The American Wind Energy Association yesterday reported that the U.S. wind industry is on track to install a record 7,500 megawatts of wind power this year, enough electricity to power about 2.2 million homes, but the industry group warned that 2009 will not be as strong.

Some highlights from AWEA's third quarter report:

• Texas added 693 MW in the third quarter -- the most of any state -- to boost its total capacity to 6 gigawatts, which pushes the state to the "global leaders" status behind only Germany, India and Spain.
• West Virginia showed the fastest wind power capacity growth in the third quarter, more than tripling existing capacity with a 164-MW project and another 100-MW facility expected to come on line by the end of the year.
• Utah added its first multi-turbine wind project, and in the Dakotas, wind turbine maker Acciona Energy brought its first U.S. turbines project on line straddling the North Dakota/South Dakota border.

Next year, however, won't be as productive, AWEA said. Because of the late one-year extension of the federal wind production tax credit in the bailout bill and the evolving financial crisis, new construction starts of wind farms will likely slow in 2009.

AWEA next year will push the new administration and Congress for a long-term extension of the wind production tax credit, a federal renewable energy standard, national climate-change legislation, and spending for new transmission capacity.

You can read the complete report at AWEA's Web site.

A roundup of green headlines that caught our eye this week:

• Tesla To Delay New Car: The credit crisis has forced electric car developer Tesla Motors to delay its launch of a five-passenger battery-powered sedan and lay off a "modest" number of its 250 employees to save cash. Tesla, which sells the spiffy Roadster, faces stiff competition for electric cars with GM, Nissan, China's BYD Co. and possibly Chrysler, Reuters says.
• Pedaling For Progress In The Bailout: EnviroWonk reports the $700 billion bailout bill has a provision to allow bicycle commuters to get a $20 monthly credit for maintenance, repairs and purchasing, thanks to Oregon Congressman Earl Blumenauer, who bikes daily to his Washington office.
• What's Fresh Is Not The Only Factor: Environmentally conscious sushi lovers now can get a lot of information about sustainability of the seafood from three new pocket guides, says the New York Times' Dining & Wine page. The guides -- from the Monterey Bay Aquarium, Environmental Defense Fund and the Blue Ocean Institute -- agree on which fish are sustainable but present the information in different ways.
• Another Reason For Bats To Like Halloween: The Reuters Environment blog notes that bats may get some help from the Bats and Wind Energy Cooperative, an unlikely group of conservationists, wind power companies and the federal government. They want to know if stopping spinning turbines during low wind conditions will reduce bat deaths at wind farms.

The U.S. is now the world leader in wind electricity generation with installed capacity of more than 20,000 megawatts, enough power to serve 5.3 million American homes, the American Wind Energy Association (AWEA) said today. The new capacity doubles the 10,000-MW mark reached in 2006.

U.S. capacity of 20,152 MW trails Germany's installed capacity of about 23,000 MW, but AWEA says the U.S. produces more electricity because of stronger winds. AWEA expects more than 7,500 MW of new wind capacity to be added in 2008, expanding the nation's wind power fleet by 45 percent and boosting total capacity to some 24,300 MW.

"Wind energy installations are well ahead of the curve for contributing 20 percent of the U.S. electric power supply by 2030," said AWEA Executive Director Randall Swisher. But the likely expiration of the federal renewable production tax credit "threatens this spectacular progress," he said. The PTC is currently set to expire at the end of this year.

Swisher and other wind industry leaders hailed the 20,000 MW milestone in Minneapolis,  where the Republican National Convention is underway. Xcel Energy, which is  headquartered in Minneapolis, is the host utility for both the Republican convention and the Democratic National Convention held last week in Denver. Xcel is providing wind power from its system to power both events.

AWEA noted that although 20,000 MW is an important milestone, wind power provides just more than 1.5 percent of the nation's electricity, far below the potential identified by energy experts. The 20,000-plus MW can generate as much power as 28.7 million tons of coal or 90 million barrel of oil and displace 34 million tons of carbon dioxide annually, equivalent to taking 5.8 million vehicles off the road.

Pacific Gas and Electric Company is committed to developing more supplies of concentrated solar power, citing the technology's availability during high-demand hours, relative cost effectiveness, and capacity to meet power demands, the California utility told federal lawmakers today. 

