Hill Heat

As hearings begin on the Kerry-Boxer Clean Energy Jobs and American Power Act (S. 1733), senators are staking out their positions on whether the regulations in the bill should be strengthened or weakened.

Max Baucus (D-MT)

E&E News Speaking at the start of an Environment and Public Works Committee hearing where he is the second highest-ranking member, the Montana Democrat said he wanted to weaken the bill’s 2020 target for greenhouse gas emissions—now 20 percent below 2005 levels. He did not name a specific midterm target for the heat-trapping gases, instead telling reporters he hoped for “some modification.” The six-term senator also said he hoped to attach pre-emption language to the Senate climate bill, S. 1733, that stops U.S. EPA from implementing a 2007 Supreme Court opinion that opens the door to new greenhouse gas emission standards on industry.

The legislation before us is about our economy. Montana, with our resource-based agriculture and tourism economies, cannot afford the unmitigated impacts of climate change. But we also cannot afford the unmitigated affects of climate change legislation. That’s why I support passing common-sense legislation that reduces greenhouse gas emissions while protecting our economy. The key word in that sentence is ‘passing.’

Barbara Boxer (D-CA)

E&E News No climate bill has ever had this level of review, and the Obama administration stands behind this analysis.

This bill is the best insurance against a dangerous future. It is a responsible approach that sets attainable goals for gradual reductions in carbon emissions and it protects consumers, businesses and workers as we move toward clean energy. This need for bipartisanship, believe me, I’d give anything if had a John Warner still sitting here. We don’t have it. Climate change, global warming isn’t waiting for who’s a Democrat or who’s a Republican. Either we’re going to deal with this problem, or we’re not.

[on weakening targets] I don’t think it’s necessary, because we’re so down on carbon, by about 8 or 9 percent, so the real goal is going to be really easy to meet.

Lindsey Graham (R-SC)

E&E News Graham told reporters he hoped to form a “working group” with Kerry and the Obama administration that could serve as a forum for senators who do not sit on the relevant committees. “What we’re going to do is start with a clean sheet of paper and say, ‘What does it take?’” Graham said.

James Inhofe (R-OK)

EPW The victims of cap-and-trade can’t just move on and get new, green jobs.

John Kerry (D-MA)

E&E News America’s leadership is certainly on the line here.

E&E News It’s really a much lower percentage, frankly, by 2020. We’ll see what happens on the floor on that. I’m open to talking to Max. We’ll see where we wind up.

Frank Lautenberg (D-NJ)

E&E News Senator Baucus is a major figure in the Senate. The fact is, he has a different attitude than I, based on the needs of what he sees in his state. I wouldn’t hesitate to remind him there’s a national good that can come out of this, and to see if we can persuade him.

_Witnesses_

• Shari T. Wilson, Secretary, Maryland Department of the Environment
• Ronald E. Young, President, California Association of Sanitation Agencies
• Dr. Peter C. Frumhoff, Chief Scientist, Climate Campaign, Union of Concerned Scientists
• Larry J. Schweiger, President and Chief Executive Officer, National Wildlife Federation
• Fawn Sharp, President, Quinault Indian Nation
• Jim Sims, President and Chief Executive Officer, Western Business Roundtable
• Kenneth P. Green, Resident Scholar, American Enterprise Institute

_Witnesses_

• David Crane, President and Chief Executive Officer, NRG Energy, Inc.
• Ralph Izzo, Chairman, Chief Executive Officer and President, Public Service Enterprise Group Incorporated (PSEG)
• Kevin Law, President and Chief Executive Officer, Long Island Power Authority
• Nathaniel Keohane, Director of Economic Policy and Analysis, Environmental Defense Fund
• Joel Bluestein, Senior Vice President, ICF International
• Barry Hart, Chief Executive Officer, Association of Missouri Electric Cooperatives
• Dustin Johnson, Commissioner, South Dakota Public Utilities Commission

Kirsten Gillibrand (D-N.Y.)

Daily Kos I am working hard on EPW to make the bill as strong as possible—I want the Clean Air Act to regulate coal emissions, I want to make sure we get funding for mass transit (New York uses 1/3 of all mass transit in America), we need green taxis and green jobs funding, and it’s important that agriculture has a place in the offsets market. I plan to support the bill assuming it’s a progressive approach to lowering carbon emissions and creating jobs through the new green economy.

