Cooperation or Confrontation on Clean Energy?

A Proposed Agenda for the New Congress and the President

SOURCE: AP/J. Scott Applewhite/Carolyn Kaster

President Barack Obama, left, has signaled he is willing to work with Republicans on energy issues. Sen. Mitch McConnell (R-KY), right, does not appear to be in a similarly cooperative mood.

By Daniel J. Weiss | November 3, 2010

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President Barack Obama wanted to pass a comprehensive clean energy and climate pollution reduction law, but it didn’t happen during his administration’s first two years. Now that Republicans have won control of the House and dramatically narrowed the party split in the Senate there are two paths Congress and the administration can take toward energy legislation that would create jobs, reduce oil use, and cut pollution—cooperation or confrontation.

After the election day hurricane that replaced moderate legislators with conservatives it's clear that comprehensive global warming solutions are off the congressional agenda for two years. President Obama acknowledged this before the election when he said in an exclusive interview with the National Journal on October 24 that “another big omnibus, comprehensive one-size-fits-all energy bill” isn't likely. But he suggested that he is willing to take the cooperation path. The president expressed optimism that he could find common ground with Republicans on some energy issues:

We’re probably going to have a series of more bite-sized pieces that have to do with renewable energy standards, that continue to build on the good work we’ve done to improve fuel efficiency in cars, energy efficiency in buildings.

I think there are going to be a whole bunch of Republicans who continue to be interested in how we can foster a clean-energy industry here, and how can we do a better job with traditional energy sources like nuclear and natural gas. It won’t be easy, but I think we can get something like that done. But everything we do is going to have to be focused on how do we kick-start this economy so that it is growing faster.

Senate Republican Leader Mitch McConnell (R-KY), meanwhile, seems like he is in no mood to cooperate on clean energy jobs, oil security, or other issues. His focus is instead on power politics. McConnell has said that “The single most important thing we want to achieve is for President Obama to be a one-term president.” Rep. Fred Upton (R-MI), the leading candidate to become chair of the House Energy and Commerce Committee, likewise “has pledged a steady dose of oversight… [including] a detailed scrutiny of the Environmental Protection Agency's power to regulate for greenhouse gases.”

A viable energy proposal in a Republican-dominated Congress needs to meet certain criteria. It should include similar ideas that previously had significant bipartisan support, significant support from business, and little impact on the federal deficit. The budget implications are particularly crucial because the new Congress will make budget cutting one of its top priorities. Programs that are expensive or don’t pay for themselves are much less likely to get enough support to pass.

Three sets of clean energy objectives enjoy fairly broad bipartisan support: reducing oil consumption; investing in renewable and efficient energy solutions that create jobs; and new protections to prevent future BP oil disasters.

Here’s what a cooperation agenda between Congress and the administration on energy could include to address these problems. Many of the measures in this agenda do enjoy bipartisan support, and some have business support. But Republican leaders may reject these ideas embraced by some of their colleagues, and instead seek confrontations over a different agenda that would undo existing health protections.

Reducing oil consumption and improving energy security

The BP oil disaster and rising oil prices are reminders that the United States must dramatically reduce its oil use to enhance energy security and economic prosperity. Americans currently spend $1 billion per day on oil imports, and one out of every five barrels of oil consumed in the United States comes from countries the State Department classifies as “dangerous or unstable.”

Several bipartisan proposals could reduce oil use by investing in natural gas trucks and electric cars.

Natural gas trucks

The NAT GAS Act, S. 1408 and H.R. 1835, would provide tax credits for the purchase of natural-gas-fueled vehicles and the construction of infrastructure necessary to fuel these vehicles. The Senate version would authorize up to $30 million in annual grants to help manufacturers develop more effective engines. The total cost would be $4.5 billion.