Fong Wan, PG&E's Vice President of Energy Procurement, told the U.S. Senate Committee on Energy and Natural Resources that concentrated solar power (CSP) could, in theory, produce seven times the energy needed to serve California. Wan spoke at a committee field hearing on solar thermal power in Albuquerque, New Mexico. PG&E has four solar thermal supply contracts for more than 1,700 megawatts of power, enough capacity to meet almost 10 percent of the utility's peak summer needs.

A study prepared by the National Renewable Energy Laboratory suggests that costs for CSP technologies could decline significantly, from approximately 16 cents per kilowatt-hour on average today, to approximately 8 cents per kilowatt-hour in 2015, Wan said in prepared testimony. The reduction in seven years is premised on an assumption that at least 4,000 megawatts of CSP will be built by then - not just contracted for - to achieve learning curve benefits.

"Photovoltaic technologies are also making great progress for utility-scale applications and we hope to be in a position to announce contracts for utility-scale PV applications soon," Wan said. "But - given these advantages - it's reasonable to ask why the country is not seeing greater progress on renewables."

Wan identified ways for lawmakers to help advance thermal power technologies and the burgeoning renewable energy industry. Despite falling costs, CSP can't compete on price with electricity fueled by natural gas. "We are confident that will change as economies of scale are achieved. But in the interim, federal production and investment tax credits are absolutely essential for continued progress," he said. Wan urged the government to extend the credits and also remove the ITC exclusion for regulated utilities.

Siting and developing new transmission lines to carry power from remote locations to customers will also enable renewables to expand, Wan said. He noted that Senate Majority Leader Harry Reid told the committee last month that the West alone will need 7,500 miles of new transmission lines over the next decade to expand renewable energy production. Wan also said integrating intermittent renewable resources into an overall supply is needed and one key is developing storage technology. He applauded Congress for including an energy storage R&D program in legislation last year.

"In this time of high energy prices, a weak economy, and heightened focus on security, the federal government is uniquely positioned to provide clarity of vision and foster stable growth in this critical sector of the energy market," Wan said.

You can read Fong Wan's testimony at:

http://energy.senate.gov/public/index.cfm?Fuseaction=Hearings.Hearing&Hearing_ID=a7228ca1-a50a-c91d-59d8-a682d15052ad

A report released yesterday by the Energy Information Administration paints an unfortunate image of the state of U.S. greenhouse gas emissions - they are going up faster than the rate of electricity generation. 

According to the report, emissions from the electricity sector rose by three percent as electricity generation rose by 2.5 percent. This means that U.S. electricity generation was actually dirtier in 2007 than in the previous year. 

The EIA states that the relative increase in emissions reflects a decrease in hydroelectric generation due in large part to droughts, forcing utilities to use natural gas, a cleaner form of fossil generation than coal, but still one with a carbon footprint.  Natural gas produces about 40 percent less CO2 than coal. 

A more frightening finding in the report is that the vast majority of this increase did not come from industry, but from households.  According to Environmental Capital, U.S. industry continued to cut emissions, which it has done since 1990.  Households, on the other hand, increased emissions by 4.4%.  The EIA points out that this reflects the fact that more Americans are enjoying a higher standard of living, complete with flat screen TV's and central air conditioning systems.

This result provides another stark example of the need for public policy that aligns the utilities' economic incentives with environmental stewardship.  Below are a few policy steps that would create these proper incentives:

1. Extend the renewable energy tax credits:  The House again passed a bill to extend these credits and now it awaits a Senate vote.  Passing the extensions would send a clear signal to entrepreneurs to start building these renewables projects and to utilities that they could count on this clean future energy supply.

2.  Decoupling:  By decoupling a utilities' revenues from the amount of energy it sells, it creates a disincentive for utilities to sell more energy.  In other words, create a financial incentive for utilities to earn on energy savings, not energy sales.  This way utilities, who interact daily with every American and all businesses, can serve as a conservation ambassador driving good public policy.

It works.  In California we've had decoupling laws for thirty years.  During this time period, the state's per capita energy use has remained flat, while the rest of the country's has increased by 50 percent.  For PG&E's customers, it has meant savings of $22 billion and the avoidance of 135 million tons of CO2. 

