Hill Heat

From EE News:

The Energy and Natural Resources Committee yesterday cleared in a largely bipartisan fashion the first major energy bill of the Democratic-controlled Senate, but only after a testy battle over coal-based transportation fuels highlighted the divisive nature of such debates.

After several hours of back and forth, the committee approved the underlying bill, 20-3. It deals with biofuels, energy efficiency and carbon sequestration. Only three Republicans voted against the bill: Sens. Craig Thomas (R-Wyo.), Richard Burr (R-N.C.) and Jim DeMint (R-S.C.).

But even with the overwhelming committee vote, it appears the legislation could be the subject of several heated fights as it moves to the floor, especially over a renewable portfolio standard (RPS) and coal-to-liquids (CTL) technology.

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) told reporters after the vote he does not know exactly when the bill will come to the floor. He does, however, anticipate floor time before the Memorial Day recess.

Aides for Majority Leader Harry Reid (D-Nev.) said there is no specific schedule for the bill, adding it will not be on the floor next week as the Senate is expected to take up the Water Resources Development Act (see related story).

A refining industry lobbyist said he thinks Reid may have to shelve the energy package until after the recess, citing the possibility of a sprawling debate. The lobbyist noted the fierce coal-to-liquids battle that is certain to resurface on the floor. The source also noted the full Senate must deal with Bingaman’s plan for a renewable portfolio standard, which the committee sidestepped, and the possibility of multiple amendments on ethanol and other issues.

“This bill is not ready for primetime,” the lobbyist said.

At the close of the markup, the ranking member of the committee, Sen. Pete Domenici (R-N.M.), said lawmakers will continue to try to move the bill in a bipartisan manner, but he also admitted it may take a while to get the legislation past the Senate.

“When it gets to the floor … you should not expect such a short session of the Senate, it will be there for quite a few days,” Domenici said.

Bingaman several times during the course of the markup emphasized he does not view the measure as a comprehensive energy bill. More opportunities for lawmakers to move their energy priorities will present themselves, he said.

“We have a number of areas we were trying to address, this is not a comprehensive energy bill,” Bingaman added. CTL debate dominates markup session

Much of the debate yesterday centered on an amendment offered by a pair of coal-state senators that would have created a new federal mandate for the use of CTL.

After a 90-minute debate on the matter, the panel – in a 12-11 party-line vote – defeated the amendment from Sens. Craig Thomas (R-Wyo.) and Jim Bunning (R-Ky.) that would have established a coal program to mirror the existing federal mandate for biofuels.

The amendment attempt seemingly ended a bipartisan truce that reigned over the committee’s first effort of the 110th Congress to create an energy bill. Bingaman and Domenici had tried to keep CTL a renewable portfolio standard off the table during the markup.

Early on, Bingaman attempted to assure lawmakers they would have an opportunity to offer their proposals either on the floor or in other legislation down the road. But Thomas said he decided the markup was the appropriate venue to move his CTL bill.

“That’s what this committee is for, to deal with these issues,” Thomas said after the vote. “We’re going to continue to work on it.”

Bingaman told reporters after the markup that he expected the CTL issue to again become a point of contention when the bill is brought up before the full Senate.

The Thomas-Bunning bill would create a new federal mandate requiring the use of 21 billion gallons of coal liquids by 2022. Additionally, in an effort to deal with the environmental concerns, the senators included a provision stating that the greenhouse gas emissions levels of CTL fuels would not exceed that of conventional gasoline.

That language did little to assuage committee Democrats, who balked at the legislation over lingering questions about GHG emissions and the feasibility of carbon sequestration from CTL.

“If we move forward fast with coal-to-liquids, and we don’t have carbon capture [and] carbon sequestration ducks in a row, we’re setting ourselves up for a disaster,” said Sen. Jon Tester (D-Mont.).

But Republicans argued that even as Congress attempts to deal with climate change, it must also deal with pressing energy security concerns. “There is a reality that we’re facing, and that is the reality of energy security,” said Sen. Larry Craig (R-Idaho). “Here’s an opportunity to vote for U.S. coal and against Saudi oil.”

Bingaman questioned whether the committee had done enough research to endorse such a significant mandate for CTL, essentially the same level as the mandate for advanced biofuels. And three Democrats who have previously endorsed the use of CTL – Sens. Byron Dorgan (N.D.), Ken Salazar (Colo.) and Tester – said they could not support the amendment either because of the timing or their concerns on how it would affect GHG emissions. All three ended up voting against the amendment but said they could support other CTL language in the future.

The committee did adopt a Bingaman amendment, 15-8, that would create a program to study large-scale capture of carbon from industrial sources. Bingaman touted the provision as a potential step toward testing the feasibility of carbon sequestration from CTL development.

The amendment authorizes $100 million per year over five years for the program. But the language also states that only projects that capture at least 85 percent of CO2 would be eligible for the grants.