1Sky The Clean Energy Jobs and American Power Act preserves Clean Air Act authority to regulate the nation’s oldest and dirtiest coal plants. These protections are critical to New Yorkers, as we are on the receiving end of air pollution from many of these plants – contributing to acid rain, harming natural resources such as the Adirondacks, increasing contamination in our waterways, limiting the number of fish we can eat, and increasingly growing asthma rates that raise our health care costs.

Frank Lautenberg (D-N.J.)

1Sky Wake up, America – your kids are in danger!

Jeff Merkley (D-Ore.)

1Sky This is a choice between planetary stewardship, or a rise in the earth’s temperature that is devastating to human civilizations… 20% by 2020 is not an overly aggressive goal… in fact, you could argue that this bill is not moving fast enough. The IPCC says that in order to have a reasonable probability of [averting dangerous climate change,] developed countries should decrease their emissions [by even more].

Bernie Sanders (I-Vermont)

1Sky What we are dealing with is not a political compromise. We are dealing with science!

Sheldon Whitehouse (D-R.I.)

I very very strongly believe that it is time that these power plants are held accountable! They have dodged around the law for too long, and their corporate lobbyists have won against our children’s lungs, and I for one am fed up with it! So I for one will stand firm on the Clean Air Act, and I hope many of my colleagues will support me on that.

_Witnesses_

• John Warner, United States Senator (Retired)
• Kathleen Hicks, Deputy Undersecretary of Defense for Strategy, Plans, and Forces, United States Department of Defense
• Vice Admiral Dennis McGinn USN (Ret.), Member, Military Advisory Board Center for Naval Analyses
• Major General Robert H. Scales (Ret.), Drew Sloan Fellow, Truman National Security Project
• Lieutenant Colonel James Jay Carafano (Ret.), Deputy Director, Kathryn and Shelby Cullom Davis Institute for International Studies, Director, Douglas and Sarah Allison Center for Foreign Policy Studies, The Heritage Foundation

_Witnesses_

• Peter Brehm, Vice President of Business Development & Government Relations, Infinia Corporation
• Dan Reicher, Director, Climate and Energy Initiatives, Google
• Dave Foster, Executive Director, Blue Green Alliance
• Michael Nutter, Philadelphia Mayor
• Kate Gordon, Senior Policy Advisor, Apollo Alliance
• Bill Klesse, Chairman and CEO, Valero Energy Corp
• Brett A. Vassey, President and CEO, Virginia Manufacturers Association

From the Wonk Room.

This week, hearings begin in the Senate Committee on Environment and Public Works on the Clean Energy Jobs and American Power Act (S. 1733). This comprehensive climate and clean energy legislation, co-sponsored by Sen. John Kerry (D-MA) and committee chair Barbara Boxer (D-CA), will establish a mandatory global warming pollution reduction market that will fund clean energy and climate adaptation, as well as establish new renewable energy and energy efficiency standards. The 19 members of the committee – 12 Democrats and 7 Republicans – are overseeing a three-day marathon of legislative hearings this week, starting with Administration witnesses today.

The committee members can be sorted by their degree of support for clean energy, progressive reform, and strong climate action:

• STRONGEST ACTION: Jeff Merkley (D-OR), Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI)
• STRONG ACTION: Barbara Boxer (D-CA), Ben Cardin (D-MD), Kirsten Gillibrand (D-NY), Amy Klobuchar (D-MN), Frank Lautenberg (D-NJ), Tom Udall (D-CO)
• CENTRIST: Max Baucus (D-MT), Tom Carper (D-DE), Arlen Specter (D-PA)
• ANTI: Lamar Alexander (R-TN), Mike Crapo (R-ID), George Voinovich (R-OH)
• EXTREME ANTI: John Barrasso (R-WY), Kit Bond (R-MO), Jim Inhofe (R-OK), David Vitter (R-LA)

Below is the Hill Heat’s summary of some key issues that will be debated at the hearings.

CLEAN FUTURE

CLEAN AIR: “We must act to reduce black carbon,” Carper says, “a dangerous pollutant emitted by old, dirty diesel engines like those in some school buses and thought to be the second largest contributor to global warming after carbon dioxide.” “Among my top priorities was to be sure that we not only address challenges that carbon dioxide poses to our planet, but sulfur dioxide and nitrogen oxide and mercury.”