CAP estimates that converting a significant portion of medium and heavy trucks and buses to natural gas could save 1.2 million barrels of oil per day by 2035. Further, the Senate Democratic Policy Committee notes that, “The natural gas industry...estimated that this program will create more than 100,000 direct manufacturing and labor jobs and more than 450,000 indirect jobs.”

Senate NAT GAS Act supporters include Sen. Lisa Murkowski (R-AK), and conservatives Orrin Hatch (R-UT) and Tom Coburn (R-OK). The House bill has 146 cosponsors. These include more than 60 Republicans such as staunch conservatives Reps. Ron Paul (R-TX), Dan Burton (I-IN), and the current and former heads of the National Republican Congressional Committee.

Electric cars

The Electric Vehicle Deployment Act, S. 3442 and H.R. 5442, would speed the transition to electric vehicles by creating a $400 million pilot program to help up to 15 communities create electric vehicle recharging infrastructure for plug-in hybrid and all electric vehicles, such as the Chevrolet Volt and Nissan Leaf.

Both the Senate and House versions have bipartisan cosponsors. Sens. Byron Dorgan (D-ND), Lamar Alexander (R-TN), and Jeff Merkley (D-OR) penned the Senate bill. Alexander is third in the Senate Republican leadership. Lead House sponsors are Reps. Ed Markey (D-MA) and Judy Biggert (R-IL).

Clean energy jobs and consumer savings

One of the easiest and most cost-effective ways to reduce pollution and save money is to simply use less energy in our homes and businesses. Several possible measures would provide incentives for homeowners and building owners to invest in simple and effective energy savings measures that will lower electricity bills and return these savings to families’ or businesses pockets. These incentives will also create thousands of jobs in energy efficiency technology sales and installation.

HOME STAR and Building Star

These programs would create tax incentives to ease the cost of retrofits to make homes and businesses more energy efficient. HOME STAR could create 168,000 jobs over two years primarily in construction and manufacturing. The program would help 3 million families save $9 billion on their electricity bills over a decade, and it would reduce global warming pollution equivalent to taking 615,000 cars off the road.

HOME STAR, H.R. 5019, passed the House of Representatives by a vote of 246-161. Eleven Republicans voted for it. These included House Energy and Commerce Committee Ranking member Joe Barton (R-TX), who could be the next chair of the committee. The incoming chair of the House Ways and Means Committee, Dave Camp (R-MI), also voted for it.

The Senate version of HOME STAR, S. 3177, also enjoyed bipartisan support. Its sponsors are Sens. Mark Warner (D-VA), Jeff Bingaman (D-NM), and Lindsey Graham (R-SC).

BUILDING STAR, H.R. 5476, has three Republican cosponsors. It would cover 30 percent of the cost of installing energy efficiency technologies in commercial and apartment buildings, which comprise 40 percent of energy use. This could reduce energy bills by over $3 billion annually. Every $1 in federal incentives would leverage $2 to $3 of private capital. Further, the program would create 150,000 to 200,000 jobs over the next two years.

Building efficiency standards

As mentioned above buildings are responsible for 40 percent of primary U.S. energy use and 40 percent of all greenhouse gas pollution. Technology exists to make new buildings significantly more efficient, which would also create jobs. To reap these energy savings states must adopt much more efficient building standards.

The American Clean Energy and Security Act, H.R. 2454, includes a provision to require states to adopt much more efficient standards so that buildings constructed after 2015 would be 50 percent more efficient. This bill passed with the support of eight Republicans, including Senator-elect Mark Kirk (R-IL).

The American Clean Energy Leadership Act, S. 1462, also includes provisions that require states to adopt more efficient building standards. The Senate Energy Committee passed it by a partisan vote of 15-8. Sen. Richard Lugar (R-IN) also introduced S. 3464, which includes more efficient building standards.

Investments in renewable electricity and jobs

Other nations, particularly China and Germany, have invested significant resources and adopted policies that would boost their domestic clean energy industries. This has also helped them create an export market for these new technologies. The United States risks falling out of the running to lead this 21st century industry if we do not invest more in this field.

