Hill Heat

House leadership is whipping votes today for the energy bill deal, to be entitled the Energy Independence and Security Act when introduced. Highlights of the deal:

• CAFE Standard: Increase fuel economy standards to 35 miles per gallon by 2020 for new cars and trucks
• Renewable Fuels Standard: Multiple-source domestic biofuels mandate with environmental safeguards
• Plug-in hybrid/electric vehicle tax credit and advanced vehicle incentives
• Repeal of $21 billion in tax subsidies for gas and oil companies (H.R. 6), international tax loophole closed, rollback of 2005 Energy Act tax breaks
• Renewable Electricity Standard: 15% by 2020 (4% may be efficiency)
• Efficiency Standards: new appliance and building standards
• Renewable Production Tax Credit and other incentives: extends existing PTC, funds renewable research, provides renewable energy bonds for power providers
• Energy Efficiency and Renewable Energy Worker Training Program
• Incentives for small business development of renewable energy technology
• Carbon Capture and Sequestration: R&D and clean coal incentives

Full details of the legislation are below the fold.

In a letter to Congress, White House economic advisor Allan Hubbard reiterated President Bush’s October 15 veto threat of the energy bill deal brokered by the Democratic leadership, leaving no room for compromise from the president’s demands.

On October 15, I wrote you to outline a basic framework for a bill that would not compel the President’s senior advisors to recommend a veto. Based on the limitd information we have received, it seems the provisions under discussion would not satisfy those criteria. In fact, it appears Congress may intend to produce a bill the President cannot sign.

The Administration continues to believe that all the elements described in my earlier letter constitute the appropriate framework for energy legislation. Press reports indicate that your draft energy bill would fail to meet at least some of these conditions, for example by including a mandatory Renewable Portfolio Standard (RPS), a title increasing taxes, or an expansion of Davis-Bacon prevailing wage requirements.

Further criticisms include the difference between the Congressional renewable fuels standard and the White House’s preferred “alternative fuels standard”, and not excluding the EPA’s Clean Air Act authority from CAFE regulation.

The full letter is available here.

Friday afternoon the Democratic leadership in Congress announced the results of the energy bill negotiations that began in August and went into overdrive during the Thanksgiving recess, particularly once Rep. John Dingell (D-Mich.) signaled his willingness to support the 35 MPG CAFE standard as long as some technical provisions were included.

Speaker Pelosi:

CAFE will serve as the cornerstone of the energy legislation that will be on the House floor next week. We will achieve the major goal of increasing vehicle efficiency standards to 35 miles per gallon in 2020, marking an historic advancement in our efforts in the Congress to address our energy security and laying strong groundwork for climate legislation next year. We are confident that this final product will win the support of the environmental, labor and manufacturing communities.

This landmark energy legislation will offer the automobile industry the certainty it needs, while offering flexibility to automakers and ensuring we keep American manufacturing jobs and continued domestic production of smaller vehicles.

This comprehensive package will also include an increase in the Renewable Fuels Standard and a Renewable Electricity Standard, among other key provisions.

Translation of Pelosi’s statement:

“Offering flexibility to automakers”: The flex-fuel credit will extend to 2014, and be phased out by 2020.

“Continued domestic production of smaller vehicles”: The standards will distinguish between foreign-made and domestic vehicles

“Among other key provisions”: the status of the oil/gas subsidy rollback and related tax package, including the Production Tax Credit, is still under negotiation.

More details on the likely energy bill compromise are emerging. It appears that the renewable electricity standard and oil subsidy rollback provisions of the energy bill (H.R. 6/H.R. 3221), are being dropped, perhaps to be considered as a separate bill (per H.R. 2776) either concurrently or in the next year. The associated renewable incentives and research funds paid for by the rollback would have to also be dropped under pay-go rules.

The rollback was a key component of Speaker Pelosi’s 100 Hours Agenda:

We will energize America by achieving energy independence, and we will begin by rolling back the multi-billion dollar subsidies for Big Oil.

New York Times:

Reaching agreement on that timetable is likely to require Congressional leaders to drop provisions like a mandate that electric utilities nationwide generate 15 percent of their power from renewable sources, including wind, solar and hydroelectric power. Utilities lobbied intensively against that requirement.

A House-passed measure to repeal $16 billion in tax breaks for the oil industry is also expected to be scrapped, aides said. President Bush threatened to veto the entire package if the oil and gas tax bill were included.

Wall Street Journal:

Speaker Nancy Pelosi is pushing for a vote next week on compromise legislation aimed at reducing the nation’s reliance on fossil fuels, a major source of greenhouse gases. Democratic leaders have wrestled for months with how to meld the Senate bill, which includes a new fuel-economy mandate for auto makers, and the House bill, which would require power companies to use greater amounts of wind, solar and other renewable fuels. With only a few weeks left in the year, Democrats are now considering a new option: moving two separate bills.

One measure would include the proposed fuel-economy increase as well as a proposal to boost production of ethanol and related biofuels. The companion bill would include the utility mandate, as well as a tax package rolling back oil industry tax breaks.

According to a report in the National Journal’s subscription-only Congress Daily, Congress is nearing a compromise to resolve the differences between the Senate (HR 6) and House (HR 3221) versions of the comprehensive energy package. Major sticking points have been CAFE standards, renewable fuels mandate, a federal renewable energy standard, and renewable energy tax incentives (the renewable production tax credit (PTC)).

Speaker Pelosi indicated the sense of progress in a press release Monday:

Congress is now moving forward with historic energy legislation that will reduce our dependence on foreign fuels and promote energy efficiency. We have made significant progress toward completing this package and hope to have a final agreement next week.

The draft compromise, according to Congress Daily and Hill Heat sources, incorporates suggestions from Rep. John Dingell (D-Mich.)’s November 13 letter to Speaker Pelosi.

CAFE

• By 2020, 35