US lawmakers may drop Alaska pipeline subsidies
Date: 12-Sep-02
Country: USA
Canada's natural resources minister told reporters this week that key U.S. lawmakers hammering out a broad energy bill told him they were worried the subsidies would unfairly favor natural gas production in Alaska over other areas in the United States.
"People may decide to invest somewhere else, because the subsidy gives one gas (producing area) advantage over the other. So, I think the real concern is distortion of the market," said Herb Dhaliwal, Canada's Natural Resources Minister.
He also said lawmakers representing natural gas-producing states were worried energy firms in their states would ask for similar subsidies. "There will be huge pressure to say 'Well hold it, you're subsidizing that (Alaskan) gas field, but what about us'" the minister said.
Dhaliwal was on Capitol Hill to lobby against a specified route for the pipeline and $1 billion a year in subsidies and federal loan guarantees for the project that the Senate's energy bill would provide.
Related energy legislation passed by the House of Representatives did not offer the subsidies. Lawmakers from both chambers are now trying to work out their differences and come up with a compromise bill.
Dhaliwal met with Republican Rep. Billy Tauzin, who chairs the conference committee working on a final energy bill, and with Democratic Sen. Jeff Bingaman, also a member of the panel, to relay Canada's concerns over the pipeline subsidies.
The Bush administration has told lawmakers that it also opposed the subsidies and a specified route for the pipeline.
The subsidies would give energy firms a tax credit when the price of natural gas fell below $3.25 per thousand cubic feet, ensuring the project would be profitable for the companies.
The White House has said the subsidies would be too costly for taxpayers and that energy companies should decide the best route for building the pipeline.
Dhaliwal said U.S. lawmakers appeared to favor keeping a mandated route for the pipeline in a final energy bill, but subsidies were still up in the air.
Dhaliwal pointed out that two-thirds of the pipeline's route would go through Canada, hinting that his country could withhold the necessary permits if the subsidies were in a final bill.
However, he said it was too early for Canada to make such a threat because details of the final bill were still unknown.
Separately, Dhaliwal said he told lawmakers of the Canadian government's desire that the energy bill's provisions to increase the amount of U.S. electricity produced from renewable energy sources, like wind and solar, not harm Canadian firms that export electricity to the United States.
U.S. lawmakers were scheduled to meet this Thursday to continue their work on a final energy bill. Conferees are racing against the clock to finish the job before Congress adjourns in early October.
In addition to the Alaskan pipeline, lawmakers must still tackle the controversial issue of whether to allow drilling in Alaska's Arctic National Wildlife Refuge, increase the use of ethanol-blended gasoline and raise the fuel economy of cars.
