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ALEX CHADWICK, host:

From NPR News, it's DAY TO DAY.

It his news conference today President Bush threatened to veto a bill that would offer incentives for renewable energy. The House passed that $17 billion measure yesterday. It would extend existing tax breaks for solar and wind and renewable energy projects. And it would pay for that by ending subsidies for oil and natural gas. MARKETPLACE's Sam Eaton joins us. Sam, the president is opposed to this bill on the basis of what exactly?

SAM EATON: Well, he's not opposed to the bill as much as he's opposed to the way it's being funded, Alex. Tax credits for expanding renewable energy, everything from solar and wind to energy efficiency are set to expire at the end of the year. The House bill would merely extend those credits for another three years.

But money is hard to come by these days in Washington, so to pay for it Democrats have proposed cutting $18 billion in tax breaks for oil and gas producers. Now, that's where President Bush put his foot down.

President GEORGE W. BUSH: This generally is a tax increase. And it doesn't make any sense to do it right now. We need to be exploring for more oil and gas. And taking money out of the coffers of the oil companies will make it harder for them to reinvest.

EATON: Now, Bush also says the bill would raise the price of gasoline, hurting consumers.

CHADWICK: So what happens if the tax credits for renewable energy are not extended past this year?

EATON: Well, the fear, Alex, is that the U.S. would not only see less renewable energy built here but it would also fold its cards in the race to become the world leader in renewable energy technology. Now, that would be a big loss. Last year investors poured nearly $150 billion into clean energy worldwide, and that's a 60 percent increase over the previous year.

Some renewable energy advocates say the U.S. is already way behind and they say it's because the tax breaks that we're talking about here only run in three year cycles. That's basically way too unpredictable for most businesses, which need longer term outlooks in order to attract investors. So we may be installing lots of wind turbines and solar panels.

But most of them, unfortunately for the U.S. economy, are manufactured elsewhere, where incentives are more guaranteed.

CHADWICK: So if the government took a longer term view, perhaps, longer cycles of funding these things, the thought is this could maybe speed the transition to more renewable energy.

EATON: Well, it would help, but it's not necessarily the silver bullet, especially for wind energy. I spoke to Dan Kammen, an energy policy expert at UC Berkeley, and he says the U.S. faces a unique set of challenges simply because it's so big.

Professor DAN KAMMEN (University of California, Berkeley): Many of our best resources, notably wind, are in wide open areas; the prairies; west Texas has been a huge leader; the Dakotas are an absolutely phenomenal resource. These are places that have low populations and are underserved by big transmission lines.

EATON: And now Kammen says wind developments are already pushing up against a limited number of high voltage transmission lines needed to bring electricity into the cities. In Texas it's expected to exceed transmission line capacity 65 percent by the end of the year.

CHADWICK: Thank you, Sam. Sam Eaton of Public Radio's daily business show, MARKETPLACE.

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