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<title>July 2004: Cicada Glossary</title>
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<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
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<img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" width="375" height="75"><p><b><u><br>
</u></b><u><b>July 2004</b></u></p>
<p align="center"><font size="6"><b>Cicada Glossary</b></font></p>
<p><strong>by Roger Feldman -- Bingham, Dana L.L.P.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine
Magazine: 2</em>004/07/30)<br>
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<p>This year Washington has been the subject of two cycles besides those
presided over by Mr. Greenspan. One is cicadas: the “17 year locusts” that
come breed, make noise and recede into the woodwork every 17 years.<br>
<br>
The other is the reawakening din of concern with the U.S. vulnerability on
the energy supply, the energy delivery and the energy ecology fronts. It is
not to be confused with the perpetually on-going dull roar of advocates of
programs for traditional hydrocarbons development. Even the Wall Street
Journal has noted the renewed interest in something called “alternative
energy.” This resurgence corresponds with the sunset in America of the
merchant power model and the SUV. Careful attention to the din reveals it to
have three distinct strains of sound which are not necessarily in harmony,
but which tend to be banded together as much as by what they are not
(hydrocarbon fuel, central station solutions) than by what they respectively
are:<br>
<br>
• “renewable energy resources”<br>
• “distributed energy resources”<br>
• “sustainable energy resources”<br>
<br>
Call them, if you will, the songs of the Amory Lovins’ “soft road”. But note
that they are not identical triplets.<br>
<br>
It is more than a semantic or academic exercise these days to separate the
policies and approaches connoted by these terms, as they represent, in some
admixture, an important direction that future energy policy may trend -
depending, of course on the election. Each lends itself more or less to
State and local as well as to Federal resolution. From a commercial
standpoint, each represents a different type of opportunity, which different
energy industry players are more or less better able to exploit - and,
consequently are more likely to partially support (without reference to
party). Here, then, is a quick crib sheet for reading some of the upcoming
energy news. Whether or not the tax bill makes its way through Congress,
this crib sheet may be expected to be of continuing relevance, since that
law does not comprise an energy policy.<br>
<br>
“Renewables” broadly speaking, are forms of emerging electric generating
technology or socially useful energy applications of byproducts of
environmental clean up activities. Some like, wind and geothermal power can
and are competitive when bolstered with available incentives. Others are
more likely to derive more of their economics from disposal fees. Tax credit
transfers are permitted by certain tax exempt entities — but not as a
generalized mechanism. States have developed a variety of Renewable Energy
Credit transfer programs, but until Renewable Portfolio Standards economic
requirements are knit among all states, the larger efficacy of these
programs is problematic. There are of course agricultural based renewable
fuels which enjoy a variety of Federal subsidies, but the general consensus
is that on a pure energy balance basis those products offer limited cost
justification. The sustained jump in natural gas prices has been a major
benefit to renewables proponents, but here the drumbeat for more cost
competitive coal (and related syngas possibilities) moves the discussion
away from “renewable” to “alternative”, but not necessarily to renewable
resources, which are neither “sustainable” nor “distributed”.<br>
<br>
The concept of “sustainable development” is one that has a less definitive
approach to energy issues, but is of a potentially important general
political impact. The 1992 Earth Summit defined it as “socially responsible
economic development” that “protects” the resource base and the environment
for future generations. As an American Bar Association committee recently
put it - with a slightly harder edge: “Sustainable development brings a
“Holistic” approach that takes a comprehensive and longterm view of benefit
and costs”. The lingo is not as energy-focused as the other approaches, but
it includes some concepts which powerfully overlay the consideration of,
notably, hydrocarbon alternatives. By adding greater emphasis to inclusion
of considerations of emissions tracking, climate change/greenhouse gases;
and sustainable economics - as well as attention to impacts on rates and
other economic resources, analysis from this prospective both heightens
awareness of flaws in some hydrocarbon alternatives (coal) and equally
importantly the economic value (currently mostly outside the U.S.) of carbon
displacement credits for certain renewables. It is the intellectual
cornerstone of the “carbon displacement credits” approach which has the
potential to bolster certain renewable and certain environmental approaches.</p>
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<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
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