Meanwhile, California - the world's sixth-largest economy - has seen economic output per unit of energy improve by 40 percent, versus only 8 percent for the remainder of the country.  In other words, we can have economic growth and help the environment.

3.  Pass federal greenhouse gas emissions reduction legislation:  A harmonized federal policy will create clear direction for utilities, industry, and citizens.  A patchwork of laws will only make it harder for these players to take action in a meaningful way. 

A recent report by the NRDC and Ceres, sponsored by PG&E and PSEG, benchmarked the greenhouse gas emissions stemming from electricity generation and looked at the abatement impact of competing emissions reduction legislation.  The report provides a good starting point to understanding the different types of approaches to legislating greenhouse gas emissions and to the complex nature of regulating utilities with varying levels of CO2 output.

Pasadena - On the road today at the Fortune Green Brainstorm event.

I feel very fortunate to be attending this event as a wallflower - it's an unprecedented gathering of leaders in the green business space. 

One interesting speaker was Shai Agassi of Project Better Place.  Shai and his team are working hard to change the entire relationship between the transportation and utility sectors by providing the infrastructure to support the electrification of the auto industry.  It's this type of ingenuity that will help to solve our addiction to oil and improve the environment. 

The first day of the conference featured a full course of interesting panels, ranging from nuclear energy to innovative green start-ups to public policy.  One interesting panel featured California Attorney General Jerry Brown.  AG Brown highlighted a number of lawsuits that this office is pursuing to help California push environmental policy in the face of federal opposition. 

PG&E's Peter Darbee participated in numerous panels.  Of particular note was his discussion on a solar energy panel, "Is Solar the Answer?"  Moderated by Fortune's Todd Woody, the panel featured Ausra CEO Bob Fishman, Applied Materials CEO Michael Splinter, and Bill Gross of eSolar - who by the way just scored $130 million in funding from Google among others.

The final outcome:  solar might not be THE answer, but it will play a huge role in meeting our future energy needs and addressing climate change.  All participants agreed that with rising natural gas costs, technological improvements, and a clear price for carbon, solar is becoming increasingly more competitive. 

What's needed now is a clear market signal from federal lawmakers by way of federal tax credit extensions and greater R&D resources for renewable energy.

With so much going on, I could go on about the event. But I'd miss all of the evening's main attractions.  Stay tuned for more Green Brainstorm tomorrow...

A quick update on the renewable energy tax posting from earlier this week. 

United States Senators John Ensign (R-NV), and Maria Cantwell (D-WA), led a bipartisan group of senators on Friday to announce a bill designed to encourage the development of renewable energy and expand energy efficiency in buildings, homes and appliances.

"Satisfying our energy needs and reducing our reliance on foreign sources is a challenge that we must meet, but that can only happen with the right incentives in place," commented Ensign, announcing the introduction of the bill into the Senate. He continued: "Our bipartisan bill will help put us on a path toward energy independence with American ingenuity leading the way."

The Clean Energy Tax Stimulus Act of 2008 extends incentives to encourage renewable energy.

The legislation extends the placed-in-service deadline through 2009 for the Production Tax Credit to encourage electricity production using renewable energy resources such as geothermal, wind, biomass, and hydropower facilities. The bills authors argue that with this change, these renewable energy plants will have valuable tax stability for 10 years.

In addition, the bill proposes to extend the solar and fuel cell Investment Tax Credit for eight years to encourage development of these technologies.

We're hopeful that this will finally be the bill to extend the renewable energy tax credits.  It appears to have bipartisan support.  The measure is also co-sponsored by 28 other senators including Senator Pete Domenici (R-NM), Ranking Member of the Senate Energy & Natural Resources Committee. The bill is also supported by Democrats like Boxer, Feinstein, Biden, and Stabenow; and Republicans like Hutchinson, Dole, Hatch, Stevens, Coleman and Sununu.

Californians will back a variety of fees for drivers of gas-guzzling vehicles and rebates for less-polluting cars, according to a poll issued by the Mineta Transportation Institute at San Jose State University.

"The public is very supportive of these green taxes and fees," research associate Asha Weinstein Agrawal, told the San Francisco Chronicle today. "This shows that it is realistic to improve the way we collect transportation taxes in this state."

