Does November GOP Win Spell the End for Clean Energy Progress? Maybe Not

By Jesse Jenkins, originally at the Breakthrough Institute

According to most electoral prognosticators, Republicans are poised to win major victories in the upcoming November midterm elections, with control of both the House and Senate within their reach. That should spell the end for climate and clean energy legislation, according to many observers, at least for the next Congressional cycle.

But what if it doesn't? Over at SolveClimate, Elizabeth McGowan takes a fresh look at what a GOP win in November could mean for clean energy progress, noting that split control in Washington could actually improve chances for bipartisan energy legislation.

New dynamics in a Washington under divided rule

With one party in control of the White House and both legislative branches, it's far too easy for priority issues to become politically polarized -- so the argument goes. The majority party lacks significant incentive to reach out to the minority party from the beginning to craft solidly bipartisan bills. Meanwhile the minority party can simply become 'the Party of No,' attempting to block any of the majority party's legislative priorities while riding electoral angst at a "broken Washington" back into power in the next Congressional cycle.

With the White House in the hands of one party and the House, Senate, or both under the other party's control, the dynamic can be quite different, according to Capitol Hill observers.

McGowan quotes Paul Bledsoe, a strategist at the Bipartisan Policy Center's National Commission of Energy Policy with a long resume of inside-the-beltway experience:

When one party has a supermajority, Bledsoe pointed out, those in charge tend to write legislation without consulting the minority. That can make it virtually impossible to "sell" complex and significant mechanisms such as cap and trade--which now appears to be dead on arrival.

Even Republicans who once supported cap and trade approach as valid now dismiss it as an unacceptable tax.

"Traditionally, energy is not a partisan but a geographically focused issue," Bledsoe said, adding that the 2005 and 2007 energy bills passed with bipartisan support, the former in a Republican Senate and the latter in a Democratic Senate. ...

"A strange dynamic can develop when the balance of power is narrower," he said, adding that polarization along party lines can dissipate. "I think senators will feel a greater sense of urgency to initiate legislation together. I see senators of goodwill coming together to create bipartisan approaches."

Moving beyond cap and trade could yield bipartisan clean energy progress

According to Josh Freed, director of the clean energy program at the moderate Democratic DC think tank Third Way, a bipartisan clean energy strategy -- one that moves beyond the failed cap and trade debate toward a renewed public-private partnership aimed at developing and marketing improved clean energy technologies -- is ripe for passage in a Washington under split rule.

Freed spoke with SolveClimate's McGowan, saying:

Some sort of climate and energy legislation will eventually emerge but first, the public and private sectors need to cooperate to invent, demonstrate, deploy and market the green batteries, plug-in hybrid electric vehicles, advanced nuclear power, renewables and other technologies that are actually competitive with fossil fuels.

"As a country, we seem to have lost our way on that model," Freed said, adding that it propelled the success of the airline industry, the Internet and the biotechnology sector. "How do we go about turning that around?"

Congress needs to champion this push with thoughtful, comprehensive and bipartisan legislation, Freed explained, but the American public, business leaders, universities, entrepreneurs, large companies and the financial sector have to act in tandem.

Building a new bipartisan consensus for clean energy progress may take some time, but according to Freed, the effort can begin in the next Congress and external pressures may keep the heat on Congress to act sooner rather than later:

"This is going to take longer than a campaign. It's much like the health care debate in 1993," Freed said, adding that the need for reform was obvious but the mechanism being deployed all those years ago collapsed under its own weight. "It took 17 years to rebuild that coalition. With energy, we don't have the time to wait 17 years but we need to learn those lessons."

Politicians and everybody else involved have to realize that America is playing catch-up because its dawdling has ceded much of the clean technology market to China, South Korea, Spain, Denmark, the Netherlands and Germany.

"This has to be an issue that resonates in Minnesota, Tennessee and Ohio as much as it does in Oregon, Washington and Connecticut," Freed said.

Beware the Tea Party

While there are many strong motivations for bipartisan legislation to clean up, secure, and modernize the U.S. energy system while developing competitive U.S. clean energy industries, progress may ultimately depend on what kind of Republican party takes office in November.

According to Jim DiPeso, vice president of the Michigan-based non-profit Republicans for Environmental Protection, the radicalizing influence of the surging Tea Party movement may torpedo chances for clean energy legislation in the coming Congress. As DiPeso tells SolveClimate:

"All bets are off because those [Tea Party] newcomers will have different ideas about what priorities should be tackled. ... Then, you're looking at gridlock."

His wish is that President Obama, [House Minority Leader John] Boehner and [Senate Minority Leader Mitch] McConnell will be "smart" enough to mollify dissenters and follow President Clinton's lead of the mid-1990s by collaborating on a centrist agenda. ...

[DiPeso] and [Bipartisan Policy Center's] Bledsoe echo one another with their comments about why partisan bickering and backing on the climate front can be so detrimental.

"It's a huge mistake for climate activists to become partisan," Bledsoe emphasized. ...

"You can blame both sides for the polarization but it doesn't matter who is to blame. We need to fix it and that's the only way forward."

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Deutsche Bank's Parker: Senate Clean Energy Policy Failure Driving Investor Exodus

By Devon Swezey and Jesse Jenkins

The failure of the U.S. Senate to pass clean energy and climate legislation has caused investment giant Deutsche Bank to take its clean energy dollars elsewhere, according to Kevin Parker, Global Head of Asset Management for the firm.

"They're asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry," said Parker (pictured right).

Deutsche Bank manages over $700 billion in funds with $6 to $7 billion invested in clean energy markets worldwide.

These blunt comments from the global investment firm have cap and trade advocates renewing the argument that a price on carbon would have made the United States a world leader in clean energy technology.

Yet according to Deutsche Bank's own reports, cap and trade and carbon pricing would have done little to change the investment outlook in the United States relative to its competitors.

In a report released last October, after the passage of the House's Waxman-Markey climate and energy bill (HR 2454), Deutsche Bank ranked the United States as a "moderate-risk" nation for private investment in clean energy since it relied on "a more volatile market incentive approach" and "has suffered from a start-stop approach in some areas."

By contrast, countries like China, Germany, and Japan were "low-risk" nations for investors because they each rely on "a comprehensive and integrated government plan supported by strong incentives."

Mr. Parker is correct that the Congress remains "asleep at the wheel" as international competition for clean energy markets heats up.

The fact that the Senate got nothing done on climate and energy this year is outrageous, and continued policy uncertainty will ensure that the U.S. will keep lagging further and further behind economic competitors in the global clean energy race.

But let's be clear. The cap and trade legislation that Congress spent the better part of two years debating would have had, at most, a modest impact on America's standing in global clean energy markets, and would have been wholly insufficient to keep the U.S. in the game with economic competitors in Asia and Europe.

Is Carbon Pricing Really the Key?

We issued precisely that warning last November when the Breakthrough Institute and ITIF published "Rising Tigers, Sleeping Giant." The comprehensive report documented that the United States already lagged China, Japan, and South Korea in the production of virtually all clean energy technologies, and was poised to be out-invested three to one over five years by the three Asian 'Clean Tech Tigers,' even if the House-passed cap and trade bill had become law.

Deutsche Bank themselves clearly acknowledge that while carbon pricing may be important in the long-term, it is not what is helping governments around the world attract private investment and build domestic clean economies in the near-term.

According to Deutsche Bank's Parker and Global Head of Climate Change Investment Research Mark Fulton:

"While emissions targets express an intention and carbon markets might deliver a price signal in the long-term, governments must strengthen underlying mandates and incentives immediately if capital is to be deployed to cover the gap, creating more investment and jobs."

Deutsche Bank's conclusions are consistent with other analyses of the impacts of cap and trade legislation in the United States. According to the U.S. Environmental Protection Agency (EPA), under the House's Waxman-Markey bill:

"allowance prices are not high enough to drive a significant amount of additional [deployment of] low- or zero-carbon energy (including nuclear, renewables, and CCS) in the shorter-term, excluding the technologies with specific financial incentives (e.g. CCS)."

Similarly, the EPA concludes that the cap and trade system's impacts on transportation markets would be negligible. With potential carbon prices the equivalent of just 10 or 20 cents per gallon of gasoline, "the increase in gasoline prices that results from the carbon price ... is not sufficient to substantially change consumer behavior in their vehicle miles travelled or vehicle purchases..."

