Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Ms. KLOBUCHAR. Mr. President, I am here to talk about the American Renewable Energy Act which I am introducing today, along with my colleagues, Senator Snowe from Maine and Senator Cantwell from Washington.

Last week, we passed a short-term stimulus package that will help change the economic direction of this country by putting money in the hands of American families, including our seniors and veterans. Last week's action was a start, but we must begin focusing on long-term policies that will help our economy long after these rebate checks have been cashed. If we do not do that, we are going to be back exactly in the place we were before. We need long-term policies that will encourage sustainable economic growth in every corner of this country.

In January, I traveled all around my State on a Main Street tour of Minnesota. We talked about the economic challenges facing the people of our State, but we also talked about the opportunities. Energy was a topic that came up everywhere. It came up when people were filling up their cars and trucks with gas, and it came up when we talked about the opportunities.

I visited southwestern Minnesota, which is home to hundreds of large-scale wind turbines, helping to make Minnesota the Nation's third largest producer of wind energy. Along with ethanol, these wind-energy farms have spurred a rural economic renaissance in our part of the State.

For example, in 1995, SMI & Hydraulics, Inc., began their business in Porter, MN, primarily as a welding and cylinder repair shop for local farmers and businesses. Today, SMI & Hydraulics manufactures the bases for the wind towers we sell all across this country. It just recently expanded its facility to 100,000 square feet and created over 100 new jobs, many of which are traditional manufacturing jobs.

My colleagues have to understand, these places are like barns. They started out as farmers' barns and have expanded and expanded as they have been able to meet this country's rising energy needs.

The success of companies such as SMI & Hydraulics is not unique to Minnesota. Renewable energy has been a bright spot in an otherwise lagging economy. Last year, the renewable electricity sector pumped more than $20 billion into the U.S. economy, generating tens of thousands of jobs in construction, transportation, and manufacturing.

Throughout the country, renewable energy has led us down a path toward new jobs, lower energy bills, and enhanced economic development. That is why today I am introducing this bill, along with my friends Senator Snowe and Senator Cantwell, to help lead us further down the path to a better, cleaner, more prosperous energy future, with new opportunities for investment, innovation, and job creation.

Our bill, as I said, is called the American Renewable Energy Act. There are two key elements of this legislation.

First, the American Renewable Energy Act creates strong, consistent incentives for private sector investment in renewable energy resources and technology by extending tax incentives, such as the production tax credit, for 5 years. Of course, this covers wind, solar, geothermal, hydro, and other forms of renewable energy, and making sure that is in place so we can spur the kind of investment that will create jobs and allow us to be on the same path other countries around the world are on.

Second, the legislation establishes a national renewable energy standard requiring that 20 percent of our energy come from renewable sources, such as wind, solar, and biofuels, by the year 2025. A national renewable energy standard will create a large market for clean sources of energy, reducing global warming pollution, and strengthening our economy.

Let me briefly describe each of these elements. First, the renewable energy tax incentives. Already the industries for solar, wind, and biomass are expanding at annual rates exceeding 30 percent. But at the same time, we are no longer the world leader in two important clean energy fields. Even though all the technology was developed in our country, we rank third in wind power production behind Denmark and Spain, and we are now third in photovoltaic power installed, behind Germany and Japan.

Ironically, these countries surpassed us largely by adopting technologies that had been first developed here in the United States. We came up with the right ideas, but we didn't capitalize on these incentives by having these innovations, by having the right policies in place to support their commercial development and rise and support the jobs that would have come with developing the technology. Our foreign competition was able to leapfrog over American businesses because these other countries have government-driven investment incentives, aggressive renewable energy targets, and other bold national policies.

What I am proposing with my legislation is a package of tax incentives to spur investment in advanced clean technologies to serve the growing market for renewable energy sources. Specifically, in the bill Senator Snowe and Senator Cantwell and I are introducing today, we want to extend and expand the existing Federal production tax credit for renewable energy, and I want to make sure it is a long-term credit and businesses will have the clarity and certainty they need to make their own large-scale, long-term capital investments in these technologies.

Currently, the production tax credit and other key energy efficiency tax incentives are set to expire at the end of this year. Our legislation will extend these tax incentives for 5 years.

To pay for these incentives, the legislation will repeal several tax giveaways that currently go to the major oil companies. ExxonMobil shattered another record profit, earning $11.7 billion last quarter and totaling over $40 billion in profits in 2007. Big oil doesn't need these tax incentives, but our rural economies do.

Over the years, the production tax credit has been a problem because of its short-term green light-red light nature. The cycle begins with strong investment and growth in the renewable power industry, thanks to the tax incentive, but then the investment and growth slow down as the tax incentive nears expiration and is allowed to lapse. When the incentive gets restored, the renewable power industry takes time to regain its footing, and then experiences strong growth again until the incentive nears expiration again. Up and down, up and down, up and down. It is no way to run a government policy that should be geared toward creating more jobs in our country.

In fact, the American Wind Energy Association has recently noted that the slowdown in wind industry activity actually starts about 8 months before the tax credit's expiration date. These are large-scale, capital-intensive projects that often take long years to develop. But uncertainty about the future of the production tax credit discourages project development and investment. Extending the tax credit for 5 years would create a much stronger incentive and investment environment for renewable energy development.

