Thank you for the opportunity to appear this morning in support of H.B 121. As the draft bill points out, Pennsylvania faces an increasing need for the development of renewable energy and energy-efficient technologies, and a balanced energy portfolio that enhances our economy and the environment.

Our current use of energy is expensive. Vast public subsidies are imbedded in our reliance on fossil fuels. From tax breaks for producers to military deployments aimed at securing foreign energy supplies, the cost of energy resources grows inexorably. But there is also a human cost.

The generation of electricity in Pennsylvania and elsewhere now causes substantial pollution that harms public health, the environment, and the economy. For example, Pennsylvania power plants emit more than 7,900 pounds of toxic mercury pollution into our air each year- the third highest in the nation. Mercury from power plants contaminates our waterways and the fish that live there. People who eat contaminated fish store it in their bodies. Children, babies and developing fetuses are highly sensitive to mercury contamination, which can be passed to children from mothers' bodies, causing birth defects and serious neurological and developmental damage, including subtle losses of sensory or cognitive abilities, and delays in developmental milestones such as walking and talking.

Three years ago, the Centers for Disease Control and Prevention performed household interviews, physical examinations and blood mercury assessments on 705 children and 1709 women. They found that one in 12 of the women of childbearing age who were tested were above the EPA's safe reference dose for mercury, placing them at risk of adverse health effects. Nationally, 4.7 million women of child-bearing age have elevated levels of mercury. Approximately 322,000 newborns are at risk of neurological effects from being exposed in utero to mercury. In Pennsylvania waterways, mercury contamination of fish is so pervasive that the Fish and Boat Commission has issued a fish consumption advisory which recommends limiting eating fish caught anywhere in the state.

The state's power plants are also the second highest emitters of sulfur dioxide in the nation. Sulfur dioxide is the leading cause of acid rain, and more than 6,000 miles of Pennsylvania streams have become too acidic to support acid-sensitive aquatic life such as trout. Acid rain is also degrading the health of our forests by killing trees and hindering forest regeneration. The $4 billion hunting and fishing industry in Pennsylvania is damaged by mercury pollution and habitat destruction that results from acid rain.

More than 1 million Pennsylvanians live with chronic lung diseases like asthma. Pennsylvania power plants are the sixth highest emitters of nitrogen oxides which cause smog pollution. High smog days trigger asthma attacks and make breathing difficult for those who live with lung disease. The polluted air also leads to polluted water ? nitrogen oxide pollution is contributing to the degradation of Pennsylvania waterways and the Chesapeake Bay .

Pennsylvania emits 1 percent of the entire planet’s global warming gases. Power plants account for a substantial amount of that by emitting more than 110 million tons of carbon dioxide - the fifth highest in the nation. A warmer Pennsylvania will threaten human health as extremely hot summer days lead to increased deaths from heat stroke, and formerly tropical insect-borne diseases such as West Nile Virus spread. Warming degrades ecosystems, and threatens to lead to more frequent and extreme storms resulting in property damage and disruptions to the economy.

This compromised environmental quality hurts our economic competitiveness and reduces our quality of life. Pennsylvania suffers from some of the nation’s worst air pollution, and perhaps not so coincidentally ranks near the bottom among all fifty states in job creation and in population growth. Our biggest export is not high-quality manufactured products or cutting edge technology, but talented young people. It is painfully evident that polluted communities are not competitive, and that a growing economy depends on improving and maintaining our environment.

The future of Pennsylvania ’s economy, public health, and environment all rest on the foundation of energy policy. As a result of the restructuring of the electric utility industry, enacted in the mid 1990s by the General Assembly, opportunities now exist for Pennsylvania to greatly benefit from embracing new technologies which will provide cleaner and cheaper electricity and job opportunities. H.B. 121 can serve as an important component of such a policy. By providing modest but meaningful incentives for deploying renewable energy technologies, it can help to diversify Pennsylvania ’s energy portfolio and address the public health and environmental costs that are hampering the Commonwealth’s competitiveness.

Coal and nuclear plants now supply about 85 percent of the electricity in this region, and almost all of the new generation is being supplied by natural gas. Using natural gas to generate electricity in modern plants that have the best pollution controls is a public health and environmental improvement compared to past practices, but relying exclusively upon natural gas to provide clean and affordable electricity for all our future needs is risky. Too many eggs are in too few baskets.

