Energy Bill Will Test Pelosi’s Command.
By Zachary Coile
The San Francisco Chronicle

Monday 30 July 2007

Democrats in auto states oppose increasing gas mileage standards.
Washington - Democrats, in taking back the House from Republicans, promised to tilt the nation’s energy policy away from oil drilling and toward efficiency and cleaner sources of energy. This week their pledge will be put to the test.

As the House starts debate on its energy bill, Speaker Nancy Pelosi must decide: Will she push a measure, opposed by electric utilities, to require them to produce 20 percent of their power from renewable sources? Will she allow a vote on a major increase in fuel economy that’s being fought by autoworkers’ unions and a few powerful Democrats?

“When you talk about energy policy, there is the car piece and the electricity piece,” said Marchant Wentworth, legislative representative for the Union of Concerned Scientists, who has been lobbying the Democratic leadership. “You need both for an energy-efficient policy.”

The Democratic speaker from San Francisco has told environmentalists she supports raising fuel economy standards to at least 35 miles per gallon and requiring utilities to generate 20 percent of their power from renewable sources such as wind, solar or biomass by 2020.

But neither measure is part of the energy bill now, and Pelosi has not committed to bringing the proposals to the floor as amendments - although she’s leaning toward putting the electricity standard to a vote.

Pelosi is balancing her desire for a new, greener energy policy with her fear that if the bill tries to go too far, it could lose support among Democrats from energy- and auto-producing states - who are being lobbied vigorously by industry to kill parts of the bill. {are these the hydrocarbon democrats?}

It’s the same calculus that led Pelosi to support a farm bill that made modest changes to federal crop subsidies, even though she had backed deeper reforms. With a narrow majority and a desire to protect vulnerable Democrats in farm states, Pelosi chose a smaller victory and unity in her caucus over gambling on achieving a more sweeping policy change.

Pelosi’s allies say she’s working behind the scenes to line up support for both proposals as amendments to the energy bill.

“The speaker is working every way possible - and so are we - to make this happen,” said Rep. Mark Udall, D-Colo.

Pelosi’s office said the details of the energy package are still being worked out. The bill - which is competing for time in the busy final week of the congressional session before the month-long August recess - could hit the floor as soon as Tuesday.

Pelosi’s aides said the speaker wants a vote on increasing fuel economy standards, but she won’t say whether it will be this week or this fall. “That hasn’t been decided yet,” said Pelosi spokesman Drew Hammill.

Environmentalists say Pelosi is being coy about the timing for a reason: The Senate already has passed an increase in Corporate Average Fuel Economy (CAFE) standards, and House Democrats may skip a vote now and add the provision during a House-Senate conference committee this fall to reconcile the two versions of the bill. That strategy could prevent a head-on collision with Rep. John Dingell, D-Mich., the chairman of the House Energy and Commerce Committee and the most powerful foe of an increase in fuel standards - although critics deride it as a backdoor strategy.

Rep. Todd Platts, R-Pa., a co-author of the House fuel economy bill, said he backs Pelosi’s decision no matter which route she takes. “The commitment is about getting a bill to the president’s desk,” he said.

The auto industry is working hard to defeat a big fuel economy increase. In an unprecedented move - and a sign they feared they are losing the debate - automakers backed a rival bill by Rep. Lee Terry, R-Neb., and Rep. Baron Hill, D-Ind., that would raise fuel economy overall to at least 32 mpg by 2022, but still allow light trucks to be less fuel efficient than cars. (Currently, automakers must meet a standard of 27.5 mpg for cars and 22.2 mpg for pickups and sport utility vehicles.)

“This is a balanced approach, this is a compromise,” said Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers.

The proposal has been picking up backers quickly, including dozens of Republicans and moderate Democrats who have never voted for any fuel economy increase in the past. It shows how much the dynamics of the issue have changed, with gas prices soaring above $3-a-gallon this spring and public concern growing over global warming and U.S. reliance on oil from the Middle East.

“The whole frame of the debate has shifted,” said Kevin Curtis, senior advocate for the Pew Campaign for Fuel Efficiency, who is pushing House Democrats to seize the momentum and pass a major fuel economy hike. “Even the opponents of CAFE know they can’t oppose CAFE, so they’re supporting the weakest possible form of CAFE.”

While the headlines in the debate focus on fuel economy, the energy bill is full of less-noticed provisions that could have major effects.

The bill would revoke $16 billion in tax breaks for oil and gas production and shift that money into new subsidies for wind, solar and geothermal power. The Senate narrowly failed to pass a similar tax provision. It probably will be one of the thornier issues the House and Senate will tackle to forge a single bill.

The measure also includes a $3.5 billion package to boost cellulosic ethanol, and offers grants and tax breaks to help homeowners and local governments cut their energy use. The bill would raise energy efficiency standards for lightbulbs and appliances and requires the federal government’s entire operation to be carbon-neutral by 2050.

