Energy and Climate Policy Act of 1999. Establishes new Office of Global Climate
Change at DOE and authorizes $2 billion over 10 years to fund renewable energy and other
energy technology programs. Introduced April 27, 1999; referred to Committee on Energy
and Natural Resources. Hearing held March 30, 2000.
S. 935 (Lugar)/H.R. 1827 (Ewing)
National Sustainable Fuels and Chemicals Act. Senate bill introduced April 30, 1999;
referred to Committee on Agriculture. Reported (S. Rept. 106-179) October 8. Passed
Senate, amended, February 29, 2000. In House, referred jointly to Committee on Agriculture
and Committee on Science. House bill introduced Sept. 9, 1999; referred jointly to
Committee on Agriculture and Committee on Science. Science Subcommittee on Energy and
Environment held hearing October 28, 1999.
S. 1003 (Rockefeller)
Alternative Fuels Promotion Act. Provides increased tax incentives for the purchase of
alternative fuels and electric vehicles and for other purposes. Introduced May 11, 1999;
referred to Committee on Finance.
S. 1047 (Murkowski)/H.R. 1828 (Bliley)
Comprehensive Electricity Competition Act (The Administration ‘s proposed bill).
Senate bill introduced May 13, 1999; referred to Committee on Energy and Natural
Resources. Hearings held June 29 and July 15, 1999, and April 11, April 13, and April 27,
2000. House bill introduced May 17, 1999; referred to Committee on Commerce, and to the
Committees on Resources, Agriculture, Transportation and Infrastructure, and the Judiciary.
Commerce Subcommittee on Energy and Power held hearings June 17 and July 22, 1999.
S. 1369 (Jeffords)
Clean Energy Act. Creates incentive for renewable energy and other measures under
electricity restructuring. Introduced July 14, 1999; referred to Committee on Energy and
Natural Resources.
S. 1776 (Craig)
Climate Change Energy Policy Response Act. Support alternative energy policies,
regulation, R&D, and deployment of renewable energy technologies to help curb greenhouse
gas emissions. Introduced October 25, 1999; referred to Committee on Energy and Natural
Resources. Hearing held March 30, 2000.
CRS-11

---

IB10041
09-25-00
S. 2557 (Lott)
National Energy Security Act of 2000. Contains provisions on hydropower and tax
credits for renewable energy equipment and power production. Introduced May 16, 2000;
placed on Senate calendar. Motion to proceed passed September 22.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
U.S. Congress. Senate. Committee on Appropriations. Subcommittee on Energy and
Water. DOE FY2001 Budget Request. Hearing held April 11, 2000.
U.S. Congress. Senate. Committee on Energy and Natural Resources. Electricity
Legislation (S. 1369). Hearing held April 11, 2000.
U.S. Congress. Senate. Committee on Energy and Natural Resources. Subcommittee on
Energy Research, Development, Production, and Regulation. Climate Change: S. 882
and S. 1776. Hearing held March 30, 2000.
U.S. Congress. House. Committee on Appropriations. Subcommittee on Energy and Water.
DOE FY2001 Budget Request for Energy Resources and Science. Hearing held March
16, 2000.
U.S. Congress. House. Committee on Science. Subcommittee on Energy and Environment.
DOE FY2001 Renewable Energy Budget Request. Hearing held March 16, 2000.
U.S. Congress. . Committee on Science. Subcommittee on Energy and Environment. DOE
FY2001 Climate Change Budget Request. Hearing held March 9, 2000.
U.S. Congress. House. Committee on Science. Subcommittee on Energy and Environment.
Hearing on Biomass Research and Development (H.R. 2819 and H.R. 2827). Hearing
held October 28, 1999.
U.S. Congress. House. Committee on Commerce. Subcommittee on Energy and Power.
Legislative Hearing on Electricity Restructuring. Hearing held July 2, 1999.
U.S. Congress. House. Committee on Commerce. Subcommittee on Energy and Power.
Electricity Competition. Hearings held May 20 and May 26, 1999.
CRS Reports
CRS Report RS20270 . Renewable energy and electricity restructuring, by Fred Sissine.
CRS Report RS20146 . Electricity restructuring bills: a comparison of PURPA provisions,
by Amy Abel and Jon O. Shimabukuro.
CRS Report 98-615. Electricity restructuring: The Implications for Air Quality, by Larry
Parker.
CRS-12