California's registration and licensing fees and gasoline taxes do not reflect emissions levels from cars and trucks. But the phone poll of 1,500 Californians found support for green taxes and fees - charges that rise and fall with the amount of pollution a vehicle emits, the paper said. Sixty-three percent backed doubling the registration fee from the average $31 and charging higher rates for polluting vehicles and lower rates for clean ones.

Sixty-five percent supported a tax and rebate system to reward drivers of clean cars and tax high-emission cars, and 50 percent backed a mileage fee that set a higher rate per vehicle for gas hogs. There are two bills in the state Legislature that would allow regional transportation agencies to impose "greenhouse gas mitigation fees."

The survey results reflect growing public support for new measures to help develop a cleaner environment.Here at PG&E, we are looking at possibilities involving the intersection of the energy and transportation sectors. We've partnered with Tesla Motors to research remote-control charging of electric vehicles connected to the power grid, and demonstrated innovative technologies to make electric vehicles suppliers of power to homes and businesses.

In addition to our plug-in electric hybrid vehicles and dedicated electric vehicles, we own and operate a clean fleet of fuel cell vehicles and more than 1,300 natural gas vehicles - the largest of its kind in the nation. Over the last 15 years, the fleet has displaced more than 3.4 million gallons of gasoline and diesel and helped to avoid more than 6,000 tons of carbon dioxide from entering the atmosphere. 

One of the most frequent questions I get from reporters is whether or not the extension of the energy tax credits by the US federal government will negatively impact several of the renewable energy power purchasing agreements we've announced over the past six months? 

This question is sure to heat up soon with speculation that two U.S. senators, Maria Cantwell, D-Wash., and John Ensign, R-Nev., are preparing to introduce a new renewable energy tax credit proposal within a week. 

The Cantwell Ensign proposal would represent the fourth attempt at securing tax credits in the past few months. Two bills failed Senate approval in December and most recently, the Renewable Energy and Energy Conservation Act of 2008, which included a section securing renewable energy tax credits, was narrowly defeated in February. 

Much is at stake.  According to a report by the Prometheus Institute and Greentech Media, $30 billion worth of solar thermal plants have been announced in the past six months.  These include more than 1600 MW from agreements signed by PG&E. 

Back to the question on the impact of these credits on all of these projects.  The basic answer is yes, there will be a significant impact.  But it's unclear as to how much.  Given the climate change, national security, and economic benefits derived from greater adoption of renewable energy (see Editorial below), it's likely that these projects will still be built. But it may take longer, delaying economies of scale and keeping costs high relative to conventional dirtier sources of energy.  We believe that the time to act is now. 

Peter Darbee, PG&E Corp's Chairman, President, and CEO makes a very compelling case for the need to extend the energy tax credits in today's Energy Daily.  I've included below the text in its entirety.  I recognize that this makes today's blog entry extremely long, but given the importance of this subject and the need for urgent action, I am hoping that his words will motivate.  

Senate Must Renew Renewable Energy Tax Credits

As the head of one of America's largest electric and gas utilities, I like other utility executives have to consider the energy future that lies ahead for our company, our customers and the country. The more I talk with experts about the global warming crisis, the more I am convinced the problem is real and needs to be addressed immediately.

Across the country, we are seeing hotter average temperatures, more extreme weather and frequent droughts. In my home state of California, the predicted loss of snow pack will mean less hydropower as we face soaring demand for electricity during the hot summer months.

But if controlling greenhouse gas emissions is essential, the question on everyone's mind is how we can accomplish that without hurting our economy.

Congress has an immediate opportunity to take a step in that direction by supporting efforts to develop competitive new sources of renewable power that will not only reduce our carbon footprint, but also create new green jobs to boost our economy.

By providing tax incentives for renewable power as it did for new nuclear power development, Congress can help make the case for stripping carbon out of our energy supplies as strongly in our economic self-interest as it is a global environmental imperative.

In February, the House of Representatives passed a timely measure to prevent the expiration of production and investment tax credits for renewable power at the end of this year. In addition to extending the credits for several years, the House approach supports important energy efficiency programs, encourages investment in new technology such as "smart meters," the cornerstone of an advanced electric grid, and provides incentives for plug-in electric vehicles that could dramatically reduce our dependence on foreign oil.

