Change in control? What's next in Washington?

In Washington, the Digest spent time this week with Congressman Brian Bilbray of California, recently tapped as one of the Digest’s “10 who walk the walk” in DC on biofuels-related issues. Bilbray, a San Diego Republican, has been out in front for some time on algal biofuels.

Tthere has been increasing speculation about a change in control in the US Congress from the Democratic Party to the Republicans. Speculation has especially focused on the possibility that a change in control would occur in the House of Representatives.

Yet, the latest biofuels legislation, HR 4168, passed by the House last month, which would give algae-based biofuel tax parity with cellulosic biofuels with respect to a $1.01 per gallon production tax credit and a 50 percent bonus depreciation for biofuel plant property, was pushed through with efforts from Reps. Harry Teague (D-NM), Mary Bono Mack (R-CA), Dave Reichert (R-WA) and Brian Bilbray (R-CA). Jay Inslee (D-WA) was a co-sponsor of the original legislation last December, and co-chairs the House Algae Energy Caucus with Bilbray.

Is there bi-partisanship on energy policy? What are pro-environment Republican ideas for moving the agenda in Washington? What may the next Congress consider when it comes to biofuels?

Digest: Congressman, your thoughts on the Senate not being able to pass the HR 4168 algae bill before the elections.

BB: In a word, frustration. There was a waste of 18 months, and the leadership didn’t make the time for the substantive issues. Half of of our time is spent renaming post offices.

Digest: When you go back home and talk to your constituents about algae-based fuels and energy, do they get it? How much do they know so far about the promise of the technology?

BB: They see the alternatives as scary, but they don’t yet understand it. It intrigues them more other sources. What’s not to like? We have the land, sunlight and salt water to grow it. The interest is very positive.

Digest: It takes dozens of slides to go through a presentation of all the federal programs that directly or indirectly support biofuels, yet investors zero out government subsidies when considering new technologies, because they feel policy is so unstable you can’t count on it. Do you agree, and what kind of legislation is needed?

BB: For stability, we have got to go to outcome based policies.  Mandates and incentives that are based on content by volume should be based on content by BTU. Its time to go to BTU units. Right now, we have ethanol at 10 percent by volume, but its 7 percent by BTU.

Digest: What about loan guarantees? There has been a strong industry push to alter the DOE’s Loan Guarantee program to make it more effective.

BB: Loan guarantees are not just a DOE issue. There’s the Department of Defense. The DOD sees this as a national security issue, and in renewables most of the alternatives are incompatible with the military need for diesel or jet fuel.

Digest: There has been a lot of talk that the next Congress is going to be changing the way that it does business, because of concerns about public spending and the national debt. Do you see a change coming? What kind of policies do you see advancing?

BB: Absolutely. But we have resources far beyond writing checks. There are many things we can do to help where no money is spent. We can work on  providing land, and salt water, for example, to the new companies commercializing these technologies. We are working in proposals to open up public lands, a biofuels homestead act, where we will handle the Clean Air , the Endangered Species Act, providing you with land and water.

Digest: So is it fair to describe the focus over the next few years as  giving a hand up rather than a hand out?

BB: People are mad about Washington writing blank checks. We need to reform the way we operate. But there are public lands, public resources that don’t cost money.

Digest: You mentioned the Department of Defense, and the military has been actively pursuing the development of biofuels. How do you see their role evolving?

BB: For the Military, this is not just an environmental issue, it is about access to fuels. There needs to be R&D done now, so that in future decades there will be an energy stream. The military is committed to doing everything it can do to help.

Digest: There are a huge number of biofuels companies coming out of San Diego, but not much actual production and the project job creation in your home state. For example, Sapphire Energy is working on commercializing in New Mexico.

BB: New Mexico got into it because California hasn’t changed its regulations, and they saw an opportunity. Our scientists are forced to leave the state to develop their projects. There’s this huge job benefit. California can learn from this.

Digest: The algae bill that just passed the House – not only did you co-sponsor it, but it was strongly backed by a liberal Democrat in Jay Inslee and one of the more conservative Republicans in Mary Bono. Is this parochial politics, or is there something truly bipartisan about support for algal biofuels?

BB: In the case of the algae bill, the Democrat from New Mexico (Harry Teague) comes from a fossil fuels industry background. Whereas, the Republican is from the Air Resources Board, and as a county supervisor was in charge of hazardous waste. Interests and backgrounds are crossed on this one.

Digest: Do you see a Republican brand of environmentalism returning to Washington?

BB: I hope so. One of the things that makes the California Air Resources Board more effective is that it is science based, outcome based. There’s less control exerted, and more judging by results.

Digest: We noted that states with strong energy production portfolios like Texas, Oklahoma and the Midwestern ethanol-producing states, virtually avoided the recent recession. Is there a lesson for us there in managing the economy?

BB: Absolutely. Texas – and Louisiana too until the recent disasters – plus the
Midwest got a shot in the arm with mandates. But now, you see California restricting not only the traditional sources of energy, but also the alternatives. California was once the land of opportunity for alternative energy. At one point in time, every home in Pasadena had solar heating. Now, we are outlawing solar panels because of the visuals. It’s harder to put a windmill in california than anywhere in the country. 155 permits were applied for, not one was issued.

Digest: San Diego has become a hub for high technology. What are the factors that cause that? How can other communities develop that?

BB: Synergy. You have companies like Qualcomm, and Pfizer, and a mix of high tech and biotech. Plus, the military is more important to high tech than people realize. In San Diego County, we have high tech firms one after another. You have a major advanced nuclear company right in the same canyon, in the same facility, as the leading advanced biofuels companies.

Digest: There’s been talk of, under Republican leadership, moving responsibility for Education and Energy back to the states and doing away with the Department of Energy. What’s the proper role for Washington?

BB: When you come to DC, you get culture shock. You see the congress burning coal for heat, and you ask, “where’s the leadership?” There’s a place for federal policies. For example, preempting states from blocking development {of advanced technologies].  Washington is not the place to find all the wisdom in the world but it has to contribute and be involved.

Digest: Do you see the next two years as critical in DC with respect to advanced biofuels and algal fuels?

BB: There’s always the group that comes in and tries to to scare the hell out of the American people, no matter what you are working on. So we have to get it done before then.