---

IB10041
09-25-00
CRS Report 97-416. Federal tax incentives for alcohol fuels, by Salvatore Lazzari.
CRS Report 97-195. The tax treatment of alternative transportation fuels, by Salvatore
Lazzari.
FOR ADDITIONAL READING
Tables showing DOE Renewable Energy R&D Funding (current and constant) trends back
to FY1974 are available from the author of this issue brief.
Alliance to Save Energy. Energy innovations: a prosperous path to a clean environment.
June 1997. 171 p.
Edison Electric Institute. Renewable resources and electricity generation: a report on utility
involvement and outlook. June 1995.
Electric Power Research Institute. Renewable power industry status overview. EPRI
December 1998. 1 vol. (EPRI TR-111893).
—— Utility customers go for the green. EPRI Journal, v. 22, March/April 1997: 6-15.
—— Renewable energy technology characterizations. Dec. 1997. 266 p.
Holt, Edward A. Disclosure and certification: truth and labeling for electric power.
Renewable Energy Policy Project. January 1997. 12 p.
Loiter, Jeffrey M. and Norberg-Bohm, Vicki. Technology policy and renewable energy:
public roles in the development of new energy technologies. Energy Policy, v. 27,
1999. p. 85-97.
Organization for Economic Cooperation and Development. International Energy Agency
(IEA). Renewable energy policy in IEA countries. OECD/IEA, Paris, 1998. 253 p.
—— Benign energy? The environmental implications of renewables. 1998. 122 p.
U.S. Department of Energy. Office of Energy Efficiency and Renewable Energy. Making
connections: case studies of interconnection barriers and their impacts on distributed
power projects. June 2000. [http://www.eren.doe.gov/distributedpower/barriersreport/]
—— Secretary of Energy Advisory Board. Final report of the task force on strategic energy
research and development. [Annex 1: Technology Profiles] June 1995.
—— Lawrence Berkeley Laboratory and National Renewable Energy Laboratory. Green
power marketing in retail competition: an early assessment. May 1999.
U.S. Environmental Protection Agency. Energy efficiency and renewable energy:
opportunities from title IV of the Clean Air Act (EPA 430 R-94-001). February 1994.
CRS-13

---

IB10041
09-25-00
U.S. Executive Office of the President. Federal energy research and development for the
challenges of the twenty-first century. November 5, 1997. 200 p.
U.S. Executive Office of the President. Powerful partnerships: the federal role in
international cooperation on energy innovation. June 1999. 260 p.
U.S. General Accounting Office. Renewable energy: DOE’s funding and markets for wind
energy and solar cell technologies. (GAO/RCED-99-130) May 1999. 38 p.
[http://frwebgate.access.gpo.gov/cgi-bin/multidb.cgi]
—— Solar and renewable resources technologies program. (GAO/RCED-97-188). July
1997. 69 p.
U.S. Office of Technology Assessment. Renewing our energy future. OTA-ETI-614.
September 1995. 269 p.
U.S. Department of State. Office of Global Change. Climate action report: 1997
submission of the United States of America. July 1997. 256 p.
Wiser, Ryan et al. Renewable energy policy and electricity restructuring: a California case
study. Energy Policy, v. 26, 1998. p. 465-475.
Web Sites
American Solar Energy Society. [http://www.ases.org/index.html]
American Wind Energy Association (AWEA). [http://www.awea.org/]
California Energy Commission. [http://www.energy.ca.gov/renewables/index.html]
Center for Renewable Energy and Sustainable Technology (CREST).
[http://solstice.crest.org/index.shtml]
International Solar Energy Society (ISES). [http://www.electricnet.com/orgs/intsolar.htm]
National Association of Regulatory Utility Commissioners. [http://www.naruc.org/]
National Association of State Energy Offices. [http://www.naseo.org/]
Organization for Economic Cooperation and Development (OECD). International Energy.
Agency. Renewable Energy Newsletter. [http://www.caddet-re.org]
Solar Energy Industries Association (SEIA). [http://www.seia.org/maincont.htm]
T h e B u e n o s A i r e s C l i m a t e C h a n g e C o n f e r e n c e ( C O P - 4 ) .
[http://www.state.gov/www/global/gl.../climate/fs-cop4_final_981200.html]
U.S. Department of Energy. Energy Efficiency and Renewable Energy Network.
[http://www.eren.doe.gov/]
CRS-14

