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Daschle: Alternative fuels represent opportunities for rural economies
By Dan McCue
Staff Writer
Biofuel and biotechnology have the potential to transform the rural economies of the Carolinas as nothing has in a generation, but if that’s to happen, the federal government has to do all it can to create a stable investment environment for the industry, said former Senate Majority Leader Tom Daschle.
Daschle, who now serves as a special policy advisor on energy matters for Alston & Bird LLC, an Atlanta-based law firm, was a keynote speaker at the Fourth Annual North Carolina Sustainable Energy Conference in Raleigh, N.C., on March 7 and 8.
He’s also slated to speak at the upcoming Biotech 2007 conference being held in Durham, N.C., on May 14-15. That conference is being sponsored by the N.C. Council for Entrepreneurial Development, the North Carolina Biotechnology Center and the North Carolina Biosciences Organization.
While the venues for his comments on energy and innovation policy are going to be in the Tar Heel State, the perspectives he offers at both events certainly will be just as relevant to South Carolina’s efforts to transform itself into an innovation and alternative fuel economy.
“When you step back and consider where we are today, I think biofuels and alternative energy are just beginning to become a force in our economy and that it’s inevitable that together they become as big as the technological revolution has been,” Daschle told the Charleston Regional Business Journal. “I’m excited about that.
“At the same time, I think there are four specific things the federal government can do to help foster the industries development,” he said.
Daschle said that first, the federal government needs to reauthorize the Production Tax Credit for Renewable Energy and extend it beyond the short-term increments Congress has authorized in the past.
Originally enacted as part of the Energy Policy Act of 1992, the tax credit for the production of wind power and biofuels has been allowed to sunset more than half a dozen times in the intervening years, only to be renewed again later. It is next set to sunset on Dec. 31, 2008.
Daschle said U.S. Rep. Earl Pomeroy, D-N.D., a member of the powerful House Ways and Means Committee, has introduced legislation that would extend the tax credit for an additional five years.
“Given the attention now being focused on the development of alternative energy in this country, I predict a long-term extension of the tax credit will happen, if not this year then next,” he said.
“It’s a perfect example of what the federal government can do to incent investment and have a more catalytic role in alternative energy development,” Daschle added.
The second step Daschle would like to see federal lawmakers take is to create an investment framework that would reduce investors’ apprehension about betting on an emerging industry and increase the flow of investment dollars to entrepreneurs.
“While you can’t guarantee a certainty of return, I think you can create a framework in which investors at least know the lay of the land,” he said.
Third, Daschle said, is to encourage partnerships between the federal government and the private sector.
“The Research Triangle in North Carolina has been a perfect example of that,” he said. “Those kinds of efforts should be expanded and implemented elsewhere.”
Fourth, Daschle said, lawmakers and others need to realize that the development of alternative fuels and markets for them has to be an international, as well as domestic, effort.
“Toward that end, I think we have to smooth out some of the bumps that exist between ourselves and our potential international partners,” he explained. “Part of that is addressing the issue of climate change and part of that involves international trade policy.”
U.S. position a ‘huge bump’
Daschle described the United States’ current position on the Kyoto Protocol as a “huge bump” in the road toward alternative fuel development.
The Kyoto Protocol is an amendment to the U.N. Framework Convention on Climate Change. Countries that ratified the protocol committed to reducing their emissions of carbon dioxide and five other greenhouse gases, or engage in emissions trading if they maintain or increase emissions of these gases.
Although the United States is a party to the framework, it is not a party to the Kyoto Protocol, largely, Bush Administration officials contend, because of its potential negative economic impact.
Another round of talks between signatory nations to build a post-Kyoto plan for climate change is scheduled for 2012.
“We have to be better prepared to participate in this than we have in the past; we know so much more than we have in the past,” Daschle said. “Kyoto 2012 is going to have a big influence on the magnitude of international investment in climate change initiatives and the development of alternative fuels.”
Regional alliances for growth
During the recent Southeast Regional Offshore Wind Power Symposium in Charleston, a number of participants floated the idea of creating a regional green power authority, inclusive of North Carolina, South Carolina and Georgia, to share the investment risks along with the revenue and other benefits of biofuel and alternative power generation.
Daschle said such regional efforts have “tremendous potential.”
“Regional alliances, I think, offer a better utilization of ability and are more efficient than a go-it-alone approach,” he said. “They’re a way to ensure we don’t have stakeholders paying for what effectively could be a replication of efforts in neighboring states.”
Daschle said wind power offers some particularly exciting opportunities for governments, utilities and energy entrepreneurs.
“We’ve seen a threefold increase in that market in just the last five years, and from a systemic point of view, wind may hold the most promise of any of the alternative energy sources,” he said.
“Of course, that’s not to slight other forms of alternative energy, because when we talk about individual energy sources, we’re also talking about different markets,” Daschle said. “In the future wind will provide a more systemic form of energy, while solar—the use of which has increased six-fold in the past five years—will be geared more to the individual market of homes and businesses, and biofuel, of course, is all about the transportation market.”
In regard to that specific market, Daschle predicted that we’re going to see a complete revolution in the way ethanol is produced in this country over the next few years with a move away from corn’s current dominance as a raw material and toward more of a reliance on fast-growing native grasses, urban wastes and the like.
“That’s going to result in dramatic changes in the technology and how it’s marketed,” he said.
Daschle believes the drive toward alternative fuels will profoundly change the kinds of cars and trucks that enter the U.S. market. “I wouldn’t be surprised if, going forward, you saw a significant increase in hybrid vehicle production, vehicles that run on some combination of electrical power and biofuels.”
Asked about the potential of hydrogen fuel cells, an alternative fuel being heavily championed by South Carolina lawmakers, Daschle said the technology has potential, “but its widespread implementation is still quite a way off. I think right now, biofuel has a lot more potential for a more immediate impact on the market.”
CaroLinks connection
Among his other professional pursuits, Daschle is a member of the board of advisors of CaroLinks, the Charleston-based intermodal startup company that is currently planning to build a major cargo distribution center at the intersection of Interstate 95 and Interstate 26 in South Carolina.
Daschle was asked whether biofuel, either as a product for sale or for production, is part of the CaroLinks equation.
“That’s a very strong possibility,” he said. “There’s been a great deal of negotiation about that topic, about biodiesel being a component of that facility, but to date I don’t think anything has been signed.
“But we’re evaluating it. We’re definitely evaluating it,” Daschle said.
Alternative fuels to propel economy
One only needs to look at his home state of South Dakota, which currently leads the nation in ethanol production, to see alternative fuel’s transformative potential on rural economies, Daschle said.
“There’s no doubt that biofuels and alternative fuels represent a dramatic opportunity for rural economies,” he said. “Rural communities are where the wind is, where we can create the feed stocks and where we can build the facilities where biofuels are made.
“These new fields point to the direction the U.S. economy is moving in,” Daschle continued. “In the future our economy is not going to be about traditional manufacturing, and it’s not necessarily going to be about high-tech manufacturing; I think it’s going to be about innovation, particular in regard to alternative energy production.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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