What Really Matters

What really matters to create a new clean energy economy and stimulate private investment in the near-term are policy regimes that employ direct and targeted public investments to cover the cost gap between higher-cost clean energy and fossil fuels.

Indeed, China has surpassed the United States as the largest beneficiary of private clean energy investments without a price on carbon. Rather, China, along with Germany, Japan, and other "low-risk" nations, has implemented generous, technology-specific deployment incentives that reduce regulatory risks and are much more attractive to investors, and are backed by aggressive, long-term national targets for clean energy deployment.

China has targeted procurement policies for clean energy, and a variable feed-in tariff for wind power. In Germany, Deutsche Bank credits the nation's generous feed-in tariff policy, not the carbon markets of the European Emissions Trading Scheme (ETS), for Germany's world-leading solar energy sector. These incentives have "demonstrated their ability deliver renewable energy at scale," according to the bank.

If the United States wants to avoid being permanently relegated to the backwaters of the global race for clean energy investment, it needs a new clean energy competitiveness strategy that, like those of its competitors, prioritizes large and sustained public investment in clean energy technology.

That strategy should include robust and long-term investments in areas such as research and innovation, manufacturing, market creation, workforce training and education, and the development of new, globally competitive industry clusters.

Time is short, and the next several years will see first-movers establish dominant positions across a range of clean energy sectors. Already the U.S. is failing to attract significant private-sector investment in clean energy markets, losing out on a key opportunity to grow American jobs, build new high-tech, export-oriented industries, and capitalize on the economic opportunity of a fast-growing clean energy sector.

If Washington continues to ignore this growing economic imperative, the U.S. will remain behind in clean energy investment and will wind up importing the vast majority of the clean energy products needed to satisfy U.S. markets.

Almost as dangerous, however, would be a continued reliance on cap and trade and the modest carbon prices it would establish as they key to building America's clean energy industries.

The message from clean energy investors like Deutsche Bank and the model provided by our global competitors are both quite clear: what the U.S. needs is not cap and trade but a comprehensive clean economy strategy. And it needs one now.


Devon Swezey is Project Director and Jesse Jenkins is Director of Climate and Energy Policy at the Breakthrough Institute. Both are co-authors of "Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race by Out-Investing the United States"

See Also:

• The Challenge of China's Green Technology Policy


• A Clean Energy Competitiveness Strategy for America


• Report: Rising Tigers, Sleeping Giant


• Report: Strengthening Clean Energy Competitiveness

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"Climate Bill Set Aside, What's Next for U.S. Energy Policy"

I appeared last Friday on 88.9 KCRW Santa Monica and Public Radio International's nationally-syndicated show "To the Point" to discuss the recent withdrawal by Sen Harry Reid (D-NV) of a compromised Energy bill based on largely on a framework of Cap and Trade.

After more than $100 million in lobbying by green groups and allied industry players, and the bill's eventual watering down to a "utility-only" cap, Majority Leader Reid confessed that there was still no way he or the party would be able to muster the sixty votes necessary for the beleaguered legislation to pass.

This is the fourth time in seven years that this cap and trade strategy has been shot down. This time, with the Democrats just one seat shy of a super-majority and with the White House occupied by a president who came to office promising to make climate change a top priority, perhaps the latest episode in the serial failure of cap and trade indicates that it is time to bury the failed policy and develop an entirely new strategy -- one capable of overcoming the political obstacles that doomed cap and trade while successfully making clean energy cheap enough to sustainable power an energy-hungry planet.

You can listen to the roughly eight-minute discussion below. Just hit play and skip to 45-minute mark for the segment.

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Time to Bury Cap and Trade and Plan Anew

By Jesse Jenkins and Devon Swezey

Cap and trade is dead. Again. For real this time.

Reports put the time of death at 1 P.M. EST, July 22nd, 2010. That is when Senate Majority Leader Harry Reid emerged from a meeting of the Democratic Caucus without enough support for even a severely weakened and scaled-back emissions cap on the utility sector.

With that, recognition has finally set in everywhere: the United States Senate is not going to enact any form of cap and trade. Not this year. And probably not any time in the foreseeable future.

Worse yet, clean energy progress this year has gone down with the long-sinking cap and trade ship.

Democrats in the Senate have now successfuly wasted what little time they had left on the Congressional calendar wrangling over a utility-only cap--already compromised beyond recognition and destined for political failure--instead of working to advance a package of measures that would have started to make real progress on clean energy.

Reid has made it clear he'll bring only an extremely narrow bill to the floor before the August recess, one pairing measures responding to the Gulf oil spill with some incentives for home efficiency retrofits and natural gas vehicles. That's it. After a full two-year Congressional cycle, Democratic super-majorities, and Barack Obama in the White House: home retrofits and natural gas vehicles are all the Senate will deliver. We should let that sink in for a moment...

Blame Game or Moment of Reflection?


After making his decision to drop cap and trade (and any meaningful clean energy measures with it), Reid wasted no time in pinning the blame on those recalcitrant Republicans, declaring in a statement:

"Many of us want...a comprehensive bill that creates jobs, breaks our addiction to oil and curbs pollution. Unfortunately, at this time not one Republican wants to join us in achieving this goal. That isn't just disappointing. It's dangerous."

Whether it was Republicans, the filibuster, oil and coal industry lobbyists or President Obama himself, blame has already been cast far and wide.

But if anything is deserving of blame, it is the cap and trade strategy itself.

Cap and trade has now died four times in the last seven years (this time, we can hope, for good). There is little evidence that Senate Democrats had substantially more votes for cap and trade this year than they did in 2003 (when it failed with 43 votes), 2005 (failed again with 38 votes) or 2008, when Reid also pulled the bill before it could go down in embarrassing defeat and insiders put the final tally at only 35-40 votes in support of the bill.

At this dark moment, the important question is whether any greens or Democrats in Congress are willing to seriously re-think a policy framework that was structurally flawed from the beginning and has consistently failed politically.

(Early indications are that they aren't, with Nancy Pelosi saying of the House-passed Waxman-Markey bill, "we're very proud of it and excited to take it to conference.")

The Serial Failure of Cap and Trade

Cap and trade has repeatedly failed because it doesn't address the main barrier to the widespread deployment of clean energy technologies: the technology-based price gap between new clean energy and mature fossil fuels.

Many renewables, like wind and solar power, are expensive, intermittent, and difficult to scale for example, while nuclear power is extremely capital intensive and faces substantial local opposition.

Because of higher costs and technical barriers to widespread clean energy adoption, efforts to move the U.S. energy system away from fossil fuels towards clean energy alternatives inevitably comes with a significant price tag.

The result: every country in the world has been unwilling to raise the price of fossil fuels--either through a carbon tax or a cap and trade system--high enough to close this gap for the majority of clean energy technologies.

The United States is a clear case in point, where the proposed cap and trade bill was riddled with so many loopholes and cost containment mechanisms--most notably the availability of up to 2 billion dubious carbon offsets--that the effective price on carbon was too low to effectively spur clean energy innovation and adoption and the "cap" on carbon was rendered effectively non-binding.

But there's another rub. For all the talk about the urgency of a "cap" on emissions in the United States, China has become the world's largest emitter of greenhouse gases and its voracious appetite for energy threatens to wipe out any gains we achieve here in the United States.

China has moved aggressively in recent years to become a leader in the clean energy industry; with timing so perfectly ironic it seems almost planned, China announced today that the national government would level a staggering $74 billion in annual investments over the next ten years (5 trillion yuan) to adopt clean fuels and build the nation's clean energy industries. But even while establishing itself as the dominant global clean energy power, China's insatiable energy demand is so large that the nation's demand for fossil fuels continues to rise almost unabated.

In the end, until we make clean energy cheap enough to be widely available and affordable throughout the world, countries like China will continue to satisfy the majority of their increasing energy demand with fossil fuels.

Planning Anew for Clean Energy Progress

Given the stakes for both the global climate and the nation's economic outlook, we can't afford yet another episode in the serial failure of the cap and trade strategy.

This moment demands a fundamentally new strategy designed to overcome the inherent political obstacles to carbon pricing and simultaneously achieve the primary objective upon which our climate future hinges: making clean energy cheap in real, unsubsidized terms.

History shows that such technological transformations do not occur through modest shifts in market price signals. We didn't tax the telegraph to get telephones or put a cap on typewriters to see the birth of the personal computer, as Breakthrough's Michael Shellenberger and Ted Nordhaus often note.

