Lankford Pushes US Energy Diversity

CLICK HERE to watch Lankford’s Q&A on YouTube.

WASHINGTON, DC – Senator James Lankford (R-OK) today participated in a Senate Finance Committee hearing entitled, “Climate Challenges: The Tax Code’s Role in Creating American Jobs, Achieving Energy Independence, and Providing Consumers with Affordable, Clean Energy.” Lankford’s questions focused on ensuring we can maintain North American energy independence through energy diversity and ensuring American energy producers can make necessary capital investments now and in the long term to be sure they can meet our energy needs. Lankford also discussed the need to eliminate the wind production tax credit because the Oklahoma and US wind industry continues to thrive and is no longer a new industry in need of federal tax credits to get off the ground.

Lankford has continued his effort to permanently phase out and end the wind production tax credit (PTC) since the wind industry is no longer “emerging” and is now one of the primary energy sources in Oklahoma. Today, Lankford introduced the PTC Elimination Act to bring an end to the credit.

The PTC was established nearly three decades ago as part of the Energy Policy Act of 1992, and since its adoption, wind power has grown tremendously into a self-sustainable, multibillion-dollar industry. In September, Earlier this month, Lankford also discussed the need to end the wind PTC in a Senate Energy and Natural Resources hearing.

Witnesses at today’s hearing included Jason Walsh, Executive Director of BlueGreen Alliance; Maria M. Pope, President And CEO of Portland General Electric; Alex Brill, Research Fellow at the American Enterprise Institute; and Kevin Sunday, Director Of Government Affairs at the Pennsylvania Chamber of Business and Industry.

Excerpts

On geopolitical issues affecting natural gas drilling

Lankford: Europe and Germany, in particular, is losing some of its energy independence of late by trying to be more dependent on Russia, and the Nord Stream 2 pipeline for natural gas, that’s going to be an enormous geopolitical shift. That will be a very long-term effect on western Europe. We, in the United States, started exporting natural gas half a decade ago, specifically dealing with the geopolitical importance of that, and to also deal with the carbon issues and trying to be able to reduce carbon usage around the world by using cleaner natural gas around the world for energy. So geopolitically it’s important, otherwise it’s important as well. We just want to be able to drill down one of the key issues being the intangible drilling costs on that which are just normal operating costs for oil and gas for their production. There’s been conversation about that. Mr. Sunday, what would that mean to lose intangible drilling costs both geopolitically for us and our energy independence domestically as well as just in tax policy?

Sunday: It would incredibly disadvantage the producers that are still able to operate here in Pennsylvania. That would translate to reduced production, fewer jobs, reduction in the energy exports to countries as you mentioned in southeast Asia, India, it would increase their geopolitical risks and our ability to shrug off geopolitical turmoil in the gulf.

On the need to eliminate the wind production tax credit

Lankford: My question is, we still continue to put billions of dollars into the wind production tax credit as a specific set-aside to incentive new construction on that. It obviously changes the formula of the price for wind compared to everything else, but it seems to be something that should be fading. There’s a lot of great wind production out there. It’s very efficient, but we’re doing it the same way though that we’ve done it for now 30 years. Is it effective to continue to do the same credit over and over again even when wind is no longer a start-up entity?

Brill: It is true that the technology has advanced by leaps and bounds over the last few decades, and the price of wind energy has plummeted over the same period of time. Depending on how one does their calculations, it is often cost-competitive even without the subsidies. The subsidies, of course, further encourage additional investment and additional deployment of a carbon-neutral source of energy, and there are climate and economic advantages to that. But continuing a strategy of large subsidies for all clean energy will become increasingly costly over time as we continue to transition towards lower carbon emissions. So, therefore, the cost of these policies, I think, should be carefully examined.

On energy diversity

Lankford: Two months ago obviously we had a deep, cold snap that came across the central part of the United States. I was in that. Southwest power pull had a pretty dramatic shift during that time period as we saw a lot of wind towers that froze up. Our solar panels were all covered in deep snow. A lot of our natural gas facilities that were actually doing gas processing froze up in the central part of the United States. We had a pretty dramatic set of issues there, and it seemed to cascade. Part of the challenge we’re trying to be able to go through is continuing to be able to focus on energy diversity. Some of the tax incentives, when you put those in place, obviously capital run towards where they’re going to get the greatest return. That’s been wind, that’s been other things, which again, in my part of the country, in Oklahoma, the wind comes sweeping down the plain, and we actually turn wind towers with it and make energy out of it. It’s been great as a source, but the question becomes overreliance, and on peak days, what that really means to have an overreliance. How can tax policy actually push us in our energy diversity area that we over-create in some areas and under-supply others and so on peak days, hot and cold, we miss that out. How do you balance that out in your own portfolio?

Pope: … As we look forward to how do we incentive diversity across all of our resources, it’s something we feel very strongly about, and it’s one of the reasons that we really like the tech-neutral aspects of Chairman Wyden’s proposals, and, most importantly, that all participants, utilities and independent power producers alike, can participate. Thirdly, I’d say that to balance renewables, wind, solar, hydro, as well as others, Portland General, as well as many utilities in the West, belong to the energy and balance market, and we work with each other to lower the cost of renewables to be able to use the max amount of renewables across a much wider geography, the entire west. So, through a variety of mechanisms I think there’s a real opportunity to expand the use of renewables in a reliable and low-cost fashion. 

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