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Posted: January 01, 2011

Cote’s Colorado: Renewables vs. traditional energy

Extension of tax credits underscores government's long history
of supporting new technologies

Mike Cote

President Barack Obama's tax-cut deal with
Republicans was characterized by the Associated Press as a "Christmas tree tinseled with gifts for lobbyists
and lawmakers."

Some of the "gifts" included the extension of renewable-energy provisions from the stimulus that were set to expire at the end of the year. Among them: a Treasury grant program that covers up to 30 percent of costs for companies working on solar, wind and geothermal projects and a 45-cent-per-gallon ethanol tax credit.

Naysayers might argue that such assistance amounts to the government propping up technologies that can't compete in the marketplace. Ron Rossi would counter that such help has a long tradition in U.S. history.

"One of the arguments you get a lot from folks is, ‘Well, these things need to stand on their own two feet.' That's very attractive until you start trying to examine what really goes on," says Rossi, an attorney with Polsinelli Shughart in Denver who serves as transition adviser to Gov.-elect John Hickenlooper on energy.

Rossi, who gathered with some of his colleagues from Washington, D.C., in Denver for a forum on energy policy in December, used the example of steam paddle boats that first traveled up and down the Hudson River in the 19th century.

"We put the mail on it; we paid people to do this; we gave them monopolies; we did a lot of things to protect the emerging industry," Rossi said during an interview with ColoradoBiz. "The young government thought it would be a good thing to have transportation for a growing economy."

You could make the same case for the development of railroads, the national highway system, rural electrification and telecommunication, he argues. So why not for renewable energy technologies?

"We wouldn't have any nuclear power plants if it weren't for the government," said Rossi, whose energy resume includes many years working with oil and gas companies. "There's no way private banks would be able to take the risks of financing those. I think the government does need to provide a fertile environment for some of these new technologies to come in and to compete with some of the traditional technologies and move us into some things that are self-sustaining."

Renewable energy technologies aren't just competing in the marketplace, however - they're competing for federal support. The Obama Administration's push to end incentives for oil and gas while creating a cushion for renewables hasn't been sitting well with states rich in traditional energy resources, including states like Colorado with abundant deposits of natural gas.

"It's not easy to get the capital needed to go out and drill the wells so there are things like percentage depletion and intangible drilling costs, which the Obama Administration has sought to end during the last two years," said Martin Frost, a former Democratic congressman from Texas who works as a lobbyist for Polsinelli Shughart. "That's short-sighted because you're going to continue to rely on oil for some time, and certainly we want to rely on clean-burning natural gas for the foreseeable future."

A bipartisan coalition of Democrats and Republicans, including Colorado's two Democratic senators, has blocked the administration's attempt to shift money away from traditional sources of energy to fund renewables, Frost noted.

Kenny Holshof, a former Republican congressman from Missouri and a fellow D.C. lobbyist for Polsinelli Shughart, says energy policy needs to address the varying needs and resources of individual states. It's parochial - not partisan - he suggests.

"I represented a rural district in the state of Missouri. We raise corn and soybeans, so biofuels, ethanol, biodiesel, were very important to my constituency," he said. "If you're from Louisiana, drilling in the Gulf is still a good thing notwithstanding what happened with BP."

Ditto for states whose resources are wind, solar, coal or natural gas. They all need to be on the table, he said, regardless of the debate over global warming.

"Isn't it in everyone's best interest if we are more energy efficient and if we're looking at alternative forms of energy?" he said. "Are we truly serious about trying to lessen our dependence on other countries to supply our energy needs? If we were to take that high ground approach then I think we can have some significant steps forward in this whole energy discussion."

Watch video highlights of these interviews at www.cobizmag.com.
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Mike Cote is the former editor of ColoradoBiz. E-mail him at mcote@cobizmag.com.

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