Instead, time-and-time again, the most reliably successful driver of new innovation and transformative technology changes has been an active partnership between private-sector entrepreneurs and innovators and a public sector acting as both an initial funder and demanding customer of new, cutting-edge technologies.

This will demand an unprecedented level of public investment in clean energy innovation and the accelerated adoption, scale-up, and improvement of a full suite of clean energy technologies.

Such a strategy can begin to cut U.S. emissions in the near-term, but most importantly it will be absolutely essential to establish the technological and economic foundations for deep emissions cuts in the long term.

As the International Energy Agency has been clear, a global clean energy technology revolution is urgently required, and we have not a moment left to lose.

Without clean, cheap energy, emissions both at home and abroad will continue their inexorable rise, while China and other economic competitors solidify their dominance of new global clean technology markets. With this latest death of cap and trade, will we finally bury a fundamentally flawed strategy and dare to plan (and act!) anew?

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Jenkins 'Empanelated' At Grist

Over at online environmental magazine Grist.org, I've been featured among a panel of "seven of Grist's favorite journos and wonks" each offering their two cents on what (if any) changes to climate and clean energy strategy should be made now that cap and trade is on the ropes.

Part 1 focuses on what to do with the remainder if this quickly-waning Congressional year, while Part 2 focuses on longer-term strategy. Here's my response to each question:

Grist: If it's true that a carbon price is impossible this year, what policies should energy reformers rally around in the short-term?

Jenkins: The focus for the remaining few weeks left has to be on substantive steps forward we can take without ceding ground or giving up too much in the way of opportunity cost. There's not a lot of time left to rally support for new ideas, so it has to be something that's already on the drawing board, like vehicle electrification and other efforts to win our freedom from oil. One big opportunity that's been ignored is the America Competes Act, which would authorize a number of key provisions to strengthen our clean energy innovation system in the United States. Some of those provisions could be put into Senate energy legislation. And there's the Clean Energy Deployment Administration, which could be an important part of financing emerging, innovative technologies. I would hate to see that fall through the cracks.

Grist: Given that the pursuit of cap-and-trade has fallen short yet again, is there reason for energy reformers to reassess their broad legislative strategy?

Jenkins: The policy approach of the last five years -- McCain-Lieberman through McCain-Warner through Lieberman-Warner through Waxman-Markey and the American Power Act -- has run its course. We should rethink a strategy that can be more politically and substantively effective in 2011. The broad contours are: We should try much less to make dirty energy more expensive and focus much more on making clean energy cheaper in unsubsidized terms in the long term. That doesn't mean that there's no role for carbon pricing, but it's a different role than it has under Waxman-Markey. First, it's a mechanism to provide the long-term, stable funding we need to make public investments in clean energy technology innovation, demonstration, and deployment. Second, price plays an important role in helping close off some externalities, helping make the market work more efficiently, and providing a synergistic demand pull for more mature clean energy technologies.

If you look at what Americans support in poll after poll, it is clean energy technology. There's very little support for clean energy technology in the current approach, because the money in cap-and-trade has been used as the bargaining chip for efforts to get an increasingly weaker carbon cap in place. Put investment in clean technology front and center -- and oh, by the way, we're going to pay for this with a modest fee on carbon.

See also:

• Hope For A Bipartisan Energy Policy Buzzer Shot?
  
• With Seconds on the Clock, Democrats May Waste Last Chance for Clean Energy Win
  
• In Defense of 'Energy-Only'

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In Defense of 'Energy-Only'

Over at NRDC, David Doniger writes a last-ditch defense of a diminished, utility-only cap and trade proposal while categorically rejecting any "energy-only" legislation -- e.g. legislation lacking a cap and trade component.

Unfortunately, Doniger, NRDC (and EDF) wind up clinging onto a "cap" on carbon they have already given away while at the same time standing opposed to a new clean energy strategy that could still salvage a substantive win despite what little time remains on the Congressional clock.

A flawed case against "energy-only"

Doniger's case for rejecting any legislation without a carbon "cap" rests on this central argument:

Unless the overall Senate bill includes a cap on stationary source emissions, some energy bill provisions would actually make carbon emissions worse.

Doniger cites four examples -- policies promoting new power lines, electric vehicles, synthetic fuels, and biofuels -- that he says could potentially result in an increase in emissions absent other regulations on carbon.

Some of his examples are just plain flawed; an NRDC-sponsored report on emissions from electric vehicles directly contradicts Doniger's assertion that EVs powered by coal-fired electricity would raise emissions (in reality, even a coal-powered EV would be a marginal win from a GHG perspective). Others are more legitimate concerns; coal-to-liquids synthetic fuels should clearly be off the table from a GHG perspective, for example.

But the specter of an "energy-only" bill doing more harm than good could be addressed in several simple ways -- GHG standards could be established for qualifying biofuels, and transmissions lines qualifying for incentives or expedited siting could be required to carry a certain percentage of zero-carbon electricity, for example. If NRDC is worried about bad outcomes, they could easily push for smart fixes to these policies, rather than categorically rejecting legislation that might include critical steps forward, including expanded transmission access to renewable energy zones, a vehicle electrification push, or the promotion of advanced, non-grain biofuels.

Furthermore, Doniger inexplicably ignores the fact that the EPA is already moving forward with efforts to limit carbon pollution from stationary-sources like power plants and is set to forge ahead in the absence of Congressional cap-and-trade legislation. Even in the face of likely litigation, the resulting regulatory uncertainty surrounding new EPA regulations will put the damper on any investments in new major emissions sources for the time being, including new coal-fired power plants.

Clinging to an illusory carbon "cap"

The real nugget though is that while NRDC et al. keep rejecting any substantive steps forward that lack a "binding cap" on emissions, they long ago ceded anything resembling a hard, binding emissions cap in their negotiations with industry stakeholders and Congress critters.

The Waxman-Markey bill passed the House loaded with enough offsets to render the cap completely non-binding on covered sectors. (What's the problem with offsets? See here). The Kerry-Lieberman draft bill is the same. And any utility-sector only bill is likely to include just as many offsets, yet cover only about one-third of U.S. emissions, making matters even worse.

The truth is that we've never been debating a real, binding "cap" on greenhouse gas emissions, just an emissions target and a (pretty modest) carbon price signal. Call it "visor-and-trade" not "cap-and-trade." And with that as the bar set by "cap" and trade legislation, it is certainly possible to get even better outcomes -- faster transformation of the U.S. energy sector, faster clean energy innovation, and even faster emissions cuts -- with a new clean energy strategy.

Snatching a win from the jaws of defeat

A series of proactive clean energy policy measures still have the chance to move the ball substantively forward before time runs out this year, while avoiding major concessions such as ceding EPA regulatory authority (something NRDC et al. was happy to give up in exchange for the deeply-flawed House-passed "cap" and trade bill, a fact Doniger fails to mention in his post). And if done right, such an effort could even start building a new bipartisan clean energy consensus, positioning things for a new strategy in the next Congress that marries a low but steadily rising carbon price to raise critical revenues with a series of proactive and comprehensive investments in energy technology innovation and deployment.

Alternatively, we can keep chasing the failed USCAP strategy down the rabbit hole...

"Do no harm" is a fine guiding principle

In the end, Doniger's case for a climate/energy bill that "first does no harm" is something I can agree with wholeheartedly. Doniger writes:

[In crafting energy/climate legislation] there are some things that the Senate absolutely must avoid - things that would actually dig a deeper carbon pollution hole. The Senate bill must not include measures that increase carbon emissions, take away the laws already on the books to cut those emissions, or weaken other protections for public health and the environment.

The reality is that there are bad "energy-only" bills and good "energy-only" bills. The good ones are hardly "energy-only" at all, and will make substantive progress towards a low-carbon energy system -- even without a "cap" on stationary source emissions.

The best chance of seeing a good energy bill pass Congress this year and drive America towards a clean energy future is if climate advocates, like NRDC's Doniger and EDF's Fredd Krupp rally behind a new play call to salvage clean energy victory from the jaws of impending defeat. Time is nearly up.

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With Seconds on the Clock, Democrats May Waste Last Chance for Clean Energy Win

With the final seconds ticking down on the Congressional clock, President Obama and Senate Democrats emerged from a White House summit with Republican moderates Tuesday still lacking any plan to score a last minute win for clean energy.