The majority of committee Republicans voted against the amendment, arguing it would essentially delay the use of CTL for five years or more. “Senator Bingaman has found a nice way to stop the development of coal-to-liquids by an amendment that puts into place something that we don’t even understand how to do,” Domenici said. Panel adopts measures on GHG standards, biofuels studies

Only one other amendment during yesterday’s markup broke the committee along party lines and required a voice vote.

That amendment – sponsored by Bingaman – would require that any renewable fuel facility built after the bill is signed into law should produce fuels that achieve at least a 20 percent reduction in lifecycle GHG emissions.

Bingaman described such a target as “very achievable” and said the Renewable Fuels Association – the main lobbying group for the biofuels industry – has endorsed the language.

Yet Domenici called the provision largely unnecessary, given that the committee has already received assurances that cellulosic ethanol and other advanced biofuels produce fewer emissions than conventional gasoline.

“We’ve been told we have no worries, clearly we’re going to come in better than gasoline. Now all of a sudden in the last week or so we have someone coming along, ‘Well we want to put in an EPA condition,’” Domenici said. “I don’t think we should do it, it’s a far cry from where we started.”

The committee also adopted by a voice vote an amendment from Sen. Jim DeMint (R-S.C.) directing several federal agencies to conduct a study on increasing the ethanol blend in gasoline to more than 10 percent.

The Engine Manufacturers Association and the Alliance of Automobile Manufacturers backed the amendment, saying in a letter to the committee that the use of “mid-level” blends would be “entirely new products that will raise new questions, risks and challenges across a multifaceted range of energy, environmental, legal, safety and economic issues.”

The committee then adopted by a voice vote amendments to establish a research program for electric vehicles and a slew of other noncontroversial measures, including those authorizing studies for the distribution of biofuels, to allow federal agencies to acquire electric vehicles and to promote the use of new materials in industrial processes to improve energy efficiency. Offshore drilling measure shelved

A pair of senators – Dorgan and Craig – offered an amendment that would expand offshore drilling around the United States and neighboring nations. The lawmakers withdrew their amendment without a vote, saying they did not want to jeopardize the bipartisan nature of the legislation. They then expressed interest in pursuing the issue down the road.

“Many are hiding in the illusion that we don’t need more production in our standard fuels, and they are denying the reality that we do,” Craig said.

The bill would allow new oil and gas drilling in the eastern Gulf of Mexico within 45 miles of Florida’s coast. It also includes language granting U.S. companies the right to participate in exploration and production off Cuba’s coast and asking the Interior Department to conduct an inventory of outer continental shelf resources off the southeastern United States.

Even though the language was never voted on, the amendment drew a quick negative reaction from several coastal state lawmakers.

“It would be a really bad idea, it would break faith for those who negotiated in good faith on that issue [last year],” said Sen. Mel Martinez (R-Fla.), in reference to legislation approved last year allowing for new eastern gulf drilling for areas off the Florida coast. Bill’s focus remains on biofuels mandate, efficiency

The centerpiece of the bill that cleared the committee yesterday – the portion that is likely to receive the most attention when the bill hits the floor – is the dramatic expansion of the existing federal biofuels mandate.

The Bingaman-Domenici bill would put in place a 36-billion-gallon biofuels mandate by 2022 as well as provide a series of incentives for the industry’s development, such as loan guarantees for renewable fuel facilities, grants for the creation of renewable fuel corridors and transport of biomass to refiners.

Moreover, the legislation sets specific targets for the use of cellulosic ethanol, specifically hitting a mandate of 21 billion gallons by 2022.

In addition to the biofuels mandate, the legislation includes provisions aimed at spurring research and construction of renewable fuels infrastructure.

The bill would provide a federal loan guarantee of up to $250 million for renewable fuel facilities, grants for creation of renewable fuel corridors and grants for transport of biomass to refiners.

It calls for a 50 percent increase in bioenergy research through 2009, creates seven bioenergy research centers and directs the Energy Department to conduct several studies having to do with additional expansion of biofuels.

The legislation also contains an efficiency component that would codify efficiency standards for several products, boosting programs that spur use of efficient lighting technologies, and increasing conservation in federal buildings.

On the transportation side, the bill sets an overall goal of reducing gasoline use by 45 percent by 2030. The bill provides loan guarantees for plants that make fuel-efficient vehicles and their parts.

Other steps include grants to automakers to help retool current plants to make advanced technology vehicles and authorized funding for new research into batteries and lightweight vehicle materials.

Lawmakers also brought into the fold two carbon sequestration measures.

One of the measures would require the Energy Department, U.S. EPA and U.S. Geologic Survey to conduct a sweeping assessment of the potential for underground CO2 storage in all corners of the country, including Alaska and Hawaii. DOE would be required to estimate potential volumes of oil and gas that could be recovered after the carbon injections, as well as the potential risks if the CO2 leaks back into the atmosphere.

The other portion authorizes DOE to establish seven regional CO2 sequestration partnerships that bring together the work of federal, state and local governments, as well as industry and academia. The programs now run through fiscal 2009; under the bill, it would stretch through 2012.