The oil and gas industry is lobbying feverishly to spike several pieces of the bill, including provisions to change the way their overseas operations are taxed and to block them from benefiting from a rollback in the corporate tax rate. They’ve been ginning up opposition among oil-state Democrats to increased fees for drilling permits and the proposed elimination of a program that allows firms to pay the government royalties in oil or gas, not cash.

Pelosi is keeping a close watch on wavering Democrats. With a thin House majority - and strong GOP opposition to the bill - she needs the votes of the roughly two dozen Democrats from oil- and gas-producing states.

Electric utilities that rely on coal are battling the 20 percent renewable electricity standard. The Edison Electric Institute, the industry’s leading trade group, warns lawmakers the proposal could penalize utilities in regions such as the Southeast that have less wind power. Environmentalists counter the claim, noting that every region of the country has some form of renewable energy - whether it’s solar, wind, biomass, geothermal or hydropower.

“Utilities have had the ability to turn to renewables since 1978 and they haven’t,” Wentworth said. “This is the first time we would put in place a federal requirement for utilities to take action.”

Twenty four states already have similar renewable electricity standards. California, which has among the most stringent standards, must produce 20 percent of its power from renewable sources by 2010.

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A Federal Energy Policy: Can It Happen Here?
By Michael Vickerman
RENEW Wisconsin

Friday 27 July 2007

Of all the issue areas that Congress dives into from time to time, none reveals the inability of our legislative branch to fashion an internally consistent national policy quite like energy. The usual items in an energy bill - tax credit extensions, fuel subsidies, fresh regulatory requirements (and loopholes), new rules on offshore drilling, etc. - are designed to reward specific industries and influential constituencies. This year’s energy bill promises to follow that timeworn path left by Congresses of yesteryear.

But an energy bill has to be more than the sum of its subsidies to constitute effective policy. This is especially true as we enter a time of growing resource and environmental limits that threaten to bite us in the collective behind if we don’t curb our profligate consumption of energy.

Now is not the time to continue subsidizing every form of energy that can be produced in the United States, as the current Congress seems intent on doing. In previous bills, Congress has taken great pains to make sure that every energy constituency - coal, oil, nuclear or renewables - gets its fair share of the federal pie, regardless of need or environmental impact. This is the cheap energy paradigm at work - promoting economic growth by artificially lowering energy prices.

But while this paradigm may have been defensible before U.S. oil output reached its maximum in 1970, it has no place in today’s energy-constrained world. Artificially lowering the cost of all energy sources will not only encourage waste and overconsumption, it will hasten the arrival of that traumatic day when the flow of cheap oil and natural gas cannot meet the demands of a hypermobile society.

It’s no secret that Congress lacks the stomach for offending powerful energy lobbies like Big Coal. But it’s simply not possible to institute policy changes, especially those intended to reduce carbon dioxide discharges into the atmosphere, without picking a fight with the coal industry, the electric utilities, and what’s left of the U.S. automotive industry. Therefore, if Big Coal pronounces itself satisfied with the energy bill’s contents when it is passed, you can be certain that Congress declined to incorporate any provisions that would cause coal’s share of the energy pie to shrink, such as a carbon tax or renewable feed-in tariffs.

What makes the United States singularly incapable of producing a coherent energy policy aimed at cutting energy consumption and using low-carbon alternatives to fossil fuels? I believe there are three factors explaining this lamentable state of affairs. The first is that your average American citizen has the energy IQ of beach sand, and, in this regard, your average Member of Congress is the mirror image of his or her constituents. For proof, I would direct your attention to Sen. Chuck Schumer of New York, who regularly appears on news programs to suggest that gasoline is overpriced at $3.00 per gallon and that motorists are being fleeced by dastardly oil companies.

Actually, at that price gasoline is a steal, and it would be so even at $4.00 - the amount Canadians pay - or $5.00. Packing 125,000 Btu’s of energy, a gallon of gas will power the average car 25 miles, yet it costs less on a volumetric basis than milk, apple juice, Evian, coffee from Starbucks, Mountain Dew, Listerine, and Red Bull. Try getting that performance with a gallon of Gatorade in your tank. It will set you back $10 and you still wouldn’t be able to back your car out of the garage.

It should be noted that retail gasoline prices in Germany are the equivalent of $7.00 per gallon, yet its economy remains healthy. Why is that? Because Germany, unlike the underachieving U.S., has a national energy policy designed to transition the nation smoothly into a post-fossil fuel energy environment. By taxing fossil energy and providing long-term price support for wind and solar electricity production, the Germans are plowing today’s wealth into building up a sustainable energy system that can withstand the future economic dislocations resulting from Peak Oil and climate change.

Indeed, no other country has made as much progress as Germany in building up a renewable energy infrastructure for delivering low-carbon electricity to homes, businesses, and rail networks. But other countries that lack domestic supplies of fossil energy, like Spain, the Netherlands and Denmark, are also moving aggressively to harness their renewable resource base. They too are light years ahead of the United States in this regard.

A second problem confronting policymakers is the unequal distribution of energy resources across this vast country of ours. A handful of coal-producing states - West Virginia and Wyoming come to mind - are net fossil energy exporters, and will view with hostility any policy proposal that will place limits on energy extraction within their borders. Their power is magnified by the markets they serve, which include large swaths of the Midwest and South.