Wasted opportunity

Establishing a price (any price) on carbon pollution through a(n increasingly weak) cap and trade system continues to be the the preferred climate and energy approach of environmental advocacy groups and Democratic leadership. This preference holds despite the fact that for at least three years, that plan has consistently failed to uncover any route to securing the sixty votes necessary for passage in the Senate (a similar bill narrowly passed the House last June).

Heading into the Tuesday morning White House summit, Republicans eyed as key swing votes for any clean energy or climate bill telegraphed clear intentions: cap and trade would be a practical non-starter, but they were ready to act with the President on measures to promote zero-carbon electricity, electric and plug-in hybrid vehicles, and greater energy technology innovation, clean up dirty coal plants, and improve energy efficiency.

The summit offered President Obama a prime opportunity to reset the Senate energy debate by calling a new play: take up the energy provisions Republicans have offered, counter with a more aggressive proposal on similar fronts, and begin earnest negotiations with GOP swing votes to ensure passage of a final bill that could move America towards a clean energy economy before the Congressional clock expires.

Unfortunately, President Obama let this chance to break from the failed and increasingly desperate cap and trade agenda slip by, using the meeting, instead, to reiterate to the assembled Senators - and greens watching from the sidelines - that "he still believes the best way for us to transition to a clean energy economy is ... by putting a price on [carbon] pollution."

In what seemed to be an effort to convince outside audiences that Obama had not given up on cap and trade, rather than a real display of leadership, the President failed to present any clear plan of action or convince new supporters to back the much-diminished ambitions of a utility-only cap and trade bill. Instead, the White House team emerged from the meeting simply noting that, "Not all of the Senators agreed with this [carbon pricing] approach, and the President welcomed other approaches and ideas..."

Senator John Kerry (D-MA), the dogged architect (with Sen. Joseph Lieberman of Connecticut) of the increasingly embattled Senate cap and trade strategy, boldly declared that Democrats were willing to make even more concessions in the quest for permanently elusive GOP cap and trade supporters.

"We believe we have compromised significantly, but we're prepared to compromise further," Sen. Kerry told reporters.

This after Democrats had already stacked their "comprehensive" climate and energy bill full of enough offsets and cost containment mechanisms to render the emissions "cap" non-binding on covered sectors--and after recent offers to scale back the cap to cover only electric utilities, a sector responsible for just about one-third of U.S. carbon emissions...

Running out the clock

Thus, it seems that Democrats are now poised to waste what little time remains this year on what could be described either as an increasingly desperate effort to appease Republicans firmly opposed to what they've dubbed "a nationwide energy tax," or as an increasingly transparent attempt to assure green supporters they are 'fighting hard' for cap and trade in preparation for pinning their inevitable failure on 'those dastardly Republican obstructionists.'

Regardless, this strategy is all but certain to leave America empty handed on clean energy reform.

As oil gushes into the Gulf and global temperatures continue to rise, coming away from this Congressional year with nothing would be the greatest tragedy of all. But if Democrats can put aside their insistence on a wholly-compromised, "comprehensive" cap and trade bill, there may yet be hope for a political and substantive victory.

Republicans signal opening

Last week, Republicans invited to the White House summit emerged from a quick planning huddle to tell reporters that they would press Obama to drop cap and trade and work with the GOP to promote several provisions to advance clean electricity, electrification of cars and trucks, and research and development of low-carbon energy technologies.

The GOP has several "clean energy proposals which we are for and he's for too," said Senator Lamar Alexander (R-TN), who as Republican Conference Chair is at the center of GOP leadership.

After Tuesday's inconclusive meeting, key swing Republicans reiterated that there was still an opening to move forward on clean energy--if Democrats would drop cap and trade.

Senator Olympia Snowe (R-ME) stated:

"As I have long advocated, working toward energy independence is an imperative for our economic and national security. Which is why today I urged the President to seize control of our own energy destiny and, for the first time, establish clearly defined national timetables for clean energy production, benchmarks for oil consumption reduction, and goals for game-changing research - which no other president has ever done, to ensure we actually attain that independence.

The Maine moderate pointed to bi-partisan measures she had sponsored to promote energy efficiency, renewable electricity generation, and research, meanwhile stating that while she supported a limited carbon-pricing program in principle, "today we are in different and perilous economic times," stating that economy-wide cap and trade was something America "simply cannot afford."

Likewise, Senator George Voinovich (R-OH) characterized the White House meeting as "a clear signal to the president, Senator Kerry and Senator Lieberman that the chances of passing their cap and trade legislation are quite slim."

The senator went on to note:

"On the other hand, there seemed to be consensus that Senator Bingaman's energy bill may be a viable path forward in the Senate. While in need of improvement, it has bipartisan support and presents a variety of policy tools to expand domestic clean energy resources and reduce emissions.

Republicans have thus put a clean energy offer on the table constituting a clear path to bipartisan energy progress - focus on measures to boost clean electricity generation, oil reduction, energy innovation, and efficiency.

Scoring the last minute clean energy win

Herein lies the last opportunity for Democrats to score a win for energy reform. To date, Republicans have backed a number of key Senate proposals that collectively offer the foundations for a bipartisan clean energy bill that could achieve actual progress, despite the limited time to act in the crowded Congressional calendar [1 - see notes at end for more detail]:

Clean electricity generation: Republicans have backed both a (modest but first-ever) requirement that utilities nationwide purchase a portion of their electricity from renewable energy sources [2], as well as a more aggressive clean electricity requirement that would make nuclear power and carbon capture and storage at fossil fuels plants eligible alongside renewables [3]. Democrats have an opportunity to counter-offer with a slightly more expansive proposal, calling, say, for 25% of all U.S. electricity to come from new, zero-carbon electricity sources by 2020 and 35% by 2030, then negotiate from there. The end result would be a mandate to transform the U.S. electricity sector, putting American utilities on a path to a low-carbon future.

Similarly, Republicans have consistently championed financial incentives to deploy zero-carbon electricity sources. They, of course prefer nuclear power, but this offer still provides an opportunity for Democrats to counter. Instead of $10 billion to back loan guarantees for just nuclear power plants [4], Democrats could propose a similar (or even greater) amount of funding to capitalize a Clean Energy Deployment Administration capable of using a variety of flexible credit enhancement and financing mechanisms to spur the deployment of numerous innovative zero-carbon energy sources, including nuclear power, but also a suite of other cutting edge clean technologies [5].

Vehicle electrification and advanced biofuels: Senator Alexander has joined with Democrats Byron Dorgan (ND) and Jeff Merkley (OR) to propose a bill aiming to put the U.S. on track to electrify half of all vehicles on the road by 2030 [6]. A perfect bipartisan response to the unfolding Gulf oil crisis, the proposal represents a major multi-billion-dollar push to roll out charging infrastructure, incentivize the purchase of electric and plug-in hybrid vehicles and trucks, and invent and manufacture advanced batteries here in the United States that would do more to reduce U.S. oil consumption than any 10 or 20 cent increase in gasoline prices imposed by a cap and trade bill.

This electrification push could be coupled with financial incentives to spur advanced non-grain biofuels and escalating requirements to produce flexible-fuel vehicles that can run on gasoline biofuels (another Republican-backed proposal [7]). Combine these two measures to promote flexible-fuel, plug-in hybrids that can run on electricity as well and you've got essentially the very same plan proposed by the cogent David Sandalow (now an Assistant Secretary of Energy in the Obama Administration) to win America's "Freedom from Oil."

Clean energy research and innovation: Investment in energy technology innovation has consistently enjoyed bipartisan support, both from policymakers and the public, which routinely rank greater clean technology investment as their top policy response to energy and climate concerns. A doubling of DOE energy research [8], the scale-up of the newly established Advanced Research Projects Agency for Energy (ARPA-E), and the creation of a new nationwide network of clean energy innovation centers [9] or clusters [10] would each be critical components of a robust U.S. energy innovation system capable of driving both the incremental and transformational innovation needed to make clean energy cheap and ensure the next generation of clean technologies are invented and commercialized in America.

Cleaning up the dirtiest coal plants: Financial incentives to accelerate the shut down of the oldest, dirtiest coal plants in America and new air pollution regulations to clean up remaining plants could deliver huge public health gains and probably even greater emissions reductions than any weakened, utility-only cap and trade bill. Both provisions have enjoyed bipartisan support [11].

