As Congress debates a new tax package, which energy measures will make the final cut? During today's OnPoint, David Gardiner, president of David Gardiner & Associates and executive director of the Alliance for Industrial Efficiency, makes the case for industrial efficiency incentives to be included in Congress' new tax package. He also discusses U.S. EPA's recent guidance on greenhouse gas emissions permits.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Dave Gardiner, president of David Gardner and Associates and Executive Director of the Alliance for Industrial Efficiency. David also previously served as assistant administrator for policy at EPA. It's nice to see you again.
David Gardiner: Thank you, good to be here.
Monica Trauzzi: It's tax time on the Hill. All eyes are on the negotiations that are taking place on the latest, newest tax package. What are your concerns with the tax package as a relates to energy policy?
David Gardiner: Well, we think there's a huge opportunity on energy policy to advance what's known as combined heat and power and waste heat recovery. This is a little understood approach to improving the way we use energy, making it more energy efficient. It's got the potential to produce very large amounts of clean energy. The Department of Energy says that we could produce 300 power plants worth of energy, much of that would occur in the U.S. manufacturing sector, because there are places like steel mills, pulp and paper mills, chemical factories and others which are today wasting heat as they produce their products. And we could capture that heat and turn it into clean power. And there's just a gigantic opportunity to produce clean power while lowering operating costs for a lot of these manufacturing facilities. Congress has been considering an investment tax credit for combined heat and power and waste heat recovery. There's a small one today, the issue is whether we can make it larger.
Monica Trauzzi: How much money are we talking about?
David Gardiner: Well, so far, Congress hasn't actually estimated how much it would be. The important issue is that we think that there's bipartisan support, there is bipartisan support for this proposal in Congress now. And so we're hopeful as Congress deals with the tax package that they're addressing now, that this bipartisan support that we've had for combined heat and power and waste heat recovery will allow the investment tax credit expansion to go into the package.
Monica Trauzzi: Specifically, which members are pushing for these incentives?
David Gardiner: Well, in the Senate, Senators Bingaman and Snowe have formed a bipartisan team who have been pushing strongly for this throughout the course of the last two years. And in the House there's a broad coalition of members, very diverse, including Congressman Jay Inslee, Congressman Tonko, Congressman Ron Paul. It's a very diverse coalition of members that I think see a real win-win an opportunity here. There's an opportunity to enhance the competitiveness of American manufacturing, while, at the same time, saving energy, reducing operating costs, and cutting emissions.
Monica Trauzzi: So, we're basically talking about making factories cleaner. It seems like a no-brainer almost. So why wasn't it included in the tax package the first go around?
David Gardiner: Well, that's a good question. Of course, what we're trying to do is to make sure that people understand that there is this gigantic opportunity, that there are opportunities as we say to really cut costs. But sometimes, as you know, ideas that seem like no-brainers don't often go forward, so people have to push hard. We've been very excited that outside of government there's a very broad coalition that are part of our alliance that have been supporting this tax proposal. We've got companies like the Dow Chemical Company and environmental organizations like the Sierra Club. So we've got a very broad set of organizations that see the opportunity, both economically to save companies money, make them more competitive, allow them to invest in employing new people, while also reducing emissions.
Monica Trauzzi: Do we have a specific number on jobs of how this could impact job growth?
David Gardiner: The Department of Energy says that if we take advantage of the opportunity over the next 20 years we would create a million jobs. Just to give you one good example, there's a silicon manufacture in the town of Alloy, West Virginia, Globe Metallurgical, that is undertaking one of these projects right now. They are going to lower their operating costs so much that they're going to be the lowest cost silicon manufacturer in the country. They are going to increase their employment at the plant by 20 percent as a result of this. In addition, they will also have some construction jobs. So, again, the potential is there to save operating costs for manufacturers and then they can reinvest those savings into increasing production and more employment.
Monica Trauzzi: Let's switch gears and talk about EPA's recent guidance on greenhouse gas emission permits. What role does energy recycling play?
David Gardiner: It plays a big part. We were very pleased that the Environmental Protection Agency's guidance on greenhouse gases said that the use of combined heat and power, waste heat recovery, recycled energy should be right at the top of the list of things that companies could do to meet the guidance that EPA's issuing for reducing greenhouse gas emissions. We are very hopeful that as EPA approaches other rules under the Clean Air Act, that they'll do the same thing and recognize, as we think they do, that combined heat and power, again, represents this terrific opportunity to help meet clean air requirements to make the air cleaner, while at the same time lowering operating costs for companies and making them more competitive.
Monica Trauzzi: So, are you happy with the guidance as is or are there certain changes to the proposal that you'd like to see?
David Gardiner: Well, we think there are a few things that EPA could do to make the guidance a little stronger, to make it more clear that combined heat and power and waste heat recovery are the absolute preferred choice for companies. Certainly the EPA guidance recognizes that energy efficiency of this sort is kind of the first step that people should take. There's a little bit more that they could do, but I think, in general, the EPA guidance is very well much structured in a way that makes an awful lot of sense.
Monica Trauzzi: Is industry adequately prepared to comply with these new standards?
David Gardiner: Well, our sense is that there are lots of opportunities out there in the industry for combined heat and power and waste heat recovery. That investment, the level of investment that we'd like to see isn't happening in today's economy in part because the economy is so tough. So that's part of the reason that we want to advance the tax package, is because that will help make the finances for this a little better in a tough economy. But the tradition also has been that both electricity rules and clean air rules have never really given appropriate credit for energy-efficiency strategies like combined heat and power and waste heat recovery. So we were pleased to see EPA take this first step. We think there are more steps that EPA can take on other areas and it's important for electricity regulators to also look for opportunities to create demand for combined heat and power and waste heat recovery. Again, DOE says that we could produce 300 power plants worth of energy from this source and we need utility regulators, clean-air regulators, Congress, the Obama administration to all step up and say, "This is a power source that we want to encourage. Let's have a strategy that really brings this power source forward." And at the same time we'll be doing that. We'll be making manufacturing facilities more efficient, more competitive.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show. Nice to see you.
David Gardiner: Great.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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