Despite months of effort, Senate Democrats have been unable to unite in support of a cap-and-trade program or a renewable standard.  A renewable standard requiring utilities to provide 15 percent of their power from renewable sources by 2021 was a key provision in an “energy-only” bill the Senate Energy and Natural Resources Committee approved last year with support from both Democrats and Republicans.  Nonetheless, Senator Reid has decided that he lacks the requisite 60 votes to pass either this standard or a cap-and-trade program.

In addition to the oil spill response provisions, the energy package that Senator Reid says he will push also includes provisions for the creation of clean-energy jobs through the “Home Star” energy efficiency retrofit program, tax incentives for manufacturing of vehicles that run on natural gas, and investments in the Land and Water Conservation Fund.  Reid suggested that many of the bill’s provisions may be based on language from previously-introduced bills; the oil spill response provision, for example, will likely rely heavily on bill S. 3305, sponsored by Senator Robert Menendez (D-NJ), which raises a company’s maximum oil spill liability amount from the $75 million cap set out in the Oil Pollution Act of 1990 to $10 billion. 

Most observers think that cap-and-trade and likely the renewable standard are now unlikely to move in this Congress.  Congress will only have a short session when it returns from the August recess before it adjourns for the elections.  Some have speculated that Congress might take up these issues in a lame duck session after the elections.

Reports circulated this week that representatives of selected utilities and environmental groups were meeting together to see if agreement on utility cap-and-trade is possible.  The head of the National Rural Electric Cooperative Association, however, stated that he is opposed to a utility-only approach, and the Edison Electric Institute has not taken a public position on such an approach. 

The talks became more complicated given the desire of the utilities to also develop a legislative approach for addressing emissions of the “other 3 Ps,” or pollutants, meaning sulfur dioxide, nitrogen oxides, and hazardous air pollutants that, like carbon dioxide, are emitted from coal-fueled electric generation stations.  Environmental groups are said to be adamantly opposed to what they characterize as “give-backs” or “concessions” on 3-P emission reductions that they expect under the numerous regulations that EPA has proposed or has planned.  Meanwhile, Senator Carper expects to move to mark-up soon on his own bill that would cap and reduce 3-P emissions.

Congressional activity is now racing against the clock as the August recess nears.  The prospects remain extremely fluid.

While the President called for legislation reducing the nation’s use of fossil fuel, he avoided specific endorsements of current legislation such as the Kerry-Lieberman bill or of cap-and-trade legislation.  Instead, he noted that several different approaches – including raising efficiency standards in buildings, adopting renewable energy standards, and having the energy industry invest more money in research and development – “have merit and deserve a fair hearing in the months ahead.”  The President also stated that he is open to additional ideas from both democrats and republicans alike, so long as they address America’s addiction to fossil fuels.  President Obama added that “the one approach I will not accept is inaction.”

President Obama also applauded the House of Representatives for passing “The American Clean Energy and Security Act of 2009” last summer, a comprehensive energy and climate bill introduced by Congressman Henry A. Waxman (D-CA) of the Energy and Congressman Edward J. Markey (D-MA) of the Energy and Environment Subcommittee.  Meanwhile the Senate, which has not voted on a comparable energy bill yet, may chose to move forward with one or several pieces of various energy bills that have been previously introduced.  This includes:

• “The American Power Act,” introduced by Senator John Kerry (D-MA) and Senator Joe Lieberman (I-CT);
• “The American Clean Energy Leadership Act,” introduced by Senator Jeff Bingaman (D-NM);
• “The Practical Energy and Climate Plan,” introduced by Senator Dick Lugar (R-IN);
• “Carbon Limits and Energy for America’s Renewal (Clear) Act,” introduced by Senator Maria Cantwell (D-WA) and Senator Susan Collins (R-ME); and
• “The National Energy Security Act of 2009,” introduced by Senator Byron Dorgan (D-ND).

The full transcript of President Obama’s address can be found at the White House’s website at:  http://www.whitehouse.gov/the-press-office/remarks-president-nation-bp-oil-spill.

 Senator Lisa Murkowski (R-AK), joined by a group of 40 co-sponsors, including three Democrats, introduced the resolution in January under the Congressional Review Act (see March 5, 2010 edition of the WER).  The resolution would have prevented EPA from regulating GHG emissions under the Clean Air Act. 

 Under Senate procedural rules, resolutions introduced under the Congressional Review Act do not need 60 votes in the Senate and can be adopted by a simple majority.  Although the resolution may have had difficulty passing the House, and almost certainly would have been vetoed by President Obama, it was intended to force a vote on whether the Clean Air Act is an appropriate vehicle for regulating GHG emissions.

 Some possible supporters of the resolution decided to oppose it based on reports that the Majority Leader had promised a vote on a bill sponsored by Senator Rockefeller (D-WV).  Senator Rockefeller’s bill, which has not yet been formally introduced, would not prohibit EPA regulation as did the Murkowski resolution but would delay such regulation for a period of two years.  It is unclear at this time if and when the Senate will vote on Senator Rockefeller’s bill. 

 Also in the wings is possible legislation by Senators Carper (D-DE) and Casey (D-PA) that may not yet have been drafted but would, at least reportedly, delay regulation for one year and also codify EPA’s tailoring rule.  Thus, it remains uncertain whether renewed efforts will be made in Congress to prevent EPA regulation of GHG emissions; such regulation is scheduled to commence in January 2011.

 Senator Lugar’s bill establishes a “Diverse Energy Standard” to promote investment in lower-emitting energy sources.  Electric utilities would be required to obtain a “target percentage” of their electricity from these sources; this percentage would start at 15% in 2015 and rise to 50% by 2050.  Sources that would meet the bill’s standard include renewable power sources, coal usage that captures and sequesters at least 80% of carbon emissions, biomass, and coal mine methane. 

 In lieu of a comprehensive emissions cap-and-trade program or the establishment of a carbon price, the bill would establish a Federal diverse energy credit trading program.  Generators of electricity from these “diverse” sources would be issued energy credits, and could trade or sell any credits earned in excess of the quantity needed to comply with the “target percentage” to other electric utilities within the same state.  Until the year 2029, this program would issue credits to utilities generating electricity from coal that capture and sequester at least 65% of the coal’s carbon emissions.

 The bill also establishes a voluntary retirement program for the nation’s highest-emitting coal plants.  In exchange for voluntarily agreeing to retire one of these units before 2019, an electric utility would be subject to an “alternative compliance mechanism” lessening the unit’s regulatory compliance requirements under the Clean Air Act’s New Source Review, GHG performance standard, and Hazardous Air Pollutant programs.  Relief from these regulations would forego the need for the utility to install costly emissions reduction equipment over the next decade.

 Other sections of the bill call for increased vehicle efficiency and building energy efficiency measures and expanded loan guarantees for nuclear power.  The vehicle efficiency provisions codify proposed fuel economic standards until 2016; thereafter, passenger vehicles must achieve 4% annual efficiency improvements, and fuel efficiency standards for medium- and heavy-duty vehicles must be adopted.  The building energy efficiency provisions establish improved energy efficient building performance requirements for new residential and commercial construction, and offer federally-backed, low interest loans to promote energy efficiency retrofits.  Finally, the bill expands loan guarantees for nuclear power, offering an additional $36 billion to help deploy new nuclear power generation facilities.

A copy of the bill is available at http://lugar.senate.gov/energy/legislation/pdf/EnergyBill.pdf.