A "cash for coal clunkers" program could provide such financial incentives to close the old high-polluting coal plants (many of them pre-dating, and thus exempt from, Clean Air Act regulations) and replace them with cleaner power plants (with one level of incentive to replace the coal plant with a state-of-the-art natural gas plant, and progressively larger incentives for zero-carbon alternatives like renewables and nuclear power). Old, dirty coal plants provide just a small share of U.S. electricity but make up a disproportionately large share of U.S. power-sector greenhouse gas emissions and pollutants (with associated health impacts and economic costs).

Similarly, updated requirements to clean up conventional air pollutants - including toxic mercury as well as the smog and acid rain-forming sulfur dioxide and nitrogen oxide pollution - would both incentivize the worst culprits to shut down rather than install expensive new pollution controls, while requiring the remainder of the coal fleet to clean up its air pollution resulting in widespread public health benefits for everyone.

Enhanced efficiency: New efforts to boost the efficiency of American vehicles, buildings, appliances, lighting, and manufacturing have routinely enjoyed bipartisan support. Greater energy efficiency will help the U.S. economy get more economic bang out of our energy usage. Increasing economic productivity is a goal Republicans and Democrats can clearly come together to secure, and they have; wide-ranging efficiency measures have featured prominently in several bills currently backed by key Republicans [12].

Advancing the production of zero-carbon electricity, electrifying the American transportation fleet, catalyzing clean energy research and innovation, cleaning up the coal fleet, and boosting the efficiency and productivity of the U.S. energy system: these measures represent a nearly full list of the key levers needed to drive down emissions and U.S. dependence on coal and oil, all while building stronger domestic clean energy industries. What's more, these five areas are now ripe for bipartisanship and with Republican support, these clean energy measures presents a key opportunity for Democrats to drive America forward this year towards a clean energy economy.

What will the last play call be?

Obama and Senate Democrats now face a clear choice between two options...

They can waste precious time assuring green supporters they haven't abandoned cap and trade and meanwhile, come up empty handed by squandering the political opportunity presented by the oil catastrophe in the Gulf, appearing weak and inept before a public demanding energy reform, and handing another political victory to a GOP all too eager to enter the midterms having denied Obama and the Democrats one of their key policy priorities. More to the point, Americans will wind up without any substantive energy progress this year.

OR

Democrats can come out of the huddle prepared to build off of Republican proposals already on the table by offering more substantial counter-offers on each front: clean electricity, electrifying transportation, clean energy innovation, energy efficiency and even accelerated coal plant retirement. These energy-focused measures attached to a bill responding to the oil disaster in the Gulf would command strong public support, putting Democrats in a position to finally bargain from the high ground, secure stronger provisions, and score a real win on clean energy before the end of year.

Will it be a "comprehensive energy and climate bill?" No. And that's fine!

The inexorably-weakening "cap" and trade bills Senate Democrats seem willing to swallow are far from comprehensive already--and still unlikely to secure any passage this year.

Faced with ending up empty-handed and beaten, it is time for Democrats to bank these real wins now while making it abundantly clear to the public that this bill does not "check the box" on energy and climate for good.

If Democrats do that, they will have led America on the path to energy reform, and can tell the public that they will continue to lead a bipartisan effort to end America's dependence on dirty fossil fuels next year, if voters will back them in the November midterms.

If instead, Democrats insist on wasting these last few seconds on the obviously failing and increasingly desperate cap and trade agenda, Americans are likely to wind up without any substantive energy progress this year, and Democrats are likely to fare even worse at the polls. The ball is in their court.

Originally posted at the Breakthrough Institute

Notes:

[1] With just weeks remaining for floor votes in the Senate before the midterms hit, there's still a Supreme Court justice and a new Afghanistan commander to confirm, Financial Reform bills to conference, a budget to perhaps pass (prospects there don't look great), and on top of that, the White House just announced President Obama would give a big speech on Immigration Reform later this week, touching off yet another hot button domestic policy issue.

[2] The "American Clean Energy Leadership Act" (S.1462, or ACELA) passed the Senate Energy and Natural Resources Committee last June with bipartisan support from four Republican committee-members: Sens. Lisa Murkowski (AK), Sam Brownback (KS), Jeff Sessions (AL), and Bob Corker (TN). That bill would establish a (modest but first-of-its-kind) requirement that utilities nationwide purchase a portion of their electricity from renewable energy sources (15% by 2020). In addition to this requirement, known as a "Renewable Electricity Standard" (RES) or "Renewable Portfolio Standard (RPS), the ENR Committee bill would: establish a new federal agency to provide low-cost financing to spur the deployment of new clean technologies (the Clean Energy Deployment Administration); ramp up funding for Department of Energy R&D; establish new efficiency standards for buildings, lighting, appliances, industry and manufacturing.

[3] This is consistent with the "Diverse Energy Standard" included in the "Practical Energy and Climate Plan" (S.3464). Introduced by Senator Richard "Dick" Lugar (R-IN) and co-sponsored by Sens. Lisa Murkowski (R-AK and Ranking Member of the Energy Committee), and Lindsay Graham (R-SC, who backed the bill after walking away from the climate plan he drafted with Sens. Kerry and Lieberman in April), the bill has arguably surfaced as the GOP's preferred energy platform. In addition to the "diverse" clean energy standard that includes stronger requirements than the Energy Committee bill above (15% by 2015, 20% by 2020, 25% by 2025 ... 50% by 2050) but allows nuclear power and carbon capture and storage at coal plants to qualify for the utility requirement, the GOP-backed bill would: ramp up vehicle fuel efficiency standards and set the first ever standards for medium- and heavy-duty trucks; establish financial incentives for advanced biofuel production (from non-grain sources) and require new vehicles to be flexible fuel (capable of running on biofuels and gasoline); establish stronger building, appliance, and industrial efficiency standards; ; expand loan guarantees for zero-carbon nuclear power plants; and provide incentives for the retirement of the oldest and dirtiest coal plants in the country.

[4] The "Clean Energy Act" (S.2776) sponsored by Republicans Lamar Alexander (TN) and Mike Crapo (ID) and Democrats Jim Webb (VA) and Mark Warner (VA), would encourage the build-out of new nuclear plants with a major expansion of loan guarantees, providing $10 billion in appropriations to be leveraged into roughly $100 billion in loan guarantees. In addition, the bill would provide $750 million in funding to establish new "mini-Manhattan projects" to advance clean energy research.

[5] The Clean Energy Deployment Administration is included in the bipartisan ACELA bill, see note [2] above. A similar provision passed the House in the Waxman-Markey American Clean Energy and Security Act.

[6] The Electric Vehicle Deployment Act (S.3442), sponsored by Democrats Byron Dorgon (ND) and Jeff Merkley (OR) and Republican Lamar Alexander (TN), aims to put the US on track to electrify half of all vehicles on the road by 2030. The $7-10 billion bill would: launch pilot communities across country to spur adoption of electric and plug in hybrid vehicles (funded at $2 billion per year); subsidize the nationwide build-out of charging infrastructure and purchase of electric and plug-in vehicles, including new credits for medium- and heavy-duty hybrid purchases; provide $1.5 billion for advanced battery research and $250 million for related workforce development and education efforts.

[7] Incentives for advanced biofuels production and flexible fuel vehicles are included in the Lugar energy bill, see note [3] above.

[8] The Energy Committee bill, see note [2] above, would authorizing a doubling of applied research programs at DOE, and basic research programs at DOE and elsewhere are on track to double under the America COMPETES Act originally passed with bipartisan support and signed into law by President Bush in 2007.

[9] These innovation centers would be consistent to the "mini-Manhattan projects" proposed by the Webb-Alexander-Warner-Crapo bill, see note [5] above.

[10] Clean energy cluster programs would extend multi-sector, collaborative research efforts to enhance the strength of regional economic clusters and could be a natural and effective extension of the research programs supported by Republicans. See "Strengthening Clean Energy Competitiveness: Opportunities for America COMPETES Reauthorization"

[11] A "cash for coal clunkers" style program offering $11 billion in financial incentives to accelerate the closure of the oldest, dirtiest coal plants comprising 16% (49 GW) of the coal fleet but representing a disproportionate amount of U.S. pollution of both the carbon and conventional varieties appeared in draft legislation sponsored by Senator Dick Lugar (R-IN). The final version introduced as S.3464 (see note [3] above) included a narrower incentive program for coal plant retirement. Republicans Lamar Alexander (TN) and Susan Collins (ME) and Democrats Tom Carper (DE) and Amy Klobuchar (MT) have sponsored the "Clean Air Act Amendments of 2010" (S.2995) which would impose new 'three-pollutant' air pollution requirements on mercury, SO2 and NOx emissions at power plants.