COAL PLANT GREENHOUSE GAS REGULATION: Kerry-Boxer follows Gillibrand’s call that “the EPA has to have authority to regulate coal plants under the Clean Air Act.” Baucus opposes the retention of this authority.

EMISSIONS LIMITS: As Sens. Cardin, Lautenberg, Merkley, Sanders, Whitehouse requested, the 2020 target for greenhouse pollution reductions has been strengthened to 20 percent below 2005 levels, instead of Waxman-Markey’s 17 percent target. Baucus has criticized the stronger targets.

GREEN TRANSPORTATION: Kerry-Boxer includes Sen. Carper’s push for green transportation, devoting “a guaranteed share of revenues from carbon regulation to transit, bike paths, and other green modes of transport.” The SmartWay Transportation Efficiency Program is modeled on the Clean, Low-Emission, Affordable, New Transportation Efficiency Act (S. 575 / H.R. 1329), co-sponsored by Sens. Specter, Merkley, Lautenberg, and Cardin.

NATURAL RESOURCE ADAPTATION: Whitehouse and Baucus have submitted language to support efforts for natural resource adaptation.

INDUSTRY

ALLOWANCE ALLOCATION: As chair of the Finance Committee, Baucus can assert authority over emission allowance distribution. Baucus has raised the possibility of “auctioning allowances to cut taxes by cutting marginal rates, by cutting capital gains rates, by cutting payroll taxes or by doing all of the above,” although he doubts there will be “major” changes to the House allocation formula, which is supported by the Edison Electric Institute, the main utility trade group. Baucus has supported additional allocations to rural electric cooperatives and “solid relief to low-income Americans.” Carper supports the existing allocation formula, saying, “I thought the utility industry did a great service by coming up with a compromise that all of them could live with.”

COAL SUPPORT: Carper led what he calls the “clean coal group,” an “ad-hoc group that helped craft the coal provisions,” including a change that “allows for advanced distribution of the bill’s bonus allowances” for carbon capture and sequestration projects with at least 50% efficiency. The National Mining Association still says the legislation “doesn’t work for coal.”

NUCLEAR SUPPORT: Carper wants “an expanded role for nuclear” and is “working with Joe Lieberman and others to create a more robust nuclear title when the bill comes to the floor.” However, he recognizes that “there’ll be a lot of incentives, just from the way the allowance system will be set up,” and has called for expanding the Nuclear Regulatory Commission, rather than increasing subsidies for the nuclear industry. Alexander believes “we should build 100 new nuclear plants” but has offered no proposal on how to achieve that, while dismissing estimates that the legislation under consideration would accomplish his goals.

TRADE: Baucus supports “ways to make sure U.S. companies are not taken advantage of, or discriminated against.” Specter supports “strong provisions to ensure the strength and viability of domestic manufacturing,” including a “border adjustment mechanism” if “other major carbon emitting countries fail to commit to an international agreement requiring commensurate action on climate change.”

OPPOSITION

CLIMATE DENIAL: Barrasso, Bond, Crapo, Inhofe, and Vitter question the consensus that manmade climate change is a significant threat. Barrasso has said: “I don’t believe it is a problem at this point.” “None of the farmers I have talked to in Missouri,” said Bond, “have expressed concerns about human-caused global climate change.” Crapo argues “the underlying cause of these climactic shifts is ultimately not well-understood and is a matter of vigorous debate.” “God’s still up there,” said Inhofe. “We’re going through these cycles.” “I don’t think it is clear and settled,” Vitter has said, “the extent of the human impact on temperature trends.”

EPA AND CAROL BROWNER: Barrasso, Crapo, Inhofe, Vitter, and Voinovich have repeatedly criticized the EPA and their analyses of the legislation. Voinovich has a hold on EPA deputy administrator nominee Robert Perciasepe. Inhofe, Barrasso, and Vitter have attacked Browner as an unaccountable “czar” and are requesting White House documents about her actions.

FILIBUSTER THREAT: The Republicans on the committee were all co-signatories of a letter in March that called for the preservation of a GOP filibuster threat against climate legislation. None of the seven Democratic signatories are members of the environment committee.

FUEL COSTS: Bond co-authored a report that argues clean energy legislation is the equivalent of a $3.6 trillion gas tax, totalling over 40 years extremely pessimistic estimates of fuel prices based on a National Black Chamber of Commerce report, without taking into account fuel economy. Other studies predict that gas prices will fall, as demand lessens and oil company profit margins are lessened.

