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Why Energy Reform Is Likely This Year, and Six Forms it Could Take

3 years ago
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Call me Pollyanna, but I think the chances are better than even that at some point this year, President Obama will sign an energy bill that at least takes baby steps toward making carbon polluters pay to pollute. This is based on years (OK, decades) of Washington watching, and the vindication of my sometimes-lonely belief that Obama would ultimately sign a major health reform law.

Doomsday scenarios – legislation tied to the tracks, the train barreling ever closer, no hope of survival -- are always tempting when it comes to complex issues like health policy, climate change and energy. That's especially true when the time frame narrows to a few months before elections that could reverse the majority in one or both houses of Congress. Nor is there any guarantee that meetings like the energy confab Obama is planning with senators of both parties will go smoothly or produce bipartisan results. In fact we've seen the opposite.

Still, this meeting (initially scheduled for Wednesday, but now postponed as a result of the McChrystal flap) will include several Republican senators who have expressed interest in various aspects of energy policy, and who could help broker a compromise acceptable to others. And the BP oil spill has revived prospects for action on energy this year. "This has to be a wake-up call to the country," Obama said Tuesday. He urged the Senate to seize the opportunity to "move forward on something that could have enormous, positive consequences for generations to come."
Last year the House passed a sweeping energy and climate bill that would be its starting point in negotiations on a merged House-Senate bill. Here are possible paths the Senate might take, in order of least likely to most likely:
1. The Senate does nothing. This is highly unlikely. Many lawmakers in both parties want to spur investment and jobs in the clean-energy sector. And many would like to use an energy bill to respond to the BP oil spill with provisions such as higher liability caps and stiffer drilling safety regulations.
2. The Senate passes the comprehensive energy and climate bill sponsored by Massachusetts Democrat John Kerry and Connecticut independent Joe Lieberman. The measure phases in a full-fledged cap-and-trade system that limits carbon emissions and allows industries to buy and sell pollution permits. Although many of those industries helped craft the bill, conflicting regional interests would likely drain support for this package. And that would be on top of a blockade of GOP opposition. Some evidence, such as an EPA analysis this month, points to a minor cost impact on families. But Republicans call the bill "cap-and-tax" and a job killer. Prognosis: Unlikely.
3. The Senate embraces the 39-page CLEAR Act introduced by Washington Democrat Maria Cantwell and Maine Republican Susan Collins. Fossil fuel producers and importers would buy "carbon shares" at monthly auctions. Three-quarters of the auction revenue would be refunded to U.S. residents and the rest, they write, would "finance clean-energy research and development; help reduce emissions in agriculture, forestry and manufacturing; and provide transition assistance for workers and communities in carbon-intensive regions."
One problem with Cantwell-Collins, according to some environmentalists, is that it would rebate the same amount of money to people regardless of how much they pay for power – and people in the Midwest pay more than people elsewhere. You could create a formula to make it more fair, but then the bill would no longer be a simple 39-page alternative to Kerry-Lieberman. Also, the main driver for reducing emissions is incentives financed by the 25 percent share of auction revenue. But there is no guarantee that Congress will use the money that way.
4. The Senate passes a limited bill that nudges the country toward energy conservation and clean energy, but doesn't put a price on carbon. One proposal from Indiana Republican Richard Lugar would require that new homes, businesses and appliances use less energy, and encourage states and utilities to phase out coal plants in favor of more nuclear and renewable power. Another bill, from North Dakota Democrat Byron Dorgan, Oregon Democrat Jeff Merkley and Tennessee Republican Lamar Alexander, would offer incentives to move toward plug-in electric cars and trucks. A third alternative was sponsored by New Mexico Democrat Jeff Bingaman and approved by his energy committee on a bipartisan 15-8 vote (two Democrats voted no, four Republicans voted yes). Among other things, utilities would have to produce 15 percent of their electricity from wind, solar and other renewable sources by 2021.
The energy policy consulting firm Garten Rothkopf says the Bingaman and Lugar bills will be the starting point of Senate debate. But will they be the end point? Daniel J. Weiss, climate strategy director for the liberal Center for American Progress Action Fund, says an energy-only package is fiscally unrealistic. "There's no mechanism to pay for the nuclear, renewable and clean-car programs that such a bill would create," Weiss said. Some revenue from putting a price on carbon pollution could fund clean energy programs, he said, "and still return the bulk of the money" to utility customers to offset any increase in power prices.
5. The Senate passes a package that includes some or all of the options in No. 4, plus a carbon emissions cap on utilities only. The White House floated that idea over the weekend and it is not thrilling to environmentalists. The World Wildlife Federation, for instance, has called for "a firm cap" on all carbon pollution. But a utilities-only cap could attract some moderate votes, and could be expanded to other industries later. Later could be as soon as this fall, in a House-Senate conference committee.
6. Negotiations between the Senate and the House produce a combined bill that's tougher on carbon than the Senate bill, and it passes in a lame-duck session after the midterm elections. The lame-duck aspect seems likely because the Senate will have to work fast just to pass its own bill before an August recess, and House-Senate negotiations could take months. As for eventual passage of a stronger bill, that's not out of the question. Candidates will be done eviscerating each other on the campaign trail. The ads will be off the air. Some senators and House members will be within weeks or even days of retirement, whether voluntary or forced. All of that gives people more flexibility in how they vote.
Even if Republicans sweep control of both chambers and are poised to take over in January, end-of-year energy action may not be dead. That's because out in America, people want to see changes. Republican strategist Frank Luntz has released research that shows broad bipartisan support for holding polluters accountable and for ending the U.S. addiction to foreign oil. Many polls show majorities across party lines think the government should regulate emissions to reduce global warming. It all comes down to politics: Whether cap-and-trade – a market-driven idea once supported by prominent Republicans – can be transformed into something smaller, simpler and more appealing to fence-sitters once the heat of the election season has cooled.