Increasing the renewable energy portion of Pennsylvania ’s electric generation portfolio by providing incentives for renewable energy deployment will serve as an economically important hedge against volatile natural gas prices. More renewable generation decreases the demand for new natural gas generation. It helps moderate both the price and supply risks of relying on natural gas for new generation. Since natural gas is the marginal fuel that establishes the clearing price for all electricity, a substantial increase in new renewables that decreases reliance on natural gas provides downward pressure on all electricity prices.

We believe that the deployment of alternative energy technologies offers significant potential to foster major new industries with taxes and jobs, and can make Pennsylvania ’s existing businesses more competitive. Energy efficiency technologies can lower operating costs for the businesses that deploy them. Policies that encourage the development and deployment of energy efficiency and distributed generation technologies will further enhance Pennsylvania ’s already-reliable electricity grid. Such policies, coupled with the industry-leading standards set by PJM, will improve Pennsylvania ’s business climate.

The deployment of alternative energy technologies can also jump-start the rural and agricultural economy. Creating incentives for renewable resources like wind and biomass deployment is a shot in the arm to farmers and rural communities. A wind farm is usually built on leased land, with payment to the landowner - often a family farmer - of $2000 to $4000 annually for each tower, without interfering with grazing or other agricultural activities on 95 percent of the land. Biomass technologies using new crops as well as those that use agricultural and other organic wastes create new industries and solve problems.

With that background in mind, I’d like to outline six suggestions on improving the effectiveness of H.B. 121 for your consideration.

First, state incentives should encourage deployment of renewable technologies that are now ready for the marketplace. The public wants more renewable energy. But the public sector needs to help increase the supply of renewable energy and to reduce its costs.

Second, we would suggest that the definition -Qualified alternative fuel producer,- if needed in the legislation, should not require that the principal place of business be located within Pennsylvania , merely that that the production be located in the Commonwealth. Such important manufacturers as Honda, AMD, and Shell do not have their principal places of business in Pennsylvania , but this slight change of emphasis in H.B. 121 could be a factor in attracting renewable energy production facilities to the Commonwealth.

Third, we believe that given the fact that the legislation proposes incentives for the generation and sale of renewable electricity, the legislation should precisely define “Qualified renewable electricity.” We suggest the definition include only those technologies that are generally accepted in the marketplace as being renewable: solar photovoltaic energy, solar thermal energy, wind power, low-impact hydropower, geothermal energy, biologically-derived methane gas, and sustainable biomass energy. In our judgment, the term Qualified renewable electricity should not include municipal solid, industrial, residual or any hazardous waste when it is burned for the generation of electric energy.

Fourth, as drafted, Section 9 (b) of the act limits the type of state assistance to grants. The committee may wish to consider loans, loan guarantees, or other financial support as a means of leveraging additional private investment and allowing recycling of public dollars and growing an even larger source of state assistance over time through loan repayments.

Fifth, we would suggest that the committee consider an additional localized incentive which we believe could be beneficial an authorization for local tax exemption for renewable energy projects. Political subdivisions could be authorized but not required to provide tax exemptions, deductions, abatements, credits or other support to Qualified Businesses and individuals under this Act pursuant to Section 13.

Finally, this legislation, while innovative and important, should be part of a broader state policy to encourage the deployment of renewable energy technologies. Key to this policy, in our judgment, is the adoption of a Renewable Portfolio Standard for Pennsylvania a flexible, market-driven policy requiring energy companies that sell electricity in Pennsylvania to provide a small but increasing portion of their electricity from renewable resources like wind, solar, and biomass. A market standard requiring no direct government investment or choosing technological winners, an RPS would allow the market forces of competition, efficiency, and innovation to deliver renewable energy at the lowest possible cost. Thirteen states have already adopted an RPS, including Texas , whose RPS legislation was signed by then-Governor, now President Bush.

We would appreciate the opportunity to discuss this with the Committee in greater detail in the coming months.

We commend Representative Bard and her co-sponsors for their willingness to propose such forward-looking legislation, and thank the Committee for the opportunity to testify this morning.