[12] A wide range of efficiency programs are included in both the bipartisan Energy Committee bill, see note [2], and the Lugar bill, see note [3], as well as numerous other bills co-sponsored or introduced by Republican Senators.

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Clearing the Clean Energy Innovation Threshold

Originally posted at the Breakthrough Institute

The latest from the Brookings Institution's Mark Muro is a perfectly succinct summary of how one should judge the coming Kerry-(Graham?)-Lieberman Senate climate and energy bill, reportedly scheduled for release this Wednesday:

What is clear, though, is this: To get to a good bill senators need to deal properly with the revenue--whether from offshore oil drilling or pollution allowance auctions or whatever else is in the bill. And to do that they need to make sure a huge chunk of it gets applied to clean-energy research and development. Get that right and much else needn't be perfect. Blow that, and the bill is likely not worth it.

... The bottom line is this: Putting a price on carbon, or regulating emissions, ... while absolutely necessary, will not be sufficient to address the nation's climate problem and will, importantly, not put the U.S. in the position to seize the extraordinary opportunities that will come with rebuilding to global energy economy. Also necessary, as we keep saying, will be a major drive to promote large-scale technology breakthroughs. No matter how you measure it, U.S. government investment in clean energy R&D remains grossly inadequate. Right now clean energy R&D accounts for only around $3 billion a year. But if we're going to see real progress in de-carbonizing the present economy and creating the next one this number should be closer to $15 billion and probably as much as $25 billion per year.

So that's the target: $15 to $25 billion a year is "the number"--the critical investment threshold for federal clean energy investment that must become a core benchmark for evaluating any and all federal climate, energy, or indeed appropriations deal making.

Mark notes the rumors and reports of the still-not-yet-public drafts of the K-G-L bill do not bode well for the bill's ability to clear this critical clean energy innovation threshold...

Mark also notes that if Congress still insists on moving forward with more offshore drilling -- a key pillar of the political dealmaking behind the Senate climate bill push -- the new revenues from oil and gas production should be directed towards clean energy innovation investments as well. Here's Muro:

The price of drilling's inclusion should clearly be not just strict new drilling safeguards, but a hard link of drilling to clean technology innovation as well. That is, Senate dealmakers should in effect embrace the outline of a recent GOP plan to put hundreds of billions of new oil and gas royalties into a fund to accelerate clean energy innovation that would help make clean energy cheap and truly help wean America from its carbon dependency.

While the political inevitability of new offshore drilling sure looks to have vanished since Breakthrough's Yael Borofsky and I outlined the same concept about a month ago, the larger point still stands: IF we drill, the money had better be put to good use, and that means investing in our clean energy future.

Read Muro's full post at the New Republic here.

See also:

The Innovation Consensus: $15 Billion for Clean Energy R&D

After "Drill, Baby, Drill," Obama Should Embrace Another GOP Energy Plan

"Jumpstarting a Clean Energy Revolution with a National Institutes of Energy" - Breakthrough Institute featured policy report

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WEBINAR: Climate Legislation in the US Senate: Will Obama Get a Bill?

Live Webinar May 6, 2:30 PM ET / 11:30 AM PT - REGISTER TODAY

Following closely on the Earth Day, April 22, release date of the proposed Kerry-Lieberman Senate legislation (until recently the Kerry-Graham-Lieberman legislation), The Energy Collective will bring together energy experts, a key legislator from the U.S. Senate, and the head of the Environmental Defense Fund to examine and debate the bill in an online, interactive forum. Click here to register for the free webinar today.

How will the Senate bill regulate large emitters and price greenhouse gas across the oil & gas, utility, and manufacturing industries as compared to the House-passed Waxman-Markey American Clean Energy and Security Act?

Among other questions, we'll ask:

• Can the Democrats pass the Kerry-Lieberman bill in 2010? What's the strategy for bringing uncommitted Senators on-board?
• What will the total emissions reductions be if the bill is implemented?
• Industries will be regulated very differently from each other in the bill - why is comprehensive legislation still necessary?
• What is the state of play on distributing free emissions allocations through the bill, which could be worth hundreds of billions of dollars over the course of the legislation?
• Why are pricing fees for emissions preferred to an economy-wide emissions cap?
• How does the bill address concerns over economic impacts of climate legislation?
• How do nuclear energy policies and incentive differ from those in the House bill?
• Your questions, submitted live during the event.

Featuring:

Senator Lamar Alexander (R-Tennessee) chairs the Senate Republican Conference and serves on committees overseeing education, clean air, highways, science, appropriations and the Tennessee Valley Authority. He is the only Tennessean ever popularly elected both governor and U.S. Senator. Sen. Alexander has been U.S. Education Secretary, University of Tennessee president, and professor at Harvard 's School of Government. He chaired the National Governors’ Association and President Reagan's Commission on Americans Outdoors. Recently, he is the author of Going to War in Sailboats: Why Nuclear Power Beats Windmills for America’s Green Energy Future.

Fred Krupp has been President of the Environmental Defense Fund for 25 years, and has overseen the growth of EDF into a recognized worldwide leader in the environmental movement. Krupp is widely acknowledged as the foremost champion of harnessing market forces for environmental ends. He also helped launch a corporate coalition, the U.S. Climate Action Partnership, whose Fortune 500 members – Alcoa, GE, DuPont and dozens more - have called for strict limits on global warming pollution. Krupp is coauthor, with Miriam Horn, of New York Times Best Seller, Earth: The Sequel. Educated at Yale and the University of Michigan Law School, Krupp was among 16 people named as America’s Best Leaders by U.S. News and World Report in 2007.

Marc Gunther is a veteran journalist, speaker, writer and consultant whose focus is business and sustainability. Marc is a contributing editor at FORTUNE magazine, a senior writer at Greenbiz.com, a lead blogger at the Energy Collective. He's also a husband and father, a lover of the outdoors and a marathon runner. Marc is the author or co-author of four books, including Faith and Fortune: How Compassionate Capitalism is Transforming American Business. He's a graduate of Yale who lives in Bethesda, MD.

Jesse Jenkins is Director of Energy and Climate Policy at the Breakthrough Institute, and is one of the country's leading energy and climate policy analysts and advocates. Jesse has written for publications including the San Francisco Chronicle, Baltimore Sun, Yale Environment 360, Grist.org, and HuffingtonPost.com, and his published works on energy policy have been cited by many more. He is founder and chief editor of WattHead - Energy News and Commentary and a featured writer at the Energy Collective. Jesse goes by @JesseJenkins on Twitter.

Click here to register for the free webinar now and mark your calendar.

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Senate Climate Bill Trio Scrapping Oil and Gasoline Fee?

Originally posted at the Breakthrough Institute

[Update at end of post - 4/22/10 at 5:20 PST]

According to several reports, the trio of senators leading the effort to craft a climate and energy bill for release next Monday are back-peddling from earlier plans to implement a new fee on petroleum-based fuels such as gasoline amidst concerns that any new "gas tax" would trigger voter backlash.

Earlier reports of ongoing, private negotiations on a Senate climate and energy bill led by Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) indicated that the trio were planning to drop the 'economy-wide' cap and trade plan included in the House-passed Waxman-Markey bill in favor of a 'three sector' approach to regulating emissions from power plants, industry, and petroleum-based fuels.

A cap would be implemented on the power sector to begin with, with industry phased in at a later date, while the oil sector would be exempted from the plan. Instead, petroleum-based fuels, including gasoline and diesel fuel, would be subject to a "linked fee" that would be tied somehow to the price of carbon pollution credits under the power sector cap and trade program -- in effect, a variable tax on gasoline and other petroleum products.

Now however, the Wall Street Journal reports that Sen. Kerry vehemently declares, "There is no gas tax, there was no gas tax and there will never be a gas tax."

Another Journal article similarly reports:

The senators had been discussing the idea of using an indirect tax on gasoline to substitute for emissions caps on the oil industry, according to people familiar with the discussions. The White House last week said President Obama wouldn't support an increase in the current federal gas tax of 18.4 cents a gallon, and Messrs. Graham and Kerry have disavowed the idea of a gas-tax increase.

