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Stalled energy bill could hurt wind projects
by Mark Steil, Minnesota Public Radio
November 25, 2003

One of hundreds of wind turbines in southwest Minnesota. By the end of 2003 wind power in the state will produce enough electricity for about 150,000 homes. (MPR Photo/Mark Steil)

A stalled federal energy bill is causing major headaches for Minnesota's wind energy industry. The legislation extends a tax credit for wind production. Without the credit some wind projects in the state could be in jeopardy. The failure to pass the bill also affects ethanol production and a planned Iron Range power plant.

	Building a wind turbine

Worthington, Minn. — The energy bill looked like it was on a fast track to passage before it came to a standstill last Friday. That's when senators refused to limit debate on the measure.

The bill is dead for this year, but supporters say they'll try to pass it again in January.

Backers of wind generated electricity hope that happens. The bill continues an important federal tax credit for wind energy. The credit expires at year's end. Randall Swisher, executive director of the American Wind Energy Association, says the credit is a major reason for wind energy's rapid growth, about 25 percent a year. He says if the tax credit isn't renewed quickly, projects could be canceled.

"If the credit were to expire it would have a dramatic impact on the market for wind. I think that market would almost totally disappear," says Swisher.

The Trimont Area Wind Farm in southern Minnesota is one project that may be affected. Farmers and other landowners are developing the project in Jackson and Martin counties. Great River Energy of Elk River plans to buy the electricity. Great River's Kandace Olsen says the stalled energy bill is a big concern for project developers.

"They need to have that production tax credit in order to make the energy they sell to us competitive. If they can't get that credit than it would probably at least slow down the project," says Olsen.

Olsen is optimistic Congress will find a way to extend the credit. She believes most lawmakers support the idea of using tax breaks to boost the wind industry.

	A wind farm

"There have been times in the past where the production tax credit has expired and then the senate has come back and renewed it retroactively. So, that could very well happen in this case," Olsen says.

The uncertainties caused by the stalled energy bill extend beyond wind energy. The legislation would double the nation's production of ethanol. Minnesota is one of the leading manufacturers of the corn based fuel. Backers of a planned ethanol plant in Granite Falls say they plan to build even if the energy bill fails. But the project's chairman Paul Enstad says passing the energy bill would help attract investors.

"It certainly wouldn't hurt anything at all. I believe it would help sell the equity that we need to raise yet, very quickly, in our project," says Enstad.

Enstad says the Granite Falls ethanol plant will help the area's farm economy while producing a clean burning fuel.

Ethanol opponents have questioned the environmental claims made about the fuel. They say in certain climates ethanol increases air pollution.

Another Minnesota component of the energy bill also faces environmental questions. The legislation contains federal loan guarantees for a coal gasification plant on the Iron Range. It would produce electricity by breaking down coal into gases, which then would be burned to make energy.

Critics say the plant would produce excess carbon dioxide.

Tom Micheletti owns the company which wants to build the plant. He says most harmful pollutants would be removed from emissions before they're released into the air. Micheletti says it will be more difficult to build the plant if the energy bill fails.

"It will slow our project down, it will not kill our project but it will slow it down. The loan guarantee provision that we have is critically important to the project in terms of helping us with financing and moving the project along," says Micheletti.

But before the loan guarantees reach northern Minnesota the Senate must pass the bill. That won't happen now until January, at the earliest.

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