VZCZCXYZ0007
RR RUEHWEB

DE RUEHMD #0315/01 0741245
ZNR UUUUU ZZH
R 141245Z MAR 08
FM AMEMBASSY MADRID
TO RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEHC/SECSTATE WASHDC 4482
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC

UNCLAS MADRID 000315 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/WE, EUR/PGI, EEB/ESC/IEC, OES/EGC, OES/ENV, 
OES/OGC, OES/PCI, OES/PD, G:E WEIGOLD 
DOE FOR PIA:BALLOU, EERE:KARSNER, MIZROCH, DICKERSON, 
CHIANG, OWEN 
COMMERCE FOR MAC:BOHIGIAN, CULVER, 3133/ITA/USFCS/OIO/EUR, 
4211/ITA/MAC/EUR, 6110/ITA,MAS/ENERGY 
PASS PRESIDENT'S COUNCIL ON ENVIRONMENTAL QUALITY 
 
E.O. 12958: N/A 
TAGS: EINV ENRG KGHG SENV SP
SUBJECT: SPANISH RENEWABLE ENERGY DELEGATION ENERGIZED BY 
MISSION TO U.S. 
 
REF: 07 MADRID 1823 
 
SUMMARY 
------- 
¶1. (U) Post and the Spanish government organized a highly 
successful renewable energy mission of Spanish companies and 
GOS officials to Washington and Denver February 11-14.  In 
Washington, the delegation, which was led by Ambassador 
Aguirre and the Spanish Secretary of State for Tourism and 
Commerce, met with key federal policymakers and Senators as 
well as state government representatives and business groups. 
 In Colorado, the delegation visited the National Renewable 
Energy Laboratory (NREL), met with the Governor of Colorado 
and Mayor of Denver, and met with local business leaders and 
renewable energy companies. 
 
¶2. (U) The Spanish participants were very pleased with the 
mission, as was Post.  Most of the 11 companies represented 
were considering major investments in the U.S., and many 
already have investments in the U.S.  The Washington meetings 
provided an understanding of U.S. policy and the political 
environment on renewable energy.  The NREL visit gave the 
government and business representatives an overview of 
cutting-edge U.S. research, and several of the companies were 
pleased by the meetings set up for them by the Commerce 
Department with U.S. companies.  In planning the mission, 
Post arranged meetings that emphasized the policy links 
between renewable energy and addressing climate change.  The 
mission showed the wide range of USG agencies with interests 
in renewable energy.  State, DOE, and Commerce all played key 
roles in organizing it, and the delegation met with officials 
from Commerce, State, the CEQ, DOE, and the Senate, in 
addition to state and local officials. 
 
¶3. (U) During the mission and in our followup meetings, the 
Spanish companies emphasized renewal of federal investment 
and production tax credits as the most important issue 
affecting their investment plans.  The Washington meetings 
gave them a better understanding of the political context of 
these credits and an opportunity to explain to USG officials 
and Senators the importance of the issue to their investment 
plans.  Our next steps include facilitating ongoing 
cooperation, building on recent public outreach 
opportunities, encouraging a U.S. renewable energy mission to 
visit Spain, incorporating renewable energy into key Post 
events, and exploring ideas for further cooperation and 
investment.  Reports of the individual meetings start with 
para 9.  End Summary. 
 
 
Why - Renewable Energy in the Bilateral Relationship 
--------------------------------------------- ------- 
¶4. (U) Renewable energy is an increasingly important part of 
the bilateral relationship.  Spanish companies, including the 
world,s largest and third largest producers of 
wind-generated electricity, own wind farms in at least 13 
U.S. states and turbine manufacturing plants in two states. 
Spanish companies have significant solar and biofuels 
investments in the U.S. as well.  One Spanish company has a 
DOE grant worth almost $80 million toward its construction of 
a biofuels plant.  DOE cooperates with Spanish officials and 
Spanish companies on many projects.  Post receives a steady 
stream of official visitors seeking to learn how Spain has 
developed a wind industry that provides ten percent of its 
electricity and a rapidly growing solar industry.  Renewable 
energy also will play an important role in the Spanish and 
American responses to climate change. 
 
