Hill Heat

CQ (subs. req.):

With oil nearing $100 per barrel and high prices at the gasoline pump, an agreement on corporate fuel economy standards is perhaps the most significant development to come out of the informal negotiations, which were launched after Republicans blocked a conference because they objected to provisions that would have increased taxes on the oil and gas industry and a requirement to have the nation’s electric utilities produce a percentage of their power from renewable sources.

Those tax and “renewables” provisions were in the House-passed bill but absent from the Senate legislation. Lobbyists said it was likely that they would be taken up next year in a separate bill, or as part of House legislation to address climate change.

EE News (subs. req.):

Sources on and off Capitol Hill said Democratic leaders may try to move the oil taxes and renewable electricity provision as a separate bill, or even abandon them for the year.

A Democratic aide close to the talks said House Democratic leaders “remain committed” to keeping these provisions. But both provisions face Senate roadblocks and would almost certainly draw GOP-led filibusters, which require 60 votes to overcome.

The House bill requires utilities to provide 15 percent of their power from renewable sources by 2020, though roughly a fourth of the requirement can be met with energy efficiency measures.

Pelosi and Senate Majority Leader Harry Reid (D-Nev.) both support the plan, but it has run into stiff resistance, especially among Southeastern GOP lawmakers who claim their states lack enough renewable resources to meet the mandate.

The renewable electric power standard is a top priority of environmental groups. Marchant Wentworth, a lobbyist for the Union of Concerned Scientists, said environmentalists are fighting to keep the provision alive. “It is a vital part of any comprehensive energy package,” he said.

The Bush administration, however, has issued veto threats over increased oil industry taxes and a renewable electric power mandate.

Deal Near On Fuel Efficiency, Renewables In Energy Bill

Negotiators have proposed scaling down a Senate renewable fuels mandate and are nearing a deal on raising fuel efficiency standards, sources said today. Under the deal being discussed, refiners would be required to produce 20.5 billion gallons of renewable fuels by 2015, with as much as 15 billion gallons coming from corn-based ethanol, according to draft House language. The Senate-passed version would have required the production of 36 billion gallons of renewable fuels by 2022. The draft would mandate that 5.5 billion gallons of advanced biofuels – fuel not derived from sugar or starch and that can cut lifecycle greenhouse gas emissions in half – must be produced by 2015. The draft plan might trigger limits starting in 2016 to further increases in renewable fuels production based on the impact renewable fuels production has on the environment, energy security, consumer prices and other factors. Critics – including refiners, livestock groups and grocery manufacturers – say the draft sets unreasonable production mandates. “We don’t think that the volumes that are called for in this draft have any basis in reality,” said an oil refinery lobbyist. It would require a National Academy of Sciences study within 18 months on the impact of the renewable fuels mandate followed by periodic reviews authorized by the Clean Air Act of technologies and the feasibility of complying with the mandate.

Negotiators are also close to a bipartisan deal raising the average standard for cars, light trucks and SUVs from 25 miles per gallon to 35 mpg by 2020, according to lobbyists following the talks. This would echo the Senate-approved plan. In a nod to automakers, the deal would adopt separate fuel-economy standards for cars and trucks and try to preserve domestic production of fuel-efficient cars, lobbyists said. This would be in line with a letter House Energy and Commerce Chairman Dingell sent Speaker Pelosi this month indicating his willingness to accept fuel efficiency that uses the Senate plan as its base while incorporating changes sought by automakers. Congressional aides say negotiations continue. Lawmakers might take up an energy bill as early as next week. Pelosi issued a statement Monday indicating that lawmakers have made “significant progress toward completing the package and hope to have a final agreement next week.” Aides have an internal deadline of Wednesday evening to finish an energy bill so it can be officially drafted and reviewed by lawmakers, lobbyists said. —by Darren Goode

Defenders of Wildlife • Environmental Defense • National Environmental Trust
National Wildlife Federation • Natural Resources Defense Council
The Nature Conservancy • Union of Concerned Scientists • The Wilderness Society

Members of the Environment and Public Works Committee
United States Senate
456 Dirksen Senate Office Building
Washington, DC 20510

November 15, 2007

Dear Members of the Environment and Public Works Committee,

We are writing to follow up on the letter of October 31, 2007, which highlighted the mounting urgency of global warming and the need for prompt action by the Senate Environment and Public Works Committee. Time is running out for effective action on global warming, and we need to get started now. The longer we delay, the greater the impacts and risks, and the more dramatically we will have to cut emissions in future years to achieve the same results.

