How will U.S. EPA's proposed standards for existing power plants impact the wind energy industry's growth? During today's OnPoint, Rob Gramlich, senior vice president of public policy at the American Wind Energy Association, discusses which states could benefit most from incorporating wind energy as part of their compliance mechanisms and talks about lobbying efforts to derail state renewable portfolio standards. Gramlich also explains why he believes the wind industry still needs the production tax credit, despite an expected boost from the existing source regulations.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Rob Gramlich, senior vice president of public policy at the American Wind Energy Association. Rob, thanks for coming on the show.
Rob Gramlich: Good to be with you.
Monica Trauzzi: Rob, wind energy is seen as one of the many sources of energy that could get a boost if the president's existing source proposal becomes final. How much growth is your industry preparing for?
Rob Gramlich: Well, we think that's exactly right, Monica. We're looking at 20 percent of U.S. electricity from wind by 2030. That's about what the Bush administration report said about seven years ago, and DOE is updating that. We think this is one of a number of policies that will help get us there.
Monica Trauzzi: Which states have you identified where wind energy could have the greatest impact in terms of the state meeting the standards set out in the existing source plan?
Rob Gramlich: It's a combination of factors. There are a lot of states with great export potential who can produce a lot of wind -- Iowa, North Dakota, Colorado. There are a lot of states that have great wind resource potential. They could use that potential for local compliance, but also they can sell it to other states. So there are a lot of importing states who may have significant goals to achieve under the new rules where they can import wind to comply.
Monica Trauzzi: So then I would imagine you're pushing this idea of the multistate plans, much like the Regional Greenhouse Gas Initiative?
Rob Gramlich: We in the wind industry have always been consistent that regional trading is beneficial. It's more efficient, it's more reliable, and certainly with wind energy, which is often in remote places, having large open regional markets with good transmission is a better way to go.
Monica Trauzzi: In announcing the proposal, Administrator McCarthy highlighted nuclear energy as an energy source that could help states meet the standard. And of course recently the nuclear industry has taken a hit against wind power for undercutting its ability to compete in the marketplace. How do you see that back and forth and that dynamic between your industry and the nuclear guys escalating with this standard as part of the conversation?
Rob Gramlich: There's a conflict between Exelon and the production tax credit. We know their views on that. They don't see it the same way we do. I wouldn't say the nuclear industry broadly opposes wind or the PTC. In fact, I see a lot more voices both in the renewable sector and in the nuclear sector saying we really need ways to value carbon-free electricity. So I actually see more of a convergence over time.
Monica Trauzzi: Does the lack of enthusiasm among some Democrats who are up for re-election ultimately cut into the president's ability to sell this plan to Americans?
Rob Gramlich: Well, politics are hard to avoid. Obviously I think the administration has laid out a timeline. You can't never do this. There's always an election year every two years, and this is a long process with a proposed rule and then a final rule, and certainly members of Congress are going to look to weigh in at some point and the courts are going to have a say at some point. So I don't think timing is a huge factor. If the administration is going to do it, they just have to go forward.
Monica Trauzzi: States are supposed to lead the way on implementing the existing source rule. What do challenges by ALEC to undercut renewal portfolio standards mean as part of this conversation.
Rob Gramlich: So there are about 30 states with renewable portfolio standards. ALEC has been active in a number of those states trying to undo them. I think a lot of those states now are going to look and say, well, wait a minute, EPA is assuming we can accomplish a certain amount of our goal through renewable energy, namely through the RPS we may have in our state. If we undo that, if the RPS is overturned, then we've got a bigger gap to fill. We've got a hole in our policy and we need to find something else that may be more expensive than the RPS. So I think a lot of them will be actually looking at the RPS to say this is a compliance tool, EPA has already said so.
Monica Trauzzi: But how does your industry specifically bounce back from these types of challenge?
Rob Gramlich: ALEC hasn't succeeded. Last year they won in none of those attacks. This year Ohio is sort of in the balance. That's still going on as we speak, which is more of -- I think there are some local issues there that are going on. But generally I think the RPSes have held very strong. They've remained popular through these discussions.
Monica Trauzzi: So your own press release says wind energy is one of the biggest, fastest, cheapest ways states can meet carbon pollution rule for existing power plants. So does the industry still need tax credits?
Rob Gramlich: Well, certainly right now. We're all dealing with the shale gas revolution, which nobody really expected. A few years ago we all might have thought something different with $10 gas. But we're looking at a market where if you want technology to be there when you're really going to need it in the 2020s and beyond, you can't just let the industries die in the teens, in this decade. And with the manufacturing we've grown here with over 550 manufacturing facilities, if we can keep those facilities operating and continue to bring down the cost, which we've done -- over 40 percent in the last five years -- then we're setting ourselves up not just with wind but other technologies is a similar place, to bring clean energy really to market and bring the cost down. That creates an option that utilities want for a variety of purposes, carbon included.
Monica Trauzzi: And the only way to do that is through the tax credits and not through these regulations that might be coming?
Rob Gramlich: The PTC is in place right now. The regulations won't take effect of course for some time, so through this decade we're certainly looking at some form of the tax credits. The EXPIRE Act needs to get passed now in this Congress, that's what's before Congress, with the extension. I think next year they're going to be looking at some different formulations in tax reform, but some form of tax support. Again, to value carbon-free electricity that many across a variety of sectors in the utility industry are saying is needed.
Monica Trauzzi: All right, Rob, we'll end it there. Thank you for coming on the show. Nice to see you. And thanks for watching, we'll see you back here tomorrow.
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