Senate Bill Aims to Improve Geothermal Leasing

SustainableBusiness.com News

Senators Ron Wyden (D-Oregon), James Risch (R-Idaho), Jeff Merkley (D-Oregon), and Mike Crapo (R-Idaho) are introducing the Geothermal Production Expansion Act of 2010 in an effort to improve the leasing and development process for geothermal energy projects.

The bill amends the Geothermal Steam Act to allow the Interior Department to issue geothermal leases for adjacent lands on a noncompetitive basis, based on fair-market value, and has a companion bill sponsored by Representative Jay Inslee in the House of Representatives.

“This [bill] would allow a geothermal developer to expand a successful geothermal lease without being forced into a bidding war with speculators or uncooperative competitors who might threaten project expansion or even prevent the project from reaching commercial scale,” Wyden said in a statement.

Daniel Kunz, President and CEO of U.S. Geothermal Inc. provided the following support: “We are grateful to Senators Wyden, Risch, Crapo and Merkley for introducing this important bipartisan legislation which, when passed into law, will provide the geothermal industry with the necessary tools to protect the long term viability and increase sustainable development of geothermal reservoirs after they are discovered.”

In February, GEA Board member Doug Glaspey provided testimony for H.R. 3709 to the House Subcommittee on Energy and Mineral Resources. He said: “The Geothermal Energy Association strongly supports H.R. Bill 3709, the Geothermal Production Expansion Act. Very simply, it allows a developer that has invested capital and taken exploration risk that results in the discovery of a geothermal resource, the ability to assemble the whole resource so a power plant can be financed and built without exposing the project to the high cost of speculation and delays. We believe H.R. 3709 is an important policy adjustment that should be available to the geothermal industry and will accelerate the development of our geothermal resources, create new jobs, and provide additional revenue for the United States treasury.“

Glaspey outlined the following benefits:

• Developers that have invested substantial capital and made high risk investments would be allowed to secure a discovery.
• Development of the geothermal resource would accelerate the creation of drilling, construction, supply and operating jobs.
• The financing capabilities of geothermal projects would increase.
• All non-competitive leaseholders would be required to pay a market average “bonus” fee and thereby increase the short term fees paid to the federal government.
• Increased development will provide higher revenue to the federal government with the payment of production royalties over decades.

“The hope is that with the strong senate leadership this proposal has behind it, Congress will be able to move on this legislation before it adjourns,” said GEA Executive Director Karl Gawell.

In Related News…

Senate Republicans on Saturday blocked a vote on a tax bill proposed by Senator Max Baucus (D-Mont.) that would have–among many other things–extended the Treasury Department’s 30% cash grant program for renewable energy projects.

Republicans made a fillibuster stand in an effort to keep Bush-era tax credits from expiring for upper-income earners.

Baucus’ bill also called for a one-year extension of the ethanol tax credit–though at a 20% reduction to 36 cents per gallon. It also included a one-year extension for the 54 cents per gallon tariff on ethanol imports, and the reinstatement of a $1-per-gallon production tax credit for biodiesel, among other renewable energy provisions.

If Democrats and Republicans are able to come to terms on a tax bill this month, Baucus’ proposals have a good chance of passage.