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17 Comments

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sysaphus71

Cap and trade is only the setup mechanism in which those who believe in global warming song and dance can get a check from the producers thru the facade of carbon credits. Exactly does this do anything but heap on more weight of the shoulders of those who produce....If this is passed ...welcome to the new recession.

June 24 2010 at 5:20 PM Report abuse +3 rate up rate down Reply
wtmorton73

I saw the picture and thought this was going to be a story about Pink Floyd. Needless to say, I was disappointed.

June 24 2010 at 12:10 PM Report abuse rate up rate down Reply
oldengineera2

Jill, you nailed it. You ARE Pollyanna.
The fact is that the billions we have spent on the "Energy Department" since Jimmy Carter pledged to free us from the evils of imported oil have not delivered reliable, affordable, clean alternatives capable of competing with hydrocarbons at today's costs of extraction. While we are all free to adopt off-the-grid solar and wind generation in this great country, the lack of takers suggests a few little disadvantages compared to the more popular utilities.
I worked for an entire career to make energy machines cleaner and more efficient. If a solar or wind solution is to happen, it cries for an efficient, affordable and safe storage/retrieval system to harvest excess energy when the wind blows/sun shines to be recovered when it is dark/calm.
We are not there. Cap and trade will only increase costs, stifle competitiveness, and kill jobs. I welcome constructive solutions. Imposing arbitrary taxes does not fit that class.

June 23 2010 at 11:58 PM Report abuse +8 rate up rate down Reply
jerhoad

Cap and tax is simply a bad idea. How much 'government control' of our lives will we endure before there is a revolt?

June 23 2010 at 10:50 AM Report abuse +19 rate up rate down Reply
djh6721

I wonder if the people fleeing the Titanic asked " Do you think the life boats will be expensive?".

Everyone wants to kick the can down the road and let someone else do it. Buck up little cowboys time to put on your big girl panties and do something that might accidently benefit someone besides yourself.