The American Recovery and Reinvestment Act began this process in 2009, but its renewable energy programs spent their funds. We must adopt new policies to continue to grow the clean energy sector.

Renewable electricity standard

Thirty states have a renewable electricity or portfolio standard, or RES, in place that requires electric utilities to generate a specific amount of power from renewable sources such as wind, solar, geothermal, biomass, and other emerging technologies. A national RES would increase demand for these clean electricity sources and help speed their commercialization at scale.

A RES passed both the House and Senate Energy Committee during the 111th Congress. It was included in ACES and ACELA cited above. Additionally, Sen. Jeff Bingaman (D-NM) introduced a RES only bill, S. 3813 a free standing RES, S. 3813. Bingaman’s proposal has 32 cosponsors, including Sens. Chuck Grassley (R-IA), Sam Brownback (R-KS), John Ensign (R-NV), and Susan Collins (R-ME).

Green bank

An independent Clean Energy Deployment Administration or “green bank” would provide loans, guarantees, and credit enhancements to help companies successfully traverse the so-called “valley of death” to take new technologies from successful R&D to deployment. Clean technology companies typically have enough capital to get started but not enough capital to begin commercial production.

A dearth of funding is currently available to assist companies with this process. CEDA funds would provide this capital and leverage $10 in private capital for every $1 of public investment.

CEDA has bipartisan support in the House and Senate. It was included in ACES and ACELA in slightly different forms.

Transmission

A missing ingredient in U.S. efforts to generate more renewable electricity and manufacture more clean energy technology is our aging system of transmission lines. Electricity congestion currently costs the eastern United States $16.5 billion each year. Additionally, transmission lines must be enhanced and expanded to transfer clean electricity from wind turbines in North Dakota to factories in Illinois.

Other countries are moving ahead to improve their clean energy transmission. China, for example, is investing $217 billion in its electric grid between 2006 and 2010 to facilitate its expansion of clean electricity generation. Building transmission lines can also create thousands of jobs. Studies of three comparable large-scale projects show that on average new transmission lines create about 14 jobs per mile of transmission, which means that building the 20,000 miles of new transmission we need could create 280,000 new jobs.

ACELA includes provisions that would create incentives for regions and states to plan and build additional transmission lines. If the measures fail the bill provides tools to the federal government to accomplish this goal.

State clean energy programs

Congress should allow states to set long-term, pre-determined, cost-based rates at which renewable electricity generators can sell their power to utilities. These renewable energy payments—sometimes called “feed-in tariffs”—create the transparency, longevity, and certainty in policy that makes financing renewable energy possible.

ACES includes a provision (Section 102) to clarify that states have this right. The Let the States Innovate on Sustainable Energy Act, S. 3923, has similar language.

Clean energy exports

America’s global competitiveness will partly depend on development and deployment of renewable and efficient energy technologies that we can export to other countries.

In May the House approved the America COMPETES Reauthorization Act, H.R. 5116, with 17 Republican supporters. It would provide $85.6 billion over five years for research, development, and deployment of new technologies across a range of industries, including clean energy, as well as funding for education in science, technology, and math that will help prepare students to become leaders in the low-carbon economy.

Financing for clean energy businesses

Finally, two measures deserve attention from the next Congress even though they did not have strong bipartisan support when introduced earlier this year.

The extension of the Sec. 1603 program—which provides grants in lieu of tax credits for renewable energy project developers—and the 48C program—which provides tax credits to facilities manufacturing clean energy components—are essential to maintain these industries in the absence of a broad federal policy to put a declining limit and price on global warming pollution. Without them, the wind, solar, geothermal, biomass, and smaller renewable energy industries will lack the critical financing they need to maintain their operations and put existing and new projects in the ground.

