Gough: Tribal equity in the wind
By
Robert Gough
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| The federal wind production tax credit incentive was extended for one year, but again, with no language to provide for tribal equity in Indian reservation projects. |
Unfortunate. Understandable. But also unnecessary, because in the area of renewable energy development, this is exactly the kind of difficult business arrangement that could be avoided if tribes could hold an equity position in projects built on their reservations from the start as part of a joint venture with the outside investors. Under the present tax credit-based incentive structure, impoverished tribes with no tax liability have to rely on outside investors who have to own the project through the 10-year course of the federal PTC for wind energy development.
Presently, the PTC penalizes tribal ownership in a project, since tribal governments, like any government, have no federal tax liability against which to apply the credit. Tribal equity in a project reduces the use of the PTC, as it is allocated in proportion to ownership interest in the project. Since the purchasing electric utilities assume full utilization of the PTC, designed to lower the costs of electricity from renewable energy, a tribally owned project enters the market with a 2-cent penalty on the sale of every kilowatt-hour of power generated. Michael Connolly of the Campo Kumeyaay Nation, which oversaw the development of a 50-MW project near San Diego, recently noted that “over 50 percent of the profitability of a project can be directly tied to federal tax incentives.” However, since a tribe cannot monetize the PTC, a project with any significant tribal ownership cannot offer the lowest cost power, and is thus not competitive with a project that can fully utilize the PTC.
If provisions for tribal joint ventures to allow tribes to fully utilize the PTC for the benefit of the project by assigning them to a taxable partner presently before Congress (S. 2520 and H.R. 1954) were included in the bailout bill, many more tribes could be busy building out our nation’s renewable energy resources while rebuilding their impoverished reservation economies, adding to our energy independence and security with clean power, and reducing the emissions of climate-changing greenhouse gases.
Sen. Tim Johnson, D-S.D., introduced S. 2520, co-sponsored by Sens. Byron Dorgan, D-N.D., and Gordon Smith, R-Ore., almost a year ago, following Arizona Rep. Raul Grijalva’s initial House bill, H.R. 1954, authorizing a shared PTC within a tribal joint venture. Sen. John Thune, R-S.D., has publicly supported South Dakota’s wind development, and his leadership is critical in these bi-partisan provisions for Tribal equity. This shared PTC would be revenue-neutral to the federal treasury, as it would utilize no more tax credits than any fully non-Indian-owned project, but would allow for tribal equity.
Renewable energy incentive policies can be used not just to build turbines, but to build tribal business capacity and local ownership so tribes can participate as full partners in joint ventures and become real players in the clean energy industry.
The Intertribal Council on Utility Policy’s long-term vision is to help build this tribal capacity. It has completed the feasibility study and is near the development of 400 MW of wind energy on eight reservations spread across three states, with the ability to expand to 1,200 MW. The feasibility of the Intertribal COUP plan is supported by a recently completed, congressionally authorized study by the Western Area Power Administration on the combination of tribal wind and federal hydropower to supplement the shortfall of generation by six dams on the Missouri River. The Intertribal COUP plan also includes the development of community wind projects to serve on-reservation needs and the buildout of a straw bale housing industry for affordable, efficient and healthy reservation homes.
Rather than basing a renewable energy economy on a tax credit policy, which constrains investment participation to only a few well-heeled players, why not consider “new energy bonds,” which could be opened up to all Americans wanting to invest in a clean energy future. Such bonds could allow for local communities, such as tribes, to have a real stake in a clean energy economy beyond the mere role of energy consumers. This would also go a long way in solving many of the project siting issues, where those large turbines look better if you have a financial stake in them.
Tribal lands hold several hundreds of gigawatts of renewable energy potential in wind, solar, geothermal and biomass, and all it would take to encourage development is a little equity interest not penalized by federal policy. Gone are the days when tribal resources are free for the taking. In the 21st century, tribes deserve better, and America can do better.
Robert Gough is secretary of the Intertribal Council on Utility Policy, which promotes tribal wind and affordable, efficient housing development. The Rosebud/COUP plan received the inaugural World Clean Energy Award for sustainable tribal economic development.
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Friday, Oct 31 at 9:38 AM Punk wrote ...