As we await the release of the Kerry-Graham-Lieberman senate climate bill next Monday, there's thus little clarity about how, if at all, oil refiners and transportation fuels will fall under the bill's carbon regulations. The transportation sector is responsible for roughly one-third of total U.S. greenhouse gas emissions, the second largest sectoral share after power plant emissions.

UPDATE: Kate Sheppard at Mother Jones is fresh off a conference call with Senator Kerry which revealed a few more details of the yet-to-be-released Senate climate bill. According to Sheppard, Kerry says the bill should now have the backing of at least three of the five big oil majors as well as the Edison Electric Institute, a trade group representing the country's investor-owned utilities. And here's the current scoop on the oil and transportation sector, according to Sheppard:

There will be no fee--or "gas tax"--on transportation fuels. Instead, oil companies would also be required to obtain pollution permits but will not trade them on the market like other polluters. How this would work is not yet clear.

Looks like Kerry et al. are still trying to figure out how to increase the cost of gasoline through carbon fees without calling it a "gas tax." We'll see how that goes...

See also:

• "New "Tri-Partisan" Climate Framework Aims to Clear High Senate Hurdle
  
• Breakthrough Institute's collected analysis of Congressional climate legislation

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Senator Byrd Responds to WV Mining Tragedy, Questions Massey Coal's Safety Record

Cross-posted from Appalachian Voices' Front Porch blog

Washington, DC – U.S. Senator Robert C. Byrd, D-W.Va. issued the following statements in response to media inquiries on a number of topics relating to the mining disaster in West Virginia:

“While the situation on the ground this morning is not as encouraging as we had hoped, my prayers continue for those who have lost their loved ones, and for the safe return of the four missing miners and those mine rescue team members who are also risking their lives to save their fellow West Virginians.”

“It is infuriating that in this day and age, and in this country, that such a disaster could still happen. I am sick. I am saddened and I am angry. We have the laws. We have the resources. These tragedies, on this scale, should no longer be happening.”

“Once we learn the cause of this disaster and investigations are completed whether it is wrongdoing by Massey, lack of enforcement by MSHA, or inadequacies with the mine health and safety laws, including the MINER Act of 2006, action will need to be taken.”

LEGISLATIVE CHANGES

“It is premature to say what changes in laws or regulations may be needed until the investigation is underway. But I have called for a reexamination of the health and safety laws that have been put into place and what more may need to be done to avoid future loss of life.”

“I have received a commitment from Senator Tom Harkin, who is a true friend of the coal miner, and who Chairs both the Senate Committee on Health, Education, Labor, and Pensions (HELP), and the Senate Appropriations Subcommittee on Labor, Health and Human Services and Education (LHHS), that a Senate hearing will occur on this overwhelming mining disaster. This will be in addition to the hearings in the House of Representatives that were requested by my West Virginia colleague, Congressman Nick J. Rahall. The House hearings will occur in the House Education and Labor Committee.”

MASSEY RESPONSE

“This has been one of Massey CEO Don Blankenship’s comments following this tragic mining disaster: ‘Violations are unfortunately a normal part of the mining process. There are violations at every coal mine in America, and (the Upper Big Branch Mine) was a mine that had violations.’” (Source: http://www.usatoday.com/news/opinion/editorials/2010-04-08-editorial08_ST1_N.htm.)

“Well for this Senator, the more I learn about the extent of these violations by Massey at the Upper Big Branch Mine alone, the angrier I get. 57 citations in the month of March alone! Closed over 60 times during the past two years to correct problems!”

“To me, one thing is clear – for a company that has had this number of violations at just one coal mine - one must seriously begin to question the practices and procedures of this particular coal company and it needs the most serious scrutiny from the Congress and the federal regulators.”

MINE SAFETY AND HEALTH ADMINISTRATION FUNDING

“Through my efforts as the senior member of the Senate Appropriations Committee, I have been able to increase funding for coal enforcement from $117 million in Fiscal Year 2006, to $159 million in Fiscal Year 2010 – a 36 percent increase. In June 2006, the Senate Appropriations Committee directed MSHA to hire 170 new coal inspectors. Since then, with the funding I have secured, MSHA has hired 444 coal enforcement personnel, including 119 in West Virginia – increasing the number of inspectors and specialists from 568 in January 2006, to 748 in March 2010. I will continue to examine the funding needs of MSHA as this investigation moves forward.

“Media reports have stated that ‘Safety officials warned Congress three months ago that the backlog of violations could undermine a crackdown on repeat offenders. A backlog of some 82,000 violations and $210 million in contested penalties is pending before a review commission. In 2009, companies protested roughly two-thirds of the $141 million in penalties assessed by federal regulators.’”

“I secured additional funding in the Fiscal Year 2010 appropriations bill for the Solicitor of Labor and Federal Mine Safety and Health Review Commission (FMSHRC) to help litigate the fines. President Obama’s budget request for FY 2011 builds on that funding, and I am currently examining whether more funding is needed to help shorten the amount of time to litigate these fines.

The FMSHRC budget increased by $1.7 million in FY 2010 and the Solicitor budget has increased by $28 million in last two years. And at my request, the Appropriations Committee has urged the Department of Labor to use additional resources to litigate mine safety penalties.

“In addition, I have secured $4 million in the last two years to increase spot inspections to enforce dust control limits. This is necessary to reduce the risk of explosions and black lung.”

MARSH FORK ELEMENTARY SCHOOL

“Marsh Fork Elementary School sits at the foot of a Massey Energy mountaintop mining site which includes a pond that holds back hundreds of millions of gallons of toxic coal slurry. Since the Upper Big Branch Mine site is in close proximity to the Massey Energy mountaintop mining site, I inquired as to whether the stability of the impoundment lot could have been compromised as a result of the mine explosion.”

“According to information I received from the Department of Labor, the slurry impoundment, located above the Marsh Fork Elementary School, was inspected on Wednesday and determined by inspectors to ‘be fine.’”

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Clean Tech Execs Champion Innovative Clean Energy Deployment Administration

By Jesse Jenkins, Devon Swezey, and Yael Borofsky

A new Clean Energy Deployment Administration (CEDA) is critical to "position the U.S. as the global leader in the development and deployment of clean energy technologies for years to come," according to a letter written by the country's leading clean tech entrepreneurs, investors, and stakeholders.

Thirteen leading clean tech companies, including Google, GE, and Kleiner Perkins, wrote to President Obama last week urging him to expedite the creation of a Clean Energy Deployment Administration along the parameters outlined by the Senate's American Clean Energy Leadership Act of 2009 (ACELA).

According to ACELA, a bipartisan product of the Senate ENR committee under the leadership of Senator Jeff Bingaman (D-NM), CEDA would be a new autonomous agency staffed with project financing experts and its own Administrator but maintain affiliation with the Department of Energy in order to benefit from DOE's considerable energy expertise. CEDA would provide financial enhancement, much like a bank, through a flexible suite of credit augmentation tools, including loan guarantees, securitization, insurance, that would reduce risk for investors in clean energy innovation. CEDA's financial support packages will thus help innovative new clean technologies secure private-sector financing, greatly increasing investment in this critical sector with limited risk to taxpayers.

Perhaps the most important and unique feature of CEDA is that it would be the first example of a deployment-oriented agency specifically designed to further accelerate clean energy innovation. To date, most clean energy deployment policies - renewable electricity standards, production tax credits, even the House version of CEDA - are far more focused on driving megawatts into the ground (and thus supporting more mature technologies, like wind). In contrast to the House version, which is more likely to act as (and compete with) a typical bank, the Senate's formulation of CEDA breaks new ground for deployment policy in its understanding that innovation doesn't end at the lab. Under ACELA, CEDA would have the ability to take on riskier projects thanks to explicit technology improvement goals, with objectives to drive lower prices and higher performance in an array of nascent clean technologies that advance some of the nation's most pressing interests.

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A CLEAR Look at the Cantwell-Collins Climate Bill, Part 1: Climate Goals

Originally at the Breakthrough Institute

A new climate bill, introduced Friday by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME), would invest only a tiny fraction of the bill's revenues to catalyze clean energy technology innovation while implementing an emissions cap that requires CO2 emissions to fall roughly 5% below 2012 levels.

[Note: post updated 12/17/09 with a correction and additional information]

At least $15 billion must be invested annually to boost federal R&D budgets and jumpstart clean energy innovation to improve the price and performance of clean technologies, according to a wide consensus of energy experts, along with additional investments in clean energy demonstration, deployment, manufacturing and infrastructure.