Over the next couple of weeks, the U.S. Senate will have the opportunity to vote on similar legislation to extend or kill vital tax credits that nurture the growing wind, geothermal and solar power industries.

But partisan disputes in the Senate over how to fund these credits, if unresolved, could deal a devastating blow to the renewables industry.

A recent study by Navigant Consulting found that failing to renew the credits could cost more than 116,000 U.S. jobs and nearly $19 billion in annual U.S. investment.

These losses would be felt across the country, in states such as California, Colorado, Illinois, Iowa, Minnesota, North Dakota, Oklahoma, Oregon, Pennsylvania, Texas and Washington.

Those who wonder why Texas should care about supporting alternatives to oil and gas don't realize that it now harbors a quarter of all wind power capacity in the United States, and has tremendous potential for further growth.

Although the Navigant study was commissioned by the wind and solar industries, our company's experience as a major buyer of renewable energy attests to its general conclusions. Already we see a marked slowdown in new renewables projects slated for 2009 and beyond, as developers wait to see whether Congress will act.

Navigant's conclusions are also supported by the nation's experience with on-again, off-again federal support for renewables.

The expiration of production tax credits in 2004, for example, caused a 77 percent drop in installed wind capacity that year relative to 2003.

Last year, with credits in place, the wind industry enjoyed its best year ever, growing 45 percent. Developers installed more than 5,000 megawatts of new generating capacity, more than twice the previous record and enough to power 1.5 million homes.

The incentives have also helped drive tremendous growth of the solar industry, albeit from a much smaller base. Our utility alone contracted for more than 700 megawatts (MW) of power from solar developers last year. As scale grows and technology advances, the cost of solar photovoltaics is plummeting and the cost of solar thermal power is approaching parity with gas-fired generation.

This tremendous spurt of innovation and development could be squelched just when the national economy, buffeted by the housing collapse and record oil prices, needs all the support it can get.

Promoting renewable electric power, combined with incentives for gas-sipping plug-in hybrid electric vehicles, could drastically reduce both the carbon footprint of American transportation and our need for oil imports.

Senate support of tax incentives for new renewable development is an affordable first step toward reducing our nation's carbon emissions. And with the fate of several promising industries and tens of thousands of jobs at stake, it is a measure we can't afford not to take.

General Electric CEO Jeffrey Immelt didn't mince words at the Wall Street Journal green economics conference on Wednesday, saying the U.S. could lose ground to other countries if the federal government and big business don't get behind clean renewable energy.

A Reuters story says Immelt took on critics of federal tax credits for renewable energy such as solar panels and wind turbines, saying GE would move more business overseas if it's not wanted in the U.S. GE's "green" products include solar lighting, a hybrid locomotive, wind turbines, and water purification systems.

Immelt also said GE is a member of the U.S. Climate Action Partnership because it wants to have a role in shaping environmental legislation rather than have it "pushed down my throat," the story said.

In February, a story in BusinessWeek, however, noted that GE and two other Climate Action Partnership (USCAP) members -- Caterpillar and Alcoa -- also were on the board of the Center for Energy & Economic Development, an organization that opposes regulations on greenhouse gas emissions.

Of note, PG&E Corporation is a founding member of the USCAP.  In addition to corporations, the group is made up of some of the world's most respected environmental groups, including the NRDC, Environmental Defense, National Wildlife Federation, and the Pew Center on Global Climate Change.

PG&E and all of the companies mentioned in the Businessweek story all agreed to a set of principles agreed upon by all of the USCAP members.  The principles are meant to serve as a call to action for federal policy makers to address climate change.  Within this framework, USCAP has been extremely effective as evinced by the several bills recently introduced to help reduce greenhouse gas emissions. 

In terms of policy implementation, yes, there are many competing agendas reflected in the multi-sector composition of USCAP's members as well as the many other business that are not a part of USCAP. 

What's clear, though, is that by participating in USCAP, these companies and environmental organizations are committed to regulatory action that will help reduce the potentially disastrous effects of climate change.  This formation of this group and its commitment marks a significant milestone in the formulation of US climate change policy.