I agree to disagree:>
11642034 Inappropriate? Alert Us!Thursday, Oct 23 at 8:04 AM Raymond Petrulsky wrote ...
My name is Raymond Patrick Petrulsky. My Grandfather, Anthony Petrulsky Sr., served in World War II. My Father, David Petrulsky Sr., served in Vietnam and I served in the USAF. I am running for U.S. Congress in Congressional District 7 which includes all of Yuma County, in addition to parts of La Paz, Maricopa, Pima, Pinal and Santa Cruz counties. "American Indians are caught in the same dilemma as libertarians. We're neither left nor right. We're just for freedom." -- Russell Means
11240574 Inappropriate? Alert Us!Wednesday, Oct 22 at 3:49 PM Rob wrote ...
I don't understand why tribes need the PTC. Why not enter into a revenue sharing agreement w/ the corporations who will build the wind farms and are capable of claiming the PTC. Nor do I understand why tribes can't build their own wind generators and claim the PTC through their own private corporations. This whole thing seems like a non-issue. Can someone help me understand?
11213164 Inappropriate? Alert Us!Wednesday, Oct 22 at 1:10 PM tonchee wrote ...
Solutions: No Pickens - just another exploiter who sees tribal resource ripe for the "pickens"; New Energy Bonds = level playing field; Direct IRS to define tribal energy production as "essential governmental function"; Define tribal energy produced on federal lands as federal energy; Give tribal energy federal buying preference (treaty partners/environmental justice/compensate for confiscated lands)
11201889 Inappropriate? Alert Us!Tuesday, Oct 21 at 4:39 PM Joe RedCloud wrote ...
This is a situation not all that strange in Indian Country. Many non-Indians want the Tribes to step up and do something. Well, we're willing to do just that. But, when it comes to treating Tribal energy enterprises in the very same manner, or some manner even close to that, the doors seem to always close before we can participate. We have the best wind resources in the country. Let's develop our renewable energy sources and solve several problems at the same time. Makes sense, yes?
9525889 Inappropriate? Alert Us!Tuesday, Oct 21 at 2:32 PM Wambli wrote ...
Robert Gought, it seem don't understand the "freeman or freewoman" we don't need help from any american imperial capitalist. When you take their blood money, the money back by stolen gold from First Nations' it many First Nations' weak and sick, not health or properous. Gives us back the gold you stolen and killed us for, keep your worthless money and colonized idea's that isn't going to matter in the next few years, it's Judgment time.
9498789 Inappropriate? Alert Us!Monday, Oct 20 at 2:32 PM celeste strikes with a gun wrote ...
Emission credits were a compromise in the "Kyoto Protocol." Canada signed it. Business entities invest in wind energy to get credits allowing more carbon emissions. I live on the Peigan Indian Reserve where one of the tallest wind turbines was built. Band members do not benefit yet Peigan Lands were disposed. It is the 21st century, and our oppression is at its worse. On July 28, 2008, Peigan Lands disposed again so AltaLink can build transmission lines for wind energy into the U.S.
9449994 Inappropriate? Alert Us!Monday, Oct 20 at 9:27 AM george wilson wrote ...
The larger issue, in my opinion, is the lack of management capability within the tribes that have the greatest opportunity to develop energy programs coupled with dysfunctional governments. This is a double whammy that must be dealt with before we can move forward.
9434339 Inappropriate? Alert Us!Saturday, Oct 18 at 8:57 AM Dave wrote ...
All doubts are gone about the need to make huge investment in clean, renewable energy. Gough's proposal costs nothing yet makes Tribes and their Reservations players, contributing the land resource and gaining equitable financial benefit in the development and operation of clean energy projects. I for one will join COUP's effort and encourage Minnesota's elected officials to allow Tribal equity in federal financial incentives to renewable energy project development.
9386064 Inappropriate? Alert Us!Friday, Oct 17 at 11:35 AM John wrote ...
Unfortunately, this is just another example of the distortions and negative unintended consequences of using tax policies to influence energy (and economic) development with corn-based ethanol the latest example. Tax incentives always lead to excesses and uneconomic outcomes. The "new energy bonds" approach may be a good alternative. Let's hear more about this and how it would foster Tribal ownership.
9357229 Inappropriate? Alert Us!Friday, Oct 17 at 9:52 AM Pam wrote ...
I've worked in the federal government for over 20 years and neither party seems to want to take Tribal Energy Programs serious! It's time to move on (as I'm sure ICUP) is doing, and not wait for something to happen that won't. T. Boone Pickens is waiting for both canidates to sign up with him and his plans for Energy development, but neither have. Perhaps ICUP could do what neither canidate is and sign on with Mr. Boone.
9352184 Inappropriate? Alert Us!Add a comment
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