June 23 2010 at 10:46 AM Report abuse -17 rate up rate down Reply
playrfire

Products made from oil: soft contact lenses, eyeglasses, heart valves, dentures, water pipes, bandages, synthetic rubber, CD's, DVD's...just to mention a few. Our dependence on oil is not just the gas/oil we use to run our cars, or heat our homes. Search oil products and you will discover just a small portion of products that we use in our daily lives (shampoo, toothpaste, detergent, etc.)

June 23 2010 at 10:18 AM Report abuse +23 rate up rate down Reply
beckjr2000

Energy Reform is indeed possible as long as those pushing it are able to keep the public in the dark as to how much it will cost and how many real jobs it will kill. There is no such thing as a Tax on a Company or Utility! You, as their customer, have to pay these Taxes as well as your own. Electricity will cost 5 to 7 times more than it does now. Gasoline, which will be declared as "Evil", will easily cost $6 or more per gallon. Meanwhile our Govenment has loaned $2 billion dollars to PetroBras for their dep water drilling program while trying to destroy ours! Why is that?

June 23 2010 at 10:05 AM Report abuse +21 rate up rate down Reply
playrfire

Taxes would go up as it costs more to produce alternative energy. We have wind power in our state, should a customer choose to support alternative energy on their electric bill, depending on the percentage he/she would choose, would increase the bill 10.00-20.00 dollars per month. This pertains to our electric bill at this time. The information was enclosed in our electric bill.
This is just one example.

June 23 2010 at 9:53 AM Report abuse +13 rate up rate down Reply
herbchina

How to reduce carbon emissions & reliance on foreign oil, etc.??
Simply start with the following:
1- cut production to 50% of current numbers of SUV's, mini-SUVs, pickup trucks, and vans that get less than 25 MPG CITY. AND EACH YEAR AFTER AN ADDITIONAL 10% CUT FROM THE PRIOR YEAR.
2- Slap a $5,000 fee on all sales of the above at the dealers, except for legitimate business use. (This gets rid of all the jackass drivers who feel like bigshots sitting in their pickup trucks while they spew out exhaust on the rest of us.
3- Another rebate program to trade in all vehicles that get less than 20 MPG City -BUT - They can only buy passenger cars that get at least 30 MPG CITY (NO SUV's, mini-SUVs, pickup trucks, and vans)
4- All new homes are to have SOLAR POWER AND GAS HEAT AS BACKUP. NO OIL EVER AGAIN.
5- INDUCEMENTS TO CONVERT ALL OIL HEATED HOMES TO GAS OR SOLAR.
6- Rebates of $5000 to all buyers of new cars (passenger only) that use either partially or completely or hybrid fuels (hybrid fuels must be substanially less expensive than a gallon of gasoline, ie no bio fuels that cost more to produce or have negative price effect on food, etc.)
THIS WILL REDUCE IMMEDIATELY OUR DEPENDENCE ON OIL AND PICK UP OUR ECONOMY BY HELPING ALL AUTO PRODUCERS, FARMERS, AND ALTERNATIVE ENERGY PRODUCERS.

June 23 2010 at 9:31 AM Report abuse -16 rate up rate down Reply
2 replies to herbchina's comment
WHO EVER WHAT EV

Home sales and car sales would drop sharply and the economy would take a straight nose dive into a depression with this plan.

June 23 2010 at 11:00 AM Report abuse +17 rate up rate down Reply
gonejan2013

Cut power use by not suppling any to states who refuse to build their own power plants. The west coast comes to mind, those who get power from Tx and Az but want to boycott Az.

June 24 2010 at 7:27 PM Report abuse +1 rate up rate down Reply
Stewart Smith

Energy reform, possible but not at all probable. The Obama administration has entirely to many irons in the fire. The so called carbon credits where you buy credits so you can pollute is a joke, the cost of buying the credits will be placed on any and all customers increasing everyones costs for every day living costs. I do not know about you but I pay to much already, I work part time as a farm hand and do not have more money for higher utility costs.

June 22 2010 at 11:34 PM Report abuse +37 rate up rate down Reply

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