What the 112th May Bring
December 15, 2010
The 111th Congress did so little to distinguish itself in preparing us for our energy future that it's hard to imagine the 112th occupying a lower circle of Dante's tropical vacation spot. But the shift in the center of gravity of both Congressional chambers that was occasioned by the mid-term elections may consign renewable energy and climate change mitigation to the attic of our Government's conscience for a couple of years more. This is, in fine, the conclusion of 2010 Election Analysis, an appreciation prepared by Washington Council Ernst & Young for the Solar Energy Industries Association.
In Ernst & Young's analysis, Republicans in the upcoming Congress are seen as pushing for more extraction of traditional fossil fuels, resisting regulation of carbon emissions, and replacing mandates with incentives. The change in the character of Congress is also seen as forcing a realignment of the kinds of energy tax provisions and revenue offsets considered by House and Senate.
It's also projected that attempts to eliminate those tax provisions that benefit the oil and gas industry will face more implacable opposition than heretofore; (the House tried several times in the last two years to reduce the industry's tax concessions but were always stymied by the Senate). This opposition is expected to last into and throughout the 112th Congress.
Climate Change Changing
As for climate change, it should come as no surprise that a broad climate bill such as the Waxman-Markey or Kerry-Lieberman bill is not expected to surface. Even when Senate Democrats of the 111th Congress were in a putative 'supermajority' position (in reality they never were, unless they could count on independent senators Sanders and Lieberman to vote with them), they could not achieve the kind of unity needed to pass legislation that Republicans could command to defeat it. As a result, comprehensive economy-wide bills such as cap-and-trade died a-borning. To gauge the chances of anything more than piecemeal bills being entertained in the next two years, one need only refer to House Republicans' pre-election 'Pledge to America', which specifically opposes cap-and-trade measures.
The Environmental Protection Agency is also likely to come in for determined opposition. Ernst & Young fully expect Republicans to oppose, delay and hamper EPA rulemaking on regulation of carbon emissions under the Clean Air Act. It's also anticipated that Democratic Senator Jay Rockefeller (WV) will introduce a bill to delay for two years EPA authority to regulate stationary sources, his part of a deal reached with Senator Lisa Murkowski (R-AK) to compensate her for the failure of her resolution of disapproval of EPA carbon regulation back in March. That bill, however, would not be expected to survive a Presidential veto.
Renewable or Clean?
It's thought that Senate Energy and Natural Resources Committee Chairman Bingaman will again attempt a national renewable electricity standard – perhaps at the level of 15% of power from renewable sources by 2021. To have a chance of becoming law, however, it will probably have to be transmogrified into a 'clean' electricity standard, allowing nuclear, 'clean' coal and natural gas into its definition. How much air this will leave in the room for true renewables is unclear.
On the subject of nuclear energy, Republican Senator Lindsey Graham has already indicated that he will resume pushing for government loan guarantees for new plants.
Will Deficits Rule?
Much of what might have been possible under this Administration is now subject to increasing concern about government spending and the national deficit. If Congressional legislators take the deficit seriously, it could mean the first critical re-appraisal of energy production tax credits in many years. Incentives and credits now being lavished on the oil and gas industry could even come in for close review, although this would only be likely to have a noticeable beneficial effect on Solar in areas where these fuels are used extensively for electricity production.
A Slightly Less Lame Duck
One bright spot that will be carried over from the 'lame duck' session of the 111th Congress is that, after much advocacy and lobbying from a host of interested groups, the Department of Energy Treasury Grant Program (TGP) for renewables will actually not die at year's end but be extended until the end of 2011. This means a more favorable financial situation for commercial owners of solar property. More than that, it means jobs, economic activity and increased deployment of solar power. To quote from a letter sent to Speaker Pelosi and Majority Leader Hoyer by U.S. Representatives Thompson (D-CA), Blumenauer (D-OR) and Holt (D-NJ), and signed by 81 House members:
"The TGP eliminates the need to secure tax equity to finance commercial renewable energy projects and it creates jobs. In the solar industry, independent studies estimate that since the program was initiated in July 2009, the TGP supported the development of 1,118 solar energy systems and created roughly 20,000 jobs. If the program is extended, it is estimated to create an additional 65,000 jobs in the solar field and yield a net savings to the government of $400 million between 2010 and 2016."
What's not to Understand?
Yes, it's a bright spot, but set against an increasingly gloomy Congressional backdrop. As we look around the nation, we see states – some considerably more, admittedly, than others – blazing their own trails in the pursuit of renewables and emissions reduction. As we look around the world (see the report on the Cancun conference below), we see hundreds of countries making commitments to mitigate the effects of climate change simply because they know it must be done. We are bound to wonder aloud what it is that the U.S. Congress finds more imperative than addressing our energy, climate, economic and employment problems with a similar level of clarity.
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Scott's Contracting
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