Both the 1603 and the 48C program were part of ARRA. They have been included in a number of tax extender bills in both houses of Congress, including. S. 3935, introduced by Jeff Bingaman (D-NM) and Olympia Snowe (R-ME),. House Ways and Means Chair Sander Levin’s (D-MI) includes similar provisions in his Domestic Manufacturing and Energy Jobs Act of 2010. The 48C program extension is also included in S. 2857, co-sponsored by Bingaman, Hatch, Lugar, and Debbie Stabenow (D-MI).

Both 1603 and 48C also boast strong business support not only from the American Wind Energy Association, Solar Energy Industry Association, and other renewable energy firms but also from more traditional firms such as Google, General Electric, and Deutche Bank.

Oil spill response and accountability

The BP oil disaster is officially over, but an undetermined amount of oil from the 180 million gallons remains in the Gulf of Mexico. This poses a long-term threat to the gulf’s aquatic life and shoreline.

It is critical that BP be held accountable for this huge disaster and that big oil companies are held responsible for future spills. Additional safety measures to protect oil rig employees and new requirements to prevent future blowouts or spills are also needed.

Here are some legislative measures that would lead to a stronger oil spill response and better accountability on oil disasters.

• Significantly increase the existing $75 million liability cap for offshore oil spill damages. This would create a powerful economic deterrent to the kinds of reckless cost cutting and shortcuts that BP reportedly took on the Deepwater Horizon platform.
• Require new oil spill response plans to have much greater specificity, including demonstrating the financial and technological capability of addressing spills.
• Reform the Interior Department’s management and oversight of ocean energy production, including more rig inspections.
• Increase the per incident spending limit for the Oil Spill Liability Trust Fund. It can currently provide up to $1 billion per oil spill for clean-up costs or damages. This spending limit should grow to $5 billion per spill.
• Establishes a Gulf of Mexico Regional Citizens’ Advisory Council to help with future spill prevention efforts.

These provisions are contained in several bipartisan bills, including the Big Oil Bailout Prevention Liability Act, S.3305. The Senate Environment and Public Works Committee passed this bill by a unanimous voice vote on June 30, 2010.

The Outer Continental Shelf Reform Act of 2010, S.3516, was passed by unanimous voice vote by the Senate Energy and Natural Resources Committee. Ranking Republican Sen. Lisa Murkowski (R-AK) said that the bill would “help restore Americans’ confidence in our ability to safely produce our oil and gas resources, and we did it in a transparent, truly bipartisan process.”

Possible confrontation over assault on health safeguards

The Obama administration and many congressional leaders have made the potential bipartisan clean energy agenda much more salient in this Congress than proposals that weaken existing environmental safeguards or benefit big oil companies.

But the new congressional leadership may have a very different agenda. Republican leaders already announced that they would conduct hearings and investigations that undermine climate science and scientists in the new Congress. The other likely attacks include blocking EPA’s efforts to set greenhouse gas pollution reduction standards as mandated by the Clean Air Act. They could conduct a similar assault to remove or undermine EPA’s ability to protect public health from various energy produced pollutants.

Climate science attacks

One way the GOP leadership plans to forestall global warming pollution reductions is to undermine the settled science that concludes humans are responsible for climate change. The Los Angeles Times reports: “If Republicans win control of the House, they plan to go after the Obama administration's environmental policies and the researchers who have offered evidence on global warming.”

Leaders of this assault on science could include Rep. Fred Upton (R-MI) and Rep. Darrell Issa (R-CA), the incoming chair of the Oversight and Government Reform Committee. Rep. James Sensenbrenner (R-WI) would also join this feeding frenzy as chair of the House Select Committee on Energy Independence and Global Warming if it is not abolished by the new House leaders.

Allowing more pollution

EPA is preparing to exercise its Clean Air Act authority to require reductions in greenhouse gas pollution. It will limit these safeguards to the very largest pollution sources—those that spew 75,000 tons of carbon dioxide or other GHGs annually.