We are encouraged that the committee has been holding hearings on S. 2191, America’s Climate Security Act, and that a markup has been scheduled for December 5. We believe that Senators should continue the process of strengthening the bill in committee and throughout the legislative process. We ask Senators to support those efforts and to defeat efforts to weaken the bill.

It is vitally important that the full Senate take up the issue of global warming. If not weakened in committee, this legislation provides a sensible framework for engaging the full Senate in an open debate and votes on global warming. We therefore ask members of the committee to continue the process of strengthening S. 2191, and to deliver the bill to the full Senate the first week of December.

Sincerely,

Robert Dewey
Vice President, Government Relations and External Affairs
Defenders of Wildlife

Elizabeth Thompson
Legislative Director
Environmental Defense

Geoffrey Brown
Legislative Director
National Environmental Trust

Jeremy Symons
Executive Director, Global Warming Program
National Wildlife Federation

David Hawkins
Director, Climate Center
Natural Resources Defense Council

Cathleen Kelly
Director of Climate Change Policy
The Nature Conservancy

Alden Meyer
Director of Strategy and Policy
Union of Concerned Scientists

Linda Lance
Vice President for Public Policy
The Wilderness Society

10:16 Voinovich There is no reason to disregard CRA International’s analysis. Anne Smith is a highly regarded economist. I have seen nothing that would dispute with this analysis. We are staring down the barrel of a gun. In fact we are staring down two barrels. The evidence suggests this bill will do nothing to help climate change. In states like Ohio, we’re all too familiar with the results. Natural gas prices are up 300% since 2001. End-of-pipe technologies don’t exist. Solving this problem will require a wholesale technology revolution. This bill will be a gigantic administrative undertaking by the EPA. I suggest my colleagues slow down. There are alternatives that must be considered before we move forward.

Boxer My staff walked your staff through a different model yesterday from the Clean Air Task Force. Sen. Lieberman has asked the EPA to do a model.

Inhofe The costs of the bill will be a trillion dollars a year. It will require a wholesale transformation of our society. Manufacturing will be forced overseas.

10:24 Vitter I have very serious concerns about the bill. I agree with Sen. Voinovich about the need for more time. Every day I hear from Louisiana constituents about energy prices. I’d like to see a clear consensus on what this does to energy prices.

11:19 Krupp Not only will it ease the burden on the American economy if we act faster, it will get other nations to move faster. To achieve a cumulative emissions budget between now and 2020 if we act now we would have to average a 2% reduction each year. But if we wait two years we would have to have a 22% reduction instead of 15% because we would have to start from a higher level and cut to a lower level. There’s enormous benefit by acting early.

11:21 Inhofe Would you support new LNG plants?

Book? Yes, we have to have to do it safely. We would support increased funding by Congress to deal with nuclear.

Inhofe You have said a tax is more effective than a cap-and-trade.

Book There is already a SEC, IRS, and EPA. You can use a tax because we have a tax system.

Some folks are going to suffer more than others. The instability of the oil market is due to the maximum capacity. The only thing to do is to find more oil.

Boxer When you say a carbon tax is more honest, I disagree. In cap-and-trade, the free market sets the price.

Inhofe CRA International said this bill would be much more aggressive than $300 billion per year. I think a tax would be more honest.

Boxer This would be quite a switch, you supporting a tax, me supporting the free market.

Inhofe It would be great if you switched the gavel, too.

11:29 Carper Nuclear?