All told, direct public investment of an estimated $30-80 billion annually is necessary to make clean energy cheap, accelerate clean tech adoption, and ensure climate objectives can be met in an affordable and timely manner.

In contrast, the Cantwell-Collins bill would initially direct just $2.5-8 billion annually to support U.S. clean energy technologies and industries, the Breakthrough Institute estimates based on the bill's supporting documents.

The Carbon Limits and Energy for America's Renewal, or CLEAR Act proposes to limit U.S. emissions of greenhouse gases through a simplified cap and trade system that auctions permits to polluters and rebates the majority of revenues directly to households through monthly, per capita dividend checks.

The legislation targets a 20 percent, economy-wide cut in U.S. greenhouse gas emissions by 2020, relative to a 2005 benchmark.

To achieve this target, the bill sets an upstream cap on importers and producers of fossil fuels that would require CO2 emissions to fall just over 5 percent relative to 2012 levels. If the most recent EIA projections of depressed emissions levels due to the economic recession prove accurate, those cuts could be in the range of 9% below the 2005 benchmark. [Note: post updated with correction on 12/17/09; rate at which emissions cap declines was misreported in prior version.]

That falls short of the bill's 20% by 2020 target and the CLEAR Act's emissions cap covers CO2 only, which is responsible for roughly 85 percent of U.S. greenhouse gases when each gas is weighted by their impact on global warming.

To fill this gap, the legislation directs the President to achieve additional emissions reductions in non-capped sectors of the U.S. economy by directly funding programs to encourage land-use changes that sequester carbon in forestry and agriculture or reduce emissions of non-CO2 greenhouse gases such as methane. The bill sets aside a portion of the cap and auction revenues in a trust fund that prioritizes spending on these additional reductions, but precise uses of that fund is subject to Congressional appropriations.

While it offers several structural advantages over competing cap and trade proposals (discussed in Part 2, forthcoming), CLEAR is principally focused on pollution reduction and does not implement a clean economy strategy sufficient to keep the U.S. competitive in the global clean energy race (see forthcoming Part 3).

Clean technology investments far short of expert recommendations

The CLEAR Act will raise an estimated $42-126 billion annually by auctioning 100 percent of the emissions permits created under the bill's upstream carbon cap.

Carbon auction prices will fall between both a floor and a ceiling, initially set at $7 and $21 respectively. The floor would rise gradually at 6.5 percent above inflation annually while the ceiling rises at 5.5 percent each year.

The legislation devotes three-quarters of the carbon auction revenue to sending monthly rebate checks to households on an equal, per-capita basis, which the bill's authors claim will be sufficient to fully compensate roughly 80% of American households for any increase in energy bills caused by the implementation of carbon regulations.

That leaves just one quarter of the bill's revenue that is set aside in a "Clean Energy Reinvestment Trust Fund." The value of the CERT fund would total an estimated $10-32 billion annually at the outset of the cap and auction program, increasing over time as carbon prices rise to roughly $16-46 billion by 2020.

Source: Senator Cantwell's office

The bill does not specify a clear strategy for utilizing the CERT funds and hands those decisions to future Presidential budget requests and Congressional appropriations cycles.

CERT funds would be prioritized to capture additional reductions of non-CO2 greenhouse gases and enhance carbon sequestration in the agriculture and forestry sectors to enable the legislation to hit its 20% by 2020 emissions reduction target. Senators Cantwell and Collins say they envision 42 percent of the CERT funds used to pursue these additional emissions reductions outside the emissions cap on the energy sector.

In addition to these efforts, the bill names a long list of other competing uses for the CERT funds (see p. 20-21), including transition assistance for heavy industry, home weatherization and energy efficiency funding, compensation for early retirement of fossil energy infrastructure, and international climate adaptation aid.

Given the variety of competing uses and the relative priority the bill places on funding land use changes and the abatement of non-CO2 gases, the CLEAR Act could easily devote as little as a quarter of the CERT revenues to investments in clean energy technology and infrastructure.

That would leave the Cantwell-Collins bill investing only slightly more than six percent of the bill's total revenues, a sum totaling $2.5-8 billion annually at the range of initial carbon prices, to catalyze clean technology innovation, directly support clean energy manufacturing capabilities and domestic market growth, and spur the construction of critical enabling infrastructure, such as long-distance transmissions lines, smart grid technologies and electric vehicle charging stations. That level of investment in clean technology could grow to $4-11.5 billion by 2020 but falls far short of expert recommendations.

Ensuring climate objectives are met in a timely and affordable manner requires strategic public investments to improve the price and performance of clean energy sources and remove key barriers to the adoption of clean technologies. Establishing a price on carbon alone is far from sufficient to overcome each obstacle and a number of energy experts estimate that targeted public investments on the scale of tens of billions annually are necessary to catalyze an affordable and rapid transition to a clean energy system. [For more on the limits of carbon prices and the need for strategic public investments, see the chapter "Barriers to Widespread Clean Energy Adoption and the Public Investment Imperative" in this Breakthrough Institute and ITIF report]

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Sources and notes:
[1] Energy innovation consensus includes 34 Nobel Laureates, two organizations representing the nation's leading universities, business leaders such as Google, and think tanks including Third Way, the Brookings Institution and the Breakthrough Institute; [2] Source: WhiteHouse.gov, "Energy and Environment"; [3] See series of letters here and here signed by dozens of energy experts; [4] For more, see here; [5] Source: "Rising Tigers, Sleeping Giant" report.


2020 emissions target is aspirational, not required by carbon cap

The CLEAR Act would establish a simplified "upstream" cap on the few thousand fossil fuel importers and producers that first bring carbon-laden fuels into the U.S. economy.

Fuel importers and producers would be required to purchase emissions permits from the federal government at regular auctions and could then trade these permits amongst themselves in secondary markets. In a departure from other cap and trade proposals, which create large Wall Street-run carbon markets replete with complex derivatives and futures products, the CLEAR bill prohibits anyone but regulated polluters and those sequestering CO2 downstream in the fuel cycle from participating in the carbon trading market.

The initial cap level would be set by the President in 2011 and would go into effect from 2012-2014, freezing emissions from capped sources at 2012 levels, after which the cap would decline at a steadily accelerating rate each year. The annual rate at which the cap falls grows at 0.25% per year, such that the cap falls 0.25% in 2015 from the prior year's level; 0.5% in 2016 from the prior year's level; 0.75% in 2017 from the prior year's level; and so on. [Note: the bill's explanatory documents are not entirely consistent, but the bill language itself is clear and the above interpretation has been confirmed by staff to Sen. Cantwell familiar with the legislation's development].

Thus, the carbon cap itself does not decline at a sufficient pace to achieve the bill's 20% by 2020 economy-wide emissions target. The CLEAR bill's carbon cap would fall just 5.14% below 2012 emissions levels by 2020 and does not cover the non-CO2 greenhouse gases responsible for roughly 15 percent of U.S. emissions, when weighted by their impact on global warming. The bill directs the President to fund additional emissions reductions outside of the capped energy sector to meet the bill's more ambitious emissions reduction targets, as discussed above.

The accelerating decline of the emissions cap requires more stringent CO2 reductions in the mid- to long-term. Given the long lead times required for many clean technology investments, staff to Senator Cantwell argue that this long-term certainty will provide a clearer incentive for private sector investments in clean energy in the shorter term. This is an advantage over competing cap and trade bills, they argue, which allow extensive use of emissions offsets, creating long-term uncertainty about required emissions reductions in the capped energy sector.

CLEAR does not allow the use of emissions offsets, which competing climate bills heavily rely on for compliance, and Senator's Cantwell and Collins claim CLEAR will achieve emissions reductions comparable to those projected under the House's Waxman-Markey bill. That bill would allow enough offset usage to permit U.S. emissions in sectors of the economy regulated by the emissions cap to grow at business-as-usual rates through 2017 or beyond, depending on offset availability, according to Breakthrough Institute analysis of the House-passed bill.

However, with Cantwell-Collins relying on additional emissions reductions in land use and non-CO2 gases to supplement the bill's modest carbon cap and Waxman-Markey depending on large amounts of offsets to affordably meet emissions goals, both bill's 2020 emissions objectives should be considered aspirational targets, not firm limits on U.S. emissions.

Furthermore, neither bill's emissions cap will require a significant near-term transformation of the U.S. energy sector, while both devote little revenue to direct public investments to accelerate clean technology innovation and adoption.

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