Energy Roundup: Baucus floats ethanol subsidy compromise

Senate tax-writing chief unveils bill stuffed with energy incentives

Senate Finance Committee Chairman Max Baucus (D-Mont.) is floating a reduction in ethanol tax credits while rejecting calls to kill the subsidies outright.

Baucus unveiled a plan Thursday evening that would extend the credit gasoline refiners and blenders receive for mixing ethanol into gasoline. The current 45 cents per gallon credit expires at year’s end – his plan would extend it through 2011 at 36 cents per gallon.

The proposal would also extend the 54 cent-per-gallon tariff on imported ethanol for a year through 2011.

The ethanol credits are part of a much broader package that includes extension of middle class tax cuts.

It remains unclear if the fuel plan can bridge a political divide over ethanol laid bare in dueling letters to Senate leaders this week.

A bipartisan coalition of Corn Belt senators – led by Sens. Kent Conrad (D-N.D.) and Chuck Grassley (R-Iowa) – are pressing for extension of incentives they call vital to the domestic ethanol industry.

But a separate group – led by Sens. Dianne Feinstein (D-Calif.) and Jon Kyl (R-Ariz.) – call the incentives expensive and harmful.

Baucus’ plan also contains a suite of other energy-related credits, such as a one-year extension of a credit for small ethanol and biodiesel producers.

It also extends credits through 2011 for installation of alternative fuel pumps at gas stations; heavy hybrid and natural-gas powered vehicles; manufacture of efficient appliances, and several other credits.

Renewable power grants, manufacturing credits in the mix

Baucus is throwing a lifeline to renewable electricity project developers.

His plan extends – through 2011 – an expiring program that provides grants to developers of wind farms, solar plants and other types of projects.

The big 2009 stimulus law authorized grants of up to 30 percent of project costs – depending on the type of development – in lieu of traditional renewable energy tax credit financing. The tax financing market had tanked alongside the economy.

Over two-dozen Senate Democrats (and one Republican) pushed for the grant program extension in a letter to Senate leaders this week.

Elsewhere, the Baucus plan provides an additional $2.5 billion worth of tax credits for projects to manufacture “clean” energy equipment, such as solar panel components.

The stimulus law provided $2.3 billion in clean energy manufacturing credits, but demand quickly outstripped that cap, leaving many companies out in the cold.

Senate energy leader ‘disappointed’ in Obama’s drilling reversal

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) isn’t pleased with the Obama administration’s decision to back off opening new offshore areas to oil-and-gas drilling.

“I was supportive of their announcement in March that they wanted to explore to determine what resources we had and what leasing ought to occur off the Atlantic and the eastern Gulf,” Bingaman told reporters in the Capitol Thursday. “I was disappointed when they reversed course yesterday.”

He’s weighing next steps but didn’t provide specifics. “I am sure it will be a subject of considerable discussion and interest when the new Congress starts,” Bingaman said.

Offshore rig inspectors overwhelmed, outgunned

The Wall Street Journal has an in-depth look at the difficult task of beefing up Interior Department offshore oil-and-gas inspections, which federal officials call a top priority.

“Seven months after the Deepwater Horizon exploded in the Gulf of Mexico, the troubled federal agency that oversees offshore drilling has been revamped, renamed and given a new leader with a mandate to turn what critics called an industry lapdog into an effective watchdog,” the Journal reports.

The piece adds:

“But there’s at least one big change the agency hasn’t made: fixing its deeply flawed inspection program. As it has for four decades, that program sends inspectors armed with little more than checklists and pencils into the Gulf to ensure the safety of more than 3,500 oil platforms and drilling rigs.”

“A Wall Street Journal examination finds that these inspectors have been overruled by industry, undermined by their own managers and outmatched by the sheer number of offshore installations they oversee. Inspectors come into the job with little or no hands-on experience in deep-water drilling, learning as they go.”

India hopes to bridge climate divides

“India hopes to be a ‘bridge player’ and help break a deadlock between advanced and developing nations over how to fight climate change, the country’s environment minister said Friday,” AFP reports.

“’India is positioning itself as a bridge player’ between rich and poor nations, Environment Minister Jairam Ramesh, who is attending UN climate talks in Cancun, Mexico, told India’s NDTV news network,” the piece adds.

United Nations report details climate threats to fisheries

“Acidification of the seas linked to climate change could threaten fisheries production and is already causing the fastest shift in ocean chemistry in 65 million years, a U.N. study showed on Thursday,” Reuters reports.

“Production of shellfish, such as mussels, shrimp or lobsters, could be most at risk since they will find it harder to build protective shells, according to the report issued on the sidelines of U.N. climate talks in Mexico.”

“It could also damage coral reefs, vital as nurseries for many commercial fish stocks.”

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