Claussen I think nuclear has to be part of the solution. I think the best thing to do for nuclear is to establish a cap-and-trade system. Nuclear has to solve the problem of waste. I think there are some interim solutions that could move us along the path.

Carper I want to thank the panel for helping us craft this legislation.

Book The world needs more BTUs and nuclear is one of those sources. It has a very high startup costs. Congress has produced significant incentives. It’s not exactly the free market. If we’re not going to use coal, we need nuclear.

Carper Mr. Sims, did you ever run for the Senate?

Sims Yes.

Carper If things had turned out slightly differently, you could have been sitting up here. How can we ensure that investments in transit generate credits or funding within this bill?

Sims We need to reduce total miles traveled.

11:36 Warner You talked, Mr. Sims about the need to reduce vehicle miles traveled. Maybe we need to add incentives to the states.

Sims I would be overjoyed to have states have to reduce overall miles traveled. Incentives for congestion pricing.

Warner Nuclear power will be addressed in our committee deliberations.

Claussen I worked a long time ago on submarines.

Warner I go back a few years myself.

Claussen On Monday Sen. Carper and I were talking about how we see nuclear as part of the solution. We talked about the need for education. If there’s a demand for nuclear, we’ll figure out the way. Again, I think the best way is to put a price on carbon.

11:51 Klobuchar How do we ensure that we can interconnect with other nations?

Claussen Remember that we’re not signatories to Kyoto. We need a global agreement, but I don’t think we’ll get that until we pass a bill. So the urgency of passing this out of committee and getting a law is high.

12:00 Krupp The sooner we have a cap, the sooner we have moral standing. I spent the last year researching all the technologies I could find that could reduce emissions. Doing this two years early will spur a technological revolution.

Lieberman You said the uncertainty created by Congressional inaction is creating problems for developing new energy infrastructure.

Berendt That is correct, Senator. It is very important that we move forward in a way that is functional and liquid. All advanced low-carbon technologies have high fixed costs.

Lieberman That’s why we put added incentives to the power sector to ease the transition.

12:07 Voinovich The AFL-CIO had real problems with this. Duke Energy said its prices would go up 50%. I have also, Mr. Krupp, looked at all the technologies available.

Claussen We work with 45 companies. 37 have already set targets to reduce emissions, and 22 have already met their targets. They’ve done it primarily through efficiency. I think there will be some time for CCS, for more nuclear, because I think we’re going to need that, for renewables. We need both carrots and sticks.

12:18 Craig I recognize the tolerance of the posteriors of those sitting here. I think it is critically important for us to have a EPA/IEA neutral analysis. I don’t disagree that there may be great new economies generated. Reasonable approaches by government can direct economies.

The Chamber’s figures are cherrypicked from Dr. Smith’s testimony. Her calculations are based on a computer model designed and run by her company. Not modeled are the economic impacts of climate change or the possibility of borrowing credits. Her results have not been peer-reviewed nor were reported with degrees of uncertainty.

Job Losses

By 2020, our scenarios project between 1.5 million and 3.4 million net job losses. There is a substantial implied increase in jobs associated with “green” businesses (e.g., to produce renewable generation technologies), but even accounting for these there is a projected net loss in jobs due to the generalized macroeconomic impacts of the Bill.

Her modeling finds a net reduction in 2015 GDP of 1.0% to 1.6% relative to the GDP that would occur but for S.2191. The impact rises to the range of 2% to 2.5% thereafter, leading to a loss in the range of $1 trillion by 2050. By way of comparison, the Stern Review estimated the losses due to strong emissions reductions would be about 1% of GDP, and the long-term losses due to inaction from 5% to 20% GDP by 2050 depending on climate feedbacks.

American consumers

Our scenarios imply that real annual spending per household would be reduced by an average of $800 to $1300 in 2015. If the percentage consumption impacts projected for each future year were to be stated in terms of current real spending power (we use 2010 spending as the proxy for “current” here), these spending impacts would increase to levels of $1500 to over $2500 by the end of our modeled time period, 2050.