Climate Law Update: Climate Change & Sustainable Energy News : Thelen Reid Law Firm : Renewable Energy, Construction, Project Finance Lawyers & Attorneys

Perry in April wrote to Johnson asking for a 50 percent reduction in the national mandate for the production of ethanol derived from grain, arguing that the requirement was hurting the economy by helping to drive up corn prices. That had harmed the state's cattle industry and led to a spike in food costs, Perry argued. The governor focused much of his objections on the cost of corn used for animal feed, noting that prices could nearly quadruple from 2004 levels.

In his statement Thursday, Perry, a Republican, said he was disappointed the EPA couldn't recognize the "significant harm" the mandate was causing farmers, ranchers and families. He added:

“Denying Texas’ request is a mistake that will only increase the already-heavy financial burden on families while doing even more harm to the livestock industry. Good intentions and laudable goals are small compensation to the families, farmers and ranchers who are being hurt by the federal government’s efforts to trade food for fuel. Any government mandate that artificially props-up a single industry to the detriment of millions of Americans is bad public policy."

The information released by the EPA Thursday cited economic models suggesting that at most a waiver of the mandate might drop corn prices by 30-cents a bushel. Using an average of the models, the EPA estimated the mandate's impact at about 7-cents a bushel.

Meanwhile, the ethanol group, which had always opposed Perry's request, quickly lauded the EPA's refusal to waive the requirement. In its statement the fuels association called the decision "an important victory for all Americans" and reiterated its assertion that other factors, including high oil prices, have driven the price of corn upward:

“EPA’s decision is a benefit to the U.S. economy, because increasing domestic ethanol production is keeping gasoline and oil prices lower than they otherwise would be thereby saving the average American household as much as $500 a year in lower transportation costs. Most economists now recognize the real severe economic harm is being done by the skyrocketing price of oil and not by ethanol production. In fact, without ethanol production the damage from high oil prices would be even worse."

In his own statement Thursday, Energy Secretary Samuel W. Bodman echoed some of those sentiments. He noted that the department in June had estimated gasoline prices would be between 20 cents to 35 cents per gallon higher without ethanol. 

--Dennis Pfaff    

(Photo credit: Texas governor's office) 

It showed not only how far the nation had come, but also the distance yet to be traveled to reach the 20 percent objective. For instance, the document reports that the United States has had the fastest-growing wind market worldwide and that it has led the world in new wind capacity for three years running.

In all, the country had nearly 17,000 megawatts of wind capacity at the end of 2007, up more than 5,300 megawatts. On the other hand, even with that growth -- a 46 percent jump in a single year -- it still represented just 1.2 percent of the country's electricity supply.

For individual states, the percentages were higher, however. Under a formula used by the report, nine states had enough wind capacity to account for more than 3 percent of their in-state generation. Topping the list were Minnesota and Iowa, where wind power accounted for 7.5 percent of each state's generation. Texas, the nation's top wind power state in terms of its total capacity, accounted for 3 percent while California, number two in the nation, came in at 2.8 percent. 

Overall, Texas easily dominated the other states in terms of new wind projects, installing more than 1,700 megawatts of turbines in 2007. Other states installing more than 400 megawatts each included Colorado, Illinois, Oregon and Minnesota. California, by contrast, had a relatively puny 63 megawatts installed. But that might change in the future as the result of new contracts such as one Climate Law Update recently highlighted.   

The report also documented economic ripple effects from the boom in wind energy development. It found that new turbine and component manufacturing facilities that were opened last year could account for as many as 4,700 new jobs. On the other hand, the report documented some quality control problems that surfaced as certain companies rapidly scaled up their operations.

GE remained the dominant manufacturer of turbines in the United States market, followed by Vestas, Siemens, Gamesa, Mitsubishi and Suzlon.

Turbine prices themselves have also increased dramatically -- by about 85 percent since 2002 -- according to the report. It attributed the spike to several factors, including the declining value of the dollar, increases in costs of materials such as steel and oil, shortages in some components, and moves by manufacturers to increase their profitability. Nevertheless, the report said that "wind power prices have been competitive with wholesale power market prices over the past few years."

One familiar cloud remained on the horizon, the future of tax incentives for renewable energy, including wind. Less than two weeks ago, House lawmakers made another attempt to get something going on the subject of tax credits for wind and other alternative energy sources, but its future remains uncertain. The importance of the tax incentives, the report said, was shown by the fact that there were "pronounced lulls" in adding new capacity during years when the "production tax credit," equal to about 2-cents per kilowatt hour, lapsed. Without an "imminent extension," the document said, the industry "may experience another quiet year" in 2009.

Another perennial obstacle to renewables, transmission capacity, showed some sign of easing with new expenditures on the rise. However, the report noted that "lack of transmission availability remains a primary barrier to wind development."

The report also found that state policies were important. For instance, it noted that 55 percent of the wind power capacity built between 1999 and 2007 was in states that had renewables portfolio standards requiring their utilities to purchase a certain percentage of power from renewable sources. In 2007, the proportion of new wind capacity going into states with such requirements was more than 75 percent, the report said.

(Photo of Texas wind farm, Department of Energy National Renewable Energy Laboratory; Credit: Todd Spink)