Simply put, a new economic sector is emerging. It is one that can shift the Nation's economy to clean energy production, generation, and use. But without the continued support of tax incentives to help this emerging industry compete on a level playing field, the opportunity will be lost.

Over the past few years, the solar energy industry has witnessed unprecedented growth. This growth pumped over $2 billion into the U.S. economy and created 6,000 new jobs. Developing solar energy is an economic engine for our country. From 2006 to 2007, the job base in the solar energy industry grew by 103 percent. Almost all of this growth is directly attributable to the solar investment tax credits that are scheduled to expire at the end of this year. If we allow these credits to expire, those jobs will dry up. We will lose out on creating new companies and we will lose out on creating new opportunities for clean energy.

I have focused on wind and solar, but there are amazing opportunities in other renewable energy fields, including hydro. There are amazing opportunities with geothermal. But we are never going to reach the full potential for jobs in this country if we keep going back and forth, up and down. We have to have a policy that is geared to the long term.

I will also say that in visiting with farmers and ranchers around our State, the other thing we need to do--but we will have to focus on in another bill--is look at creating incentives for individuals and small businesses that may want to put up their own wind turbine. That is a subject for another day, but we have to do everything we can to promote this renewable energy.

The second element in this legislation would provide an additional incentive for investment in renewable energy technology and resources. It would establish an aggressive, nationwide renewable electricity standard, one requiring that all electricity providers generate or purchase 20 percent of their electricity from renewable sources by the year 2025.

Currently, as I show on this chart here, there are 24 States, plus the District of Columbia, that have renewable electricity standards. Together, these States account for more than half of the electricity sales in the United States. You can see what these States are doing here. All on their own, the States have risen to the occasion, and said: Well, the Federal Government isn't doing anything, so I guess we will do it on our own.

California is at 20 percent, Minnesota at 27.4 percent by 2025--one of the most aggressive standards in the country. Bipartisan agreement, a Democratic legislature, and a Republican Governor reached this agreement with our utilities, including Excel Industry signing on and not opposing this agreement. We have New York at 24 percent, Wisconsin at 10 percent by 2015; 15 percent by 2015 for Montana--15 percent by 2020. Look at these States along the way, all over this country, and we are seeing these standards taking place.

While Minnesota, Maine, Washington, and other States are already headed down the path toward a new clean energy economy, the Federal Government hasn't even made it to the trail yet. The Federal Government is still stuck in the fossil age. There is a famous phrase: ``the laboratories of democracy.'' That is how Supreme Court Justice Louis Brandeis described the special role of States in our Federal system. In this model, States are where new ideas emerge and innovative proposals are tested. But Brandeis did not mean for this to serve as an excuse for inaction by the Federal Government. Good ideas and successful innovations are supposed to emerge from the laboratory and serve as a model for national policy and action. The responsibility is on us.

We know what is going on in these States around the country. The courage we are seeing in the States as they seize opportunities offered by renewable energy should be matched by courage in Washington. I think it is time for the Federal Government to follow the lead of Minnesota, Washington, Maine, and other States around the country and adopt a forward-looking renewable energy standard.

There are many benefits from having a strong national standard. It would save money for American consumers, as much as $100 billion in lower electricity and natural gas bills. It would aid in the fight against climate change by preventing well over 3 billion tons of carbon dioxide from being emitted into the atmosphere by 2030. It would create jobs and increase income across the country, especially in rural areas. Each large utility-scale wind turbine that goes on line generates over $1.5 million in economic activity. Each turbine provides about $5,000 in lease payments for 20 years or more to farmers, ranchers, or other landowners.

You can see from this chart the job creation with this national renewable electricity standard set at 20 percent--355,000 new jobs, nearly twice as much as generating electricity from fossil fuels; $72.6 billion in new capital investment; $16.2 billion in income to farmers, ranchers, and rural landowners; $5 billion in new local tax revenues.

Then look at these consumer savings--$49 billion in lower electricity and natural gas bills; a healthier environment; reductions in global warming pollution equal to taking nearly 71 million cars off the road; less air pollution, damage to land, and less water use. These are the benefits.

We pay for it by taking back some of those tax giveaways we give to those oil companies--ExxonMobil, $11.7 billion in one quarter. So are we going to give them more money or try to create 355,000 new jobs in this country? That is the choice.

I believe the combination of an aggressive renewable electricity standard and a strong package of tax incentives can begin to move our Nation to a new, cleaner, and more prosperous energy path. It is long overdue. The private sector is already beginning to invest in this energy future, and they are ready to invest more. But our Government must provide the right policies and incentives so they will be prepared to make the large-scale, long-term investments that are required to make it happen.

The opportunities are enormous for creating new technologies, new industries, new businesses, and new jobs, while at the same time promoting our energy independence, strengthening our national security, and protecting our global environment. This piece of legislation, cosponsored by my friends Senator Snowe and Senator Cantwell, this bipartisan piece of legislation is about leading the new economy, not following along; not doing countless rebate checks after rebate checks--which we need to do right now, but we are never going to get on the path to a new economic future unless we lead the way, and this is Washington's time to lead. This is about making America the global energy leader instead of the lagger. It is about creating a better economy for the next generation by leading a whole new industry. It is about not being complacent. It is about getting on a new energy path.

I believe an aggressive renewable electricity standard, coupled with strong tax incentives, leads us down this path. I urge all of my colleagues to support the American Renewable Energy Act.

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