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301 Moved Permanently

301 Moved Permanently


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It seems a new era of abundant energy is making some strange bedfellows. Who would have thought that the American Petroleum Institute (API) and the Solar Energy Industries Association (SEIA) - two interest groups that have not been up close and personal - would find themselves aligned on energy policy?

API’s recent, widely read “State of American Energy” report highlighted the role of renewable energy technologies in meeting the nation’s energy needs - and it turned to SEIA to write the solar section of the report. The fact that the nation’s most influential oil industry trade organization was embracing renewable energy was hailed as “remarkable” and “a turning point,” with SEIA calling it “a clear recognition by the oil and gas industry that solar is now a mainstream energy source and an important part of America’s energy future.”

Upon reflection, however, the API’s embrace of various forms of renewable energy to meet the nation’s power needs isn’t remarkable at all, but rather a cunning move to bypass Washington political gridlock on energy policy. The fact is that, despite the popular conception, there is little competition between the oil and renewable energy industries.

Most oil in the U.S. is used in the transportation sector - not for power generation. As of 2013, less than 1% of the nation’s total electricity generation came from oil. In other words, API’s embrace of renewable energy positions it as a powerful advocate of an “all of the above” energy policy, highlighting American energy abundance without diminishing oil’s central role as chief supplier of liquid fuel to the transportation sector.

 

Energy abundance

“The U.S. is in the midst of a new era in domestic energy abundance characterized by rising use of renewable energy and increased oil and gas production that is strengthening our economic outlook and enabling America to emerge as a global energy superpower,” says Jack Gerard, API’s president and CEO, in the introduction to the report. By acknowledging the role of solar and other renewable energy technologies in the nation’s energy mix, the oil and gas industry can wrap itself in the positive glow emanating from the popularity of the renewable energy industry with both the public and environmental groups.

This embrace of renewable energy is not at all cynical, but rather a bold effort by big oil to de-politicize the energy debate. The embrace of big oil also bolsters renewable energy by giving it a seat at the table for the national energy policy discussion. Rather than being viewed as a tangential part of the energy story, renewable energy becomes a vital part of it. By aligning itself with big oil, the renewable energy industry commands new respect from the nation’s leading industry group representing the largest part of the U.S. energy mix.

Among the renewable energy sources discussed in the report, solar stands out. “When looking at America’s energy future, solar can be a real game-changer …” the solar section of the report concludes. With solar making up 36% of all new electricity capacity added in 2014 and expecting to gain further ground in 2015, solar can no longer be treated as a rounding error in sizing up America’s energy resources.

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The solar industry should use this new alliance wisely, as it seeks to pressure a Republican-dominated Congress to keep its tax credits - the 30% federal investment tax credit (ITC) - in place at the current level past its current expiration date in 2016.

By joining together, API and SEIA (as well as other renewable energy interest groups) are sending a powerful signal to the nation that their interests are in alignment, that they can work in harmony together and - most importantly - that the infighting between big oil and renewables doesn’t serve the national goal of strengthening the economy by continuing to develop new sources of low-cost domestic energy. With the alliance, API and SEIA have leapfrogged over the political debate. If the partisan ideologues on both sides aren’t to be perceived as having been left in the dust, they will need to follow suit by finding common ground on which to build a vision for a new national energy strategy.

 

Start cooperating

One place to start may be the Keystone XL pipeline. As API’s collaboration with SEIA has demonstrated, oil has nothing to fear from the renewable energy industry. Nor does the renewable energy industry have anything to fear from the increased production of oil, because only a tiny fraction of the nation’s electricity supply comes from oil. So, why not do a deal: Give support for the pipeline in exchange for renewable energy incentives, including a continuation of the status quo for the ITC. Seeing as we already know that Canada will continue to exploit its oil sands reserves whether or not the pipeline is built, the increase in solar capacity that would result from an extension of the ITC will yield a net benefit to the environment. Everyone wins.

Jack Gerard says that his organization wants to work with the 114th Congress, President Obama and representatives of other energy sectors “to usher in an enduring era of cooperation and forward-looking energy policy for America … and to create … a more productive approach to national energy policy.” A Congressional deal to trade Democrat support for Keystone in exchange for Republican support for continuation of renewable energy tax incentives would follow the lead set by API and SEIA to work together to secure a more prosperous energy future for all Americans.

 

Neil Z. Auerbach is CEO and managing partner of Hudson Clean Energy Partners.

Industry At Large: Federal Policy

Petroleum And Solar Usher In A New Era Of Cooperation On Energy Policy

By Neil Z. Auerbach

Industry groups representing oil and renewables are now working together.

 

 

 

 

 

 

 

 

 

 

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