JOB ASSISTANCE: Inhofe and Voinovich argue that provisions for unemployment benefits and job relocation provide evidence that the legislation will destroy jobs. “There’s no credible analysis that suggests this bill will be a net job creator,” claimed Voinovich. “Less energy production,” says Barrasso, “will mean fewer jobs for Americans.”

Sen. Barbara Boxer (D-CA) has released the Chairman’s Mark of the Clean Energy Jobs and American Power Act (S. 1733), introduced by Sen. John Kerry (D-MA) and herself in September. In the most significant change, the chair has filled in the allowance allocation scheme for the bill’s carbon market, distributing allowances to utilities, refiners, industry, states and tribes for various purposes. Some auction allowances are delivered directly to consumers.

The Environmental Protection Agency issued a preliminary economic analysis of the legislation, arguing that its impacts would be largely equivalent to the Waxman-Markey American Clean Energy and Security Act (H.R. 2454), which it closely resembles. The EPA did not complete economic modeling for S. 1733, but based on its similarities to H.R. 2454, predicted:

It is likely that the full suite of EPA models would show that the impacts of S. 1733 would be similar to those that were estimated for H.R. 2454.

According to the Committee on Environment and Public Works, the Chairman’s Mark introduces the following changes to the initial draft of the legislation:

Specifies Distribution of Emissions Allowances The Chairman’s Mark specifies the distribution of the allowances established under the Pollution Reduction and Investment program. The allocations place emphasis on investments in the following areas:

• Energy Intensive and Trade Exposed industries
• Small local distribution companies (including rural electric co-operatives)
• Transportation grants
• Agriculture and forestry
• Energy Efficiency and Renewable Energy
• Advanced energy research
• Credits for early action
• Energy efficiency and renewable energy worker training
• Nuclear worker training

New Provisions To Address Clean Coal Technology

• The Chairman’s Mark includes new provisions to stimulate development of commercial-scale carbon capture and sequestration (CCS) technologies
• The bonus allowance program is modified to allow for advanced payments of bonus allowances for early actors with a requirement that funded projects will achieve at least a 50% reduction in greenhouse gas emissions.
• The Chairman’s Mark includes provisions that require coal fired power plants to meet emissions performance standards once sufficient commercial-scale CCS technology has been deployed, while also ensuring timely reductions in global warming pollution from coal plants.

Increased Investments in Energy Efficiency and Renewable Energy

• The Chairman’s Mark increases investments in utility-scale renewable energy generation.
• The 25 percent set-aside for local governments for energy efficiency and conservation block grant continues unchanged.
• The Retrofit for Energy and Environmental Performance (REEP) program is guaranteed a share of the allocation provided to states for energy efficiency and renewable energy.
• Allowances are also dedicated to energy efficiency programs, including a specific requirement that states use some of these funds for thermal energy efficiency projects.
• Priority is given to low and moderate-income households and a dedicated portion of the energy efficiency set-aside is reserved for low-income households and for public housing retrofits.
• The Chairman’s Mark includes a new program that authorizes the EPA Administrator to provide assistance to owners and operators of buildings in the United States that implement energy efficiency measures that meet Energy Star or other relevant standards.

Reducing Greenhouse Gas Emissions and Increasing Investments in the Transportation Sector

• A new allocation program with increased investments is established specifically to fund transportation projects that reduce greenhouse gas emissions. Funds are provided for the “Clean-Tea” planning and performance grants program and for Transit formula grants.
• The Clean Vehicles program is modified to place a stronger emphasis on the domestic manufacturing of advanced technology vehicles, including transit vehicles.

Enhanced Agriculture and Forestry Provisions

• A more robust supplemental agriculture and forestry program is included with allocations throughout the life of the bill. The Supplemental Agriculture and Forestry Greenhouse Gas Reduction and Renewable Energy Program is strengthened to ensure measurable reductions in global warming pollution.

Directs Assistance to Rural Communities

• The Chairman’s Mark increases allowances for small electric Local Distribution Companies, including Rural Electric Cooperatives, which will benefit rural electric consumers.
• The Chairman’s Mark includes a new program to provide grants to states and non-profits to improve air quality by replacing outdated wood stoves.

