Renewable Energy, The Election and The Stock Market

Green Energy Likely Winner, Big Oil Loser In US Senate Races
Oct 24, 2008 15:12:36 (ET)
By Ian Talley

Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--A strengthened Democratic majority in the U.S. Senate will likely boost the outlook for renewable-energy companies while large oil companies could be socked with a multi-billion dollar windfall profits tax next year.

Many polls predict Democrats will win a half-dozen or so U.S. Senate seats from Republicans in the Nov. 4 general election. This could give Senate Democrats a voting edge needed to approve a Renewable Portfolio Standard, or RPS, a requirement for greater alternative energy production from wind, solar and biomass.

Many Democrats promise a "new direction" in energy policy, supporting a move away from fossil fuels.

If elected, these candidates could allow Democrats to pass a windfall profits tax for Big Oil companies such as ExxonMobil (XOM), Chevron Corp. (CVX) and ConocoPhillips (COP), according to a Dow Jones Newswires review of campaign promises and polls.

There would also be more political mass to set stricter energy market regulations and to pave the way for congressional intervention of the Strategic Petroleum Reserve.

Given the polling numbers, "the RPS is almost a certainty," said Dave Hamilton, Sierra Club director of its Global Warming and Energy Program.

The Democratic presidential candidate, Sen. Barack Obama of Illinois, supports a 25% renewable portfolio standard by 2025. Obama, who leads in most major polls, also backs a windfall profits tax for the petroleum industry and tapping the nation's emergency stocks when oil prices are high.

Sen. Obama - as well as Senate Majority Leader Harry Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif. - believe spurring the renewable industry would help the country recover from its current economic crisis. Republican candidate Sen. John McCain of Arizona doesn't support a national renewable energy standard.

Southern utility companies, including Duke Energy Corp. (DUK) and Southern Co. (SO), have lobbied against a federal renewable portfolio standard. Wind turbine manufacturers such as GE Energy, a unit of the General Electric Co. (GE), India's Suzlon Energy (532667.BY) and Denmark's Vestas Wind Systems (VWS.OS), as well as solar firms such as Norway's Renewable Energy Corp. ASA (REC.OS), and U.S.-headquartered First Solar Inc. (FSLR) and Evergreen Solar Inc. (ESLR) would benefit under a renewable portfolio standard.

Based on previous votes, Capitol Hill watchers estimate the number of senators who are highly likely to remain in their seats and who would vote for a renewable standard is between 53 to 59. As the House has already passed such a standardseveral times, the Democratic leadership needs 60 votes in the Senate to overcome a Republican filibuster. Although support isn't strictly along party lines, the GOP has largely been opposed to a federally mandated renewable standard.

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