On the other side of the coin are the West Coast states, Florida and New England, which are populous regions that which have no domestic coal interests to protect. Nor does the automotive industry have a big presence in these states. Not having to appease Big Coal or Big Auto enables state governments in these regions to plot a more aggressive course toward achieving emissions reductions and fuel diversity goals, as is being done in California and Florida.

One would expect members of Congress to promote the principal energy industries in their region, This predisposes them to enter into strategic alliances with other members representing different energy interests, usually of the “I’ll watch your back if you’ll watch mine” variety. Though these alliances are necessary for lubricating the deal-cutting and building support for the entire package, often it comes at the expense of public policy objectives.

Indeed Congress is institutionally incapable to pass a comprehensive energy bill that attempts to diversify the nation’s energy resource base and scale back its carbon footprint unless it contains elements that work in the opposite direction (e.g., gasifying coal and expanding offshore drilling).

Further complicating matters is the very nature of the U.S. Senate itself, a body organized to magnify the power of individual states to block “national interest” initiatives from changing the status quo. Each state is equally represented in the Senate, no matter how populous. And Senate tradition grants committee chairpersons enormous deference to bottle up or water down legislation that might impose unwanted changes on the states they represent.

Another Senate tradition, the right of unlimited debate, is enforced by a rule that expressly allows a minority of senators to thwart the will of the majority. To shut off debate on a measure, especially one in which powerful economic forces and regional interests are pitted against each other, bill proponents have to line up not 51 but 60 votes. Under the rule, debate continues even if 59 senators vote in favor of ending it and only one votes against the motion.

The energy bill passed by the Senate in June came tantalizingly close to incorporating a 10-year tax package that would have raised $29 billion, mostly from oil and gas companies and redirected it toward renewable energy development. The tax package was designed to be self-supporting; that is, it would not have trigged additional borrowing to underwrite the pro-renewable energy incentives.

Would such a tax package raise prices at the pump? A little. But remember too that $29 billion equates to about nine months’ profit for Exxon Mobil alone. And, from a social equity perspective, it’s always better to base energy subsidies and incentives on a real-time transfer of wealth than to saddle future taxpayers with even greater levels of indebtedness.

Nonetheless, the oil and gas companies objected to the closing of their favored tax loopholes, and they called upon their senatorial friends in the Oil Patch states to kill off this measure. To accomplish this, these senators made common cause with their counterparts from the Southeast and Rocky Mountain states, where Big Coal is very strong. Thought this minority bloc was outvoted 57-36, they managed to prevent the tax package from being attached to the larger energy package. In any other legislative venue, losing a vote by a margin of 21 would be considered a stinging defeat, but on the floor of the U.S. Senate, it counts as a win.

In his most recent installment of Lyndon Johnson’s biography, author Robert Caro points out that there have been only a few periods in the nation’s history where the Senate lowered the floodgates and allowed legislation reflecting the popular will to come washing through its portals. Those rare instances resulted from significant political realignments that put one party with an activist agenda firmly in power.

The closest the United States came to a coherent national energy policy was during the mid-to-late 1970’s. During that period there was a prevailing sense of anxiety over the nation’s energy security, and both the legislative and the executive branches responded to the national mood with decisive actions. In a five-year period Congress passed laws creating automobile fuel efficiency standards, prohibiting new gas-fired power plants, and requiring utilities to purchase electricity generated by independent entities. By the debased standards of current governance, those were amazingly productive years.

However, once the price oil dropped in the 1980’s, the urgency of the previous decade evaporated, and successive administrations began dismantling the policy initiatives adopted in the Ford and Carter years. When the Reagan Administration lowered fuel efficiency standards in 1986, Chrysler Corporation chairman Lee Iacocca said: “We are about to put up a tombstone ‘Here lies America’s energy policy.’”

It would take nothing short of a sea change to overcome Congressional inertia and recover the ground lost in the last 25 years or so. But though the prospects for a truly coherent national energy policy are improving, and the need has never been greater, both the citizenry and the current Congress are far too complacent to entertain changes that might involve belt-tightening and discipline. Given the current political dynamic, it would be unrealistic to expect this Congress, with its narrow majorities, to be the one that jump-starts the federal government into meaningful action.

Yes, we will see some progress on the energy front this year and next, but they will represent the sum of state government initiatives undertaken to counter the policy vacuum that persists at the federal level.

Sources:
Caro, Robert A., “Master of the Senate: The Years of Lyndon Johnson”, 2002, Alfred A. Knopf Inc., New York.

National Environmental Trust: History of Fuel Standards, One Decade of Innovation, Two Decades of Inaction. URL: http://www.net.org/documents/cafe_histor….

RENEW Wisconsin is a nonprofit organization that acts as a catalyst to advance a sustainable energy future through public policy and private sector initiatives. Michael Vickerman’s commentaries also posted on RENEW’s website, RENEW’s blog, and Madison Peak Oil Group’s blog.