Promotes Advanced Renewable Fuels

• The definition of biofuels in the Renewable Fuel Standard is clarified to make clear that algae-based and other advanced fuels are included.

Enhances the Role of Tribes

• Tribes are recognized in a number of ways throughout the Chairman’s Mark. Tribes receive guaranteed allocations for the energy efficiency and renewable energy program. The Chairman’s Mark also enhances the role that Tribes will play in a number of programs in the bill.

Bigger Market Stability Reserve

• To maintain price certainty and prevent market manipulation, the size of the market stability reserve is increased in the Chairman’s Mark.

Greater Assistance for Small and Medium Refineries

• Small business refiners are given additional time to comply with the Pollution Reduction and Investment program. In addition, the domestic fuel production allowance program focuses on small and medium refineries.

Bob Corker (R-Tenn.)

E&E News We’re creating this policy – or at least this bill contemplates creating a policy – that has a lot of human giving away of free allowances. All kinds of things that distort the market, and it just seems that if truly the goal was to lower the amount of carbon there would be a proposal just to tax it and to lower some other tax and be done with it.

James Inhofe (R-Ok.)

Roll Call We need to remind the American public, for example, that the 1,400-page Waxman-Markey monstrosity is a monument to big government that will make food, gasoline and electricity more expensive, increase mandates on small businesses, and increase the size and reach of the federal bureaucracy — all while doing nothing to affect climate change. The Kerry-Boxer legislation introduced Sept. 30 is, in many ways, worse than the Waxman-Markey bill. This reflects the attitude of one of the bill’s sponsors, who said recently that, because of the recession, businesses should be expected to make even more expensive emissions reductions. While it’s never a good time to pass a national energy tax, one would have thought that imposing such a tax during a recession is especially bad. Over the past week, many people have speculated about the potential for a grand Senate climate deal, tying cap-and-trade to the expansion of nuclear power and offshore drilling. Both policies make eminent sense and are key components of the Republican “all-of-the-above” energy policy. But tying those policies to a massive national energy tax makes no sense, which is why there’s little hope for a deal so long as it involves cap-and-trade.

Lisa Murkowski (R-Alaska)

Washington Post Count me as one of those who will keep my mind open as we move forward. When you see changes to the land coming about … what is causing the loss of the sea ice that adds to the erosion issues, yes, in Alaska we are seeing change. That’s why I have been one of those Republicans who has stepped out front a little bit more on the issue of climate change.

Sam Brownback (R-KS)

Washington Post Because while we’re projecting these things, people are having to deal with their basic lives on it, and this is going to be very expensive.

Tom Carper (D-DE)

E&E News We need to make sure that the Nuclear Regulatory Commission has the human resources that they need to enable them to do the job.

I will be working with Joe Lieberman and others to create a more robust nuclear title when the bill comes to the floor, and among the things that we will be working on is, we want to make sure we invest the right amount of money in nuclear recycling, nuclear reprocessing, to try to determine what is the best path to try and follow there.

To the extent that people have ideas for further streamlining, should we look at those? Sure. But keep in mind a lot has been done, there is an incredibly heavy workload for the NRC already, and we have got make sure they have the resources they need.

Dick Durbin (D-IL)

E&E News It’s not a bad starting point to try and engage as many people as you can to find out if there is some common ground here. And I’m open to these things. I think both of them carry with them environmental concerns, serious environmental concerns. But if they’re going to deal with those honestly and directly, then maybe there’s room for conversation.

We also have a majority leader who’s interested in the nuclear power issue, too. So we have to be sensitive to that. But I think it’s perfectly all right to start with an agenda that is inclusive and try to build on that.

Judd Gregg (R-NH)

E&E News If nuclear comes under that and has proper incentives, that could be a major step forward.

Jim Inhofe (R-OK)

E&E News When I first saw it, I was disappointed that they’d have a joint communiqué of any kind. It doesn’t matter what happens, for Kerry, if he were inclined to move in that direction. It’s not going to stay, anyway. I think we all understand that. It wouldn’t survive. You always have the House to deal with. Pelosi. And I can’t see that it would.

John Kerry (D-MA)

E&E News We really haven’t gotten specific about a Kerry-Graham bill. What we’re really trying to do is get a coalition together to make this pass. What shape that takes at this point, I think, is down the road. I suppose it can develop into a bill, but it doesn’t necessarily have to be ours. It could part of a leadership effort, or some other effort.