Energy legislation can pass this Congress

Can this Congress pass significant energy legislation?  Recent signs--including the demise in the Senate of an efficiency bill--are not encouraging. 

Yet when major energy legislation was being written in 2005, in a Republican Congress, and in 2007, with Democrats in control, both bills attracted bipartisan support because their sponsors made sure they reflected widely-shared goals regarding energy policy.  Despite current partisan gridlock, those goals--reducing dependence on imported oil, increasing low emissions production, improving energy efficiency and investing in breakthrough technologies--still enjoy fairly broad support in Congress.

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However, much of the energy landscape has changed in the intervening years.  A number of key provisions in 2005 and 2007 were based on expectations of technology commercialization, investment patterns, and resource developments which have not occurred.  Equally, huge trends like the domestic shale gas and oil booms were largely unforeseen.  All of this suggests that Congress and industry, if they proceed carefully, have an opportunity to update and improve major provisions in existing law while maintaining sufficient bipartisan support.

A decade ago, for example, coal advocates were concerned about future regulation of carbon dioxide emissions.  They believed, along with the Bush Administration, that government investment in demonstration projects like Future Gen and loan guarantees would eventually lead to commercialization of coal-fired power plants with carbon capture and sequester (CCS) technology.    It turns out they were at least partly right.  Regulation of greenhouse gas emissions from new power plants is indeed about to occur through pending EPA regulations.  But investments in commercial- scale CCS have lagged, even though EPA regulations will in effect require new coal plants to employ the technology. 

But clear-eyed climate advocates are also increasingly concerned about massive coal emissions in China, India and other developing countries which may prevent effective action on climate change and which also require CCS technology to address.  This indicates a confluence of self-interest among realistic domestic coal adherents and reasonable climate activists, both of whom must confront the need to get serious about CCS.  Each can make the case that Congress will need to consider additional incentives for commercial-scale coal with CCS if America is going to continue to use its abundant coal reserves in the long-term while making large strides in cutting greenhouse gas emissions at home and abroad.      

Key expectations regarding the transportation fuels sector have also gone unfulfilled.  The Renewable Fuels Standard (RFS) passed in 2007 envisioned large commercial scale production of cellulosic ethanol, to supplement corn ethanol as the RFS pushed up against corn’s production limits.  But wide-spread commercial-scale cellulosic production has not occurred, making ambitious RFS quotas (36 billion gallons by 2022) increasingly impossible to meet.    Also unanticipated were problems in markets for ethanol credits that could increase gasoline price and volatility, and various issues regarding the ability to blend ever-larger amounts of ethanol into the liquid fuel mix.  

These problems are severe enough that EPA is likely to significantly reduce the renewable fuels quota requirement for the coming year.  Reform of the RFS that sets reasonable, achievable production quotas seems overdue and achievable, as key members from both parties in the House and Senate have noted.  However, such reform should continue to serve the underlying purpose of the reducing US oil imports.

Energy efficiency measures in 2005 and 2007 have proven far more modest than technology now allows.  In particular, the U.S. commercial and residential buildings sectors are grossly wasteful, costing business and consumers tens of billions of dollars annually compared to other industrialized nations.  The payback period for many efficiency investments is short, but investment is still lacking.  Evaluation of tax incentives for efficiency included in the 2009 stimulus bill could reveal the most cost-effective options.  A robust efficiency bill would accelerate efficiency standards for lighting, appliances, and other equipment. 

Congress should also consider new financing incentives for industrial efficiency that can help retool manufacturing to make US industry more competitive, including technologies like combined heat and power.

Energy’s historically bipartisan tradition is still being carried on by leaders like Sens. Ron Wyden (D-ore.) and Lisa Murkowski (R-Alaska) who have continued to legislate effectively on issues like initial hydropower regulatory reform and who even passed the government helium program phase out during the recent government shutdown.   In the House, Rep. Fred Upton (R-Mich.), chairman of the Energy and Commerce Committee, and ranking member Rep. Henry Waxman (D-Calif.) are well known as effective legislators.  Yet right now, even modest one-off bills like a watered down Shaheen-Portman efficiency measure have become difficult to pass.

Developing support from large sections of industry who favor RFS reform, from utilities and coal companies concerned about utilizing domestic coal, and from thoughtful climate change and efficiency advocates would amount to a powerful collection of interests, even if they all are motivated by separate concerns.  No doubt renewable and natural gas interests would have items to add like extending the renewable production tax credit or providing incentives for deployment of natural gas trucks and buses.  Any one of these groups could get their Congressional allies to stop such a bill.  But none of them is likely to get the benefits they seek without accepting broad-based legislation, and certainly the country won’t, either.

Bledsoe is a senior fellow on energy and climate at the German Marshall Fund of the United States.