After global warming legislation failed in the Senate many senators who opposed legislative efforts to reduce pollutants then claimed that only Congress should set such standards. They now want to remove or weaken EPA’s ability to protect public health and the environment from greenhouse gas pollution

Sen. Jay Rockefeller (D-WV), for instance, introduced S. 3072 that would prevent EPA from doing anything to reduce global warming pollution from stationary sources for two years. The bill would also block EPA from establishing additional tailpipe standards for GHGs from motor vehicles. Rockefeller hopes to have a Senate vote on it before the 111th Congress adjourns at the end of the year. This proposal will likely be back next year. The House has a companion bill, H.R. 4753.

Under Administrator Lisa Jackson EPA has a 2011 public health protection agenda to establish reductions of other pollutants that threaten human health and the environment. This includes finalizing or proposing safeguards to reduce mercury and sulfur pollution from power plants, require the disposal of toxic coal ash as a hazardous waste, and new, more protective National Ambient Air Quality Standards from ozone smog (subscription required).

Unsurprisingly, the oil industry and other major polluters are mobilizing to oppose the greenhouse gas and other pollution reduction rules. It is highly likely that they’ll turn to their congressional allies to urge that they use legislation to block EPA’s efforts to protect public health. Such legislation may be difficult to pass, and would face a likely presidential veto. But there is another option to block public health protection.

Big Oil and coal defenders could block these safeguards by adding a rider to the fiscal year 2011 or 2012 EPA spending bill. The rider could simply prevent EPA from spending any funds to develop or implement reductions in greenhouse gas, mercury, sulfur, toxic ash, or other pollution under the Clean Air Act.

This has happened before. Then-House Majority Whip Tom Delay added 17 antienvironmental riders to the EPA spending bill in 1995 that would have blocked the implementation of various Clean Air and Clean Water Act safeguards. They were eventually removed after President Bill Clinton vetoed this spending bill and the Republican Congress shut down the federal government for three weeks rather than provide funding without the riders.

Then, the Republican Congress began including a rider in the Department of Transportation funding bill in 1997 that prevented the agency from taking any steps to improve motor vehicle fuel economy standards. This blocked action to reduce oil use each year until 2001.

Some Republican leaders have already discussed using this rider process to undo the Affordable Care Act health reform law, and it could be used to block these health protections as well.

Politico reports that conservative legislators:

…will push their leadership into what could be an uncomfortable confrontation with the White House, specifically on health care, threatening government shutdown if they don’t get their way.

With a large number of climate science deniers just elected to Congress it’s easy to imagine them taking an equally radical stance to block pollution controls. This would be little surprise given Big Oil, coal, and other polluting companies’ election expenditures.

Conclusion

The just-elected 112th Congress will be quite different—and much more conservative—than the 111th Congress that enacted major health care and financial reforms but failed on clean energy legislation. Potential still exists, however, for bipartisan cooperation between President Obama and the Republicans in Congress on reducing oil use, investing in clean energy technologies and jobs, and preventing future oil disaster. As we can see, there were a number of bipartisan proposals to address these challenges over the past two years.

It is much less clear whether the Republican leaders in Congress will seek cooperation or confrontation. Sen. McConnell’s stated intention to put defeating President Obama at the top of his priority list is a very discouraging sign. So, too, is the climate science denial shared by many returning and newly elected legislators.

Perhaps the best we can hope for is a replay of the 104th Congress when Rep. Newt Gingrich (R-GA) become the first Republican House Speaker in a generation. First they passed a bill to weaken the Clean Water Act then forced a 1995 confrontation over antienvironmental riders that President Clinton vetoed and contributed to the government shutdown. This turned into a political debacle for the Republican majority so in 1996 they cooperated with President Clinton to pass a strong Safe Drinking Water Act.

A critical lesson from this experience is that President Obama and others who support clean energy must resist efforts to block or weaken health protection standards for industry. As in 1996 such a successful effort could lead to cooperation and real progress on clean energy.

Buck