---

IB10041
09-25-00
U.S.
Department
of
Energy. Green Power Network Clearinghouse.
[http://www.eren.doe.gov/greenpower/home.shtml]
U.S. Department of Energy. National Renewable Energy Laboratory (NREL).
[http://www.nrel.gov/]
U.S. Department of Energy. Alternative Fuels Data Center. [http://www.afdc.nrel.gov/]
U.S. Environmental Protection Agency. Solar Site. [http://www.epa.gov/solar/]
CRS-15

---

IB10041
09-25-00
Table 3. DOE Renewable Energy Budget for FY1999-FY2001
($ millions)
FY1999
FY2000 FY2001
FY2001
FY2001
Senate-
Program
Apprn.
Apprn.
Request
House SAppnC
House
Solar Buildings
3.6
2.0
4.5
4.0
4.5
0.5
Photovoltaics
70.6
67.0
81.5
75.8
76.5
0.7
Concentrating Solar Power
16.8
15.4
15.0
13.8
14.0
0.2
Biomass - Total
72.1
72.0
101.9
79.6
91.4
11.7
Biomass/Utility Power
30.8
32.5
47.8
33.5
47.6
14.1
Biomass/Biofuels Transp.
41.2
39.5
54.1
46.2
43.8
-2.4
Wind
34.1
33.0
50.1
36.9
43.6
6.7
Production Incentive
4.0
1.5
4.0
3.9
4.0
0.1
Solar Program Support
0.0
5.0
6.5
2.0
3.0
1.0
International Renewables
6.3
4.0
11.5
6.0
6.0
0.0
NREL (incl. construction)
3.9
1.1
1.9
4.0
4.0
0.0
Geothermal
28.2
24.0
27.0
27.0
28.0
1.0
Hydrogen
22.0
25.0
22.9
22.0
31.0
8.0
Small Hydro
3.2
5.0
5.0
3.4
5.5
2.1
Renew. Amer. Indian Res.
4.8
4.0
5.0
2.0
6.6
4.6
Electric/Storage
40.9
38.4
47.9
41.9
59.0
17.1
Program Direction
18.1
17.7
18.2
18.2
18.0
-0.2
Dept. Energy Management
0.0
0.0
5.0
2.0
2.0
0.0
RENEWABLES, Subtotal
332.3
315.1
407.8
343.4
397.0
53.6
Reductions/Prior Year/Increase
-1.0
0.0
0.0
0.0
0.0
0.0
RENEWABLES, Adjusted
331.3
315.1
407.8
343.4
397.0
53.6
OS/Photovoltaics Rsch.
2.9
2.8
2.8
2.8
2.8
0.0
OS/Biomass-Biofuels
27.2
26.7
26.7
26.7
26.7
0.0
OS/Wind
0.3
0.3
0.3
0.3
0.3
0.0
OS/Solar Photoconversion
14.5
14.3
14.3
14.3
14.3
0.0
OS/Hydrogen
3.0
3.0
3.0
3.0
3.0
0.0
OS/Subtotal
47.9
47.1
47.1
47.1
47.1
0.0
RENEWABLES, with OS
380.2
362.2
454.9
390.5
444.1
53.6
RENEWABLES with OS, Adjusted
379.2
362.2
454.9
390.5
444.1
53.6
Source: S.Rept. 106-395; H.Rept. 106-693; DOE FY2001 Cong. Budget Request, v. 2; Feb. 2000.
CRS-16

---