 
Who - Mission Participants 
-------------------------- 
¶5. (U) U.S. Ambassador Aguirre co-led the mission and was 
accompanied by ESTOff.  The Spanish delegation was led by 
Secretary of State for Tourism and Commerce Pedro Mejia. 
 
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Secretary General for Energy Ignasi Nieto and Environment 
 
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Ministry Director General for Climate Change Teresa Ribera 
(Washington only) also participated, along with five GOS 
staffers, Spanish Ambassador Westendorp, and three of 
Spain,s commercial counselors in the U.S.  The private 
sector participants included representatives from eleven 
Spanish companies (three of whom were CEOs), the head of the 
Spanish renewable energy producers association, and the 
 
 
 
President of the American Chamber of Commerce. 
Representatives of some Spanish companies, U.S. subsidiaries 
and of separate U.S. companies owned by Spanish companies 
also participated in some of the meetings.  Several 
delegation members commented that the Ambassador,s 
participation was a sign of the importance the Embassy and 
the USG placed on renewables. 
 
 
Results - Achieving Mission Objectives 
-------------------------------------- 
¶6. (U) The mission was a key component of Post,s strategy 
(reftel) for closer cooperation on renewables issues.  It 
emphasized the strategy,s three objectives of: 1) 
encouraging private sector investment in renewables; 2) 
encouraging generation of renewable energy; and 3) 
encouraging research and development.  It also featured 
increased cooperation between government and businesses in 
both countries on renewables issues and helped strengthen 
renewables as a pillar of the bilateral economic 
relationship. 
 
¶7. (U) By participating in substantive meetings with the 
delegation, the various federal and state government agencies 
and officials significantly advanced our collaboration on 
renewable energy by: 
 
-- Demonstrating government support for development of 
renewable energy, including investment and production tax 
credits, R&D, and federal-state actions. 
-- Reinforcing the USG's commitment to addressing climate 
change and the important role of renewable energy in doing so. 
-- Increasing linkages and closer cooperation, including an 
offer by NREL to analyze the implications of changes to 
feed-in tariff pricing, cooperation on R&D with NREL, 
bilateral meetings with various agencies, and participation 
in WIREC 2008. 
-- Promoting investment in the U.S. through the DOC's U.S. 
Export Assistance Center in Denver's work in arranging 
meetings between Spanish companies and U.S. companies in 
Colorado, and through meetings with state government 
representatives from California, Minnesota and Pennsylvania. 
-- Developing support for a U.S. renewable energy mission to 
Spain later in the year. 
 
 
What Now - Next Steps 
--------------------- 
¶8. (U) Post plans to build on the excitement created by the 
mission, and actively pursue opportunities to continue 
expanding our cooperation with the Spanish.  We have followed 
up with Spanish private sector participants to get feedback 
on the mission, learn more about each company's investment 
plans for the U.S., offer future assistance, and solicit 
ideas for future collaboration.  We will also work with the 
GOS officials and NREL to encourage R&D cooperation.  Post 
will continue to conduct public outreach on renewable energy 
and its role in combating climate change.  We will help the 
American Chamber of Commerce to plan a Spanish renewable 
mission to Texas in May in conjunction with the annual 
meeting of the U.S.-Spain Council, which also will feature 
renewable energy issues.  We also will work with the GOS and 
private sector to encourage and plan a U.S. renewable energy 
mission to Spain.  Finally, Post will support participation 
by USG officials in the American Chamber's second annual 
European Energy Roundtable event in Madrid in September. 
 
 
Reports on individual meetings follow: 
 
 
U.S. Department of Commerce 
--------------------------- 
Steven Jacobs, Principal Deputy Assistant Secretary for 
Market Access and Compliance 
 
¶9. (U) PDAS Jacobs discussed the newly developed Invest in 
America program designed to attract foreign direct investment 
(FDI) to the U.S.  Several of the Spanish companies are 
considering expanding their already significant investments 
in the U.S., and others are considering investing in the U.S. 
for the first time.  The PDAS reiterated the USG,s interest 
 
in open market access and FDI.  He also described the balance 
that exists between state and federal governments on 
renewable energy issues, and how many states compete to 
provide the most attractive investment package.  GOS 
Secretary of State Mejia emphasized the importance of 
 
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ensuring that both governments continue to reduce the cost of 
doing business and eliminate any efforts toward 
protectionism, in order to encourage more trade and FDI in 
both countries.  Mejia and Spanish Ambassador Westendorp both 
raised the possibility of amending the bilateral tax treaty, 
an issue that Post will take up with the new government that 
will be inaugurated in April. 
 
 
U.S. Department of State 
------------------------ 
Paula Dobriansky, Under Secretary for Democracy and Global 
Affairs 
Ambassador Reno Harnish, Principal Deputy Assistant 
Secretary, OES Bureau 
 
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¶10. (U) DOS provided an overview of U.S. renewable energy 
production and policy to encourage investment.  PDAS Harnish 
described the new Energy bill signed in December that 
includes mandatory targets for renewable energy production. 
GOS Secretary of State Mejia reinforced that both major 
political parties in Spain support the ongoing development of 
renewable energy, and said that climate change represents an 
opportunity to turn a global problem into a significant 
economic development opportunity.  GOS Director General of 
Climate Change Teresa Ribera and PDAS Harnish also discussed 
the challenge of carbon markets and cap-and-trade systems. 
 
¶11. (U) U/S Dobriansky discussed the importance of WIREC 2008 
and emphasized the need for the GOS and others to offer a 
pledge.  GOS Secretary General for Energy Nieto committed 
that the GOS would send a delegation to WIREC 2008.  He also 
said that the GOS agrees with the USG on the importance of 
including China and India in climate change agreements.  GOS 
Director General of Climate Change reinforced the leadership 
role that the USG played in U.N. Climate Change negotiations 
in Bali, Indonesia.  U/S Dobriansky discussed the successful 
outcome of Bali in reaching a post-Kyoto agreement on 
emissions that includes the developing world, and the 
important role of the Major Economies process in reaching an 
agreement. 
 
 
Business Council for International Understanding Lunch 
--------------------------------------------- --------- 
¶12. (U) BCIU hosted a lunch led by Theodore Roosevelt IV of 
Lehman Brothers, and attended by DOE PDAS Mizroch and DOC 
Foreign Service DG Israel Hernandez.  Several U.S. investment 
banks participated, as well as General Electric and other 
U.S. companies involved in renewable energy.  The discussion 
focused on the significant interest by financial firms in the 
U.S. renewable energy market.  Roosevelt also made the point 
that, regardless of which party wins the White House, support 
for renewable energy in the U.S. is broad-based and will 
continue into the future. 
 
 
President,s Council on Environmental Quality 
-------------------------------------------- 
James Connaughton, Chairman 
 
¶13. (U) Chairman Connaughton provided an overview of USG 
investments in large scale renewable energy projects, 
including $10 billion in loan guarantees.  The Chairman 
provided an in-depth review of investment and production tax 
credits, including the political process inherent in renewing 
them every two years and the need for longer term 
restructuring of the program.  The Chairman described the 
landscape of individual state mandates on renewable portfolio 
standards, and the expected increase in investment in 
generation and storage.  Opportunities for public-private 
partnerships for research and development and demonstration 
were outlined.  Chairman Connaughton discussed a U.S.-E.U. 
proposal to the World Trade Organization to voluntarily 
eliminate all tariffs on goods and services in the renewable 
energy industry.  He also emphasized that global leaders must 
pursue a portfolio of solutions in order to reduce emissions 
 
that includes renewable energy, carbon sequestration, nuclear 
energy, energy efficiency and other measures. 
 
 
DOE Office of Energy Efficiency and Renewable Energy 
--------------------------------------------- ------- 
Alex Karsner, Assistant Secretary, EERE 
John Mizroch, Principal Deputy Assistant Secretary, EERE 
Paul Dickerson, Chief Operating Officer, EERE 
 
¶14. (U) A/S Karsner provided an overview of investment and 
production tax credits, and described the need to restructure 
this program to remove it from the tax code system.  The A/S 
was adamant about the need for energy companies to make sure 
lawmakers understood the importance they placed on stable 
long-term tax credits, rather than always pushing for 
incremental incentives.  Karsner emphasized the importance of 
advocating for predictability in the industry and said DOE 
recognizes the need for utility companies to be profitable 
with renewable energy from the first day of operation.  The 
A/S also discussed the mission of NREL, the various types of 
research it conducts, and opportunities for public-private 
partnership that Spanish companies can participate in. 
 
 
State Perspectives 
------------------ 
¶15. (U) To provide a perspective from the state level, the 
National Governors Association (NGA) assembled a panel that 
included representatives from the NGA and the state 
governments of California, Minnesota and Pennsylvania.  Sue 
Gander, the NGA,s Director of Energy, Environment and 
Natural Resources, described the trends in renewable energy 
development at the state level.  She discussed the strong 
emphasis that the NGA and its current Chairman, Minnesota 
Governor Tim Pawlenty, have placed on clean energy, including 
development of its Clean Energy Future initiative.  The state 
government representatives described the development of the 
renewable energy industry in each of their respective states 
and the programs designed to attract investment.  Some of the 
company representatives later held separate meetings with 
state government representatives. 
 
 
Six Senators 
------------ 
Sen. Mel Martinez (R-Florida) 
Sen. Chuck Grassley (R-Iowa) 
Sen. John Thune (R-South Dakota) 
Sen. Larry Craig (R-Idaho) 
Sen. Ken Salazar (D-Colorado) 
Sen. Pete Domenici (R-New Mexico) 
Several Senate staffers. 
 
¶16. (U) GOS Secretary of State Mejia raised the importance of 
providing Spanish companies with longer-term security of 
their U.S. renewable energy investments, and stressed the 
need to extend production tax credits (PTCs) beyond the 1-2 
year renewal period.  The Senators discussed the details and 
importance of PTCs, and the political process around 
approving extensions of the incentive.  Senator Grassley 
recognized the need to renew PTCs without any interruption to 
ensure that the industry does not shut down.  Grassley said 
that the extension of PTCs was not controversial, but that 
determining who will pay for them was.  He also outlined the 
renewable energy segments of the newly passed Energy bill and 
upcoming Farm bill.  Senator Craig discussed the need for a 
balanced approach on determining who should pay for PTCs and 
how they should be structured in the long term.  Senator 
Domenici stressed the need for foreign firms to invest in the 
manufacturing of wind turbines to maintain Congress, long 
term interest in continuing to provide incentives for the 
industry. 
 
¶17. (U) Mejia provided an overview of Spanish energy 
investments in the U.S., including Gamesa,s and Acciona,s 
investments in wind turbine manufacturing plants.  He also 
raised the issue of Splash and Dash, the provision that 
allows importation of biodiesel from abroad, blending it with 
small amounts of U.S. fuel, exporting it and claiming tax 
credits.  Mejia said there was a difference of opinion on its 
legality under the WTO.  The Spanish did not view this as 
 
fair trade, and were discussing the issue with the European 
Commission.  Finally, the Senators discussed the urgent need 
for energy security as a national priority and the important 
role that renewable energy could play in reducing dependence 
on foreign sources. 
 
 
U.S. Chamber of Commerce Lunch 
------------------------------ 
¶18. (U) The U.S. Chamber and the American Chamber of Commerce 
in Spain hosted a lunch meeting for the delegation.  The 
keynote speaker was Frederick Smith, Vice President of the 
U.S. Chamber's Institute for 21st Century Energy.  Smith 
discussed the important challenge of energy security and the 
role it plays it national security.  He also described the 
creation of his organization, and its focus on preparing a 
national energy strategy document for policymakers.  Smith 
reinforced the importance of addressing climate change in the 
global context and the need to maintain economic growth while 
improving the environment. 
 
 
Washington Side Meetings 
------------------------ 
¶19. (U) In addition to the full delegation meetings, the GOS 
officials also participated in valuable side meetings. 
Energy Secretary General Nieto met separately with DOE 
officials on nuclear and fossil fuels issues.  Climate Change 
office director Teresa Ribera met with Treasury DAS Ken Peel 
to discuss the proposed Clean Technology Fund and met with 
EPA.  Secretary of State Mejia met with USTR Schwab and 
Deputy USTR Veroneau to discuss bilateral trade issues 
unrelated to energy. 
 
 
Colorado Governor Ritter 
------------------------ 
¶20. (U) In a Denver breakfast meeting hosted by the state of 
Colorado, Governor Ritter described his state's successful 
efforts to attract investment in the renewable energy 
industry.  Citing solid political support, significant R&D 
investment through NREL and the state university system, an 
expanding venture capital community, and favorable natural 
resources, the Governor made the case for investing in 
Colorado.  Anbengoa Solar, a division of Abengoa, a $4 
billion diversified Spanish energy and engineering company, 
recently opened its U.S. headquarters in Colorado.  The 
governor also said that Danish company Vestas (a leader in 
wind electricity) is actively investing in Colorado, and 
encouraged the delegation's other companies to consider 
investing. 
 
 
National Renewable Energy Laboratory (NREL) 
------------------------------------------- 
¶21. (U) The delegation spent a day at NREL in Golden, CO, 
visiting the lab's national wind technology center and its 
solar energy research facility.  DOE A/S Karsner and EERE COO 
Dickerson opened the meeting via video conference and 
provided an overview of NREL.  The management team from NREL 
described the various programs and areas of focus.  Program 
Managers and subject matter experts led discussions of NREL's 
various international R&D programs, public-private 
partnerships, enterprise development work with the venture 
capital community, and concentrating solar power research. 
Ron Benioff of NREL's International Programs group explored 
ideas for conducting analysis for the GOS in determining new 
pricing levels for feed-in tariffs.  Ron also provided a 
brief description of the various cooperative R&D efforts 
between the U.S. and Spain that already exist. 
 
 
Denver Business Leaders 
----------------------- 
¶22. (U) The Denver Metro Chamber of Commerce and the Metro 
Denver Economic Development Corporation hosted a reception 
and dinner that was attended by many of the area's business 
leaders.  Joe Blake, Chairman of the Chamber of Commerce, 
welcomed the delegation and described the favorable 
investment climate for renewable energy in Colorado. 
 
One-on-One Company Meetings 
--------------------------- 
¶23. (U) The DOC's U.S. Export Assistance Center in Denver 
arranged for meetings between the Spanish companies and U.S. 
companies interested in working with them.  The DOC created a 
website about the mission that included descriptions of each 
company and enabled U.S. companies to register and request 
meetings.  The DOC coordinated each meeting and provided a 
venue with several meeting rooms.  Both Spanish and American 
company representatives were pleased with the outcome, and 
several follow up meetings have already been scheduled. 
 
 
Colorado State University 
------------------------- 
¶24. (U) GOS Secretary General for Energy Ignasi Nieto led the 
Spanish delegation's visit to CSU to learn about its 
renewable energy-related research and development programs. 
Dr. Bill Farland, Vice President for Research at CSU, 
provided an overview of CSU's renewables programs and its 
energy conversion laboratory.  The CEOs of three start-up 
companies, all of which were created and spun-off by the CSU 
lab, discussed their focus on energy issues.  The companies 
are focused on innovation including the use of algae in 
biofuels, more effective management of energy grids and 
improvements in the efficiency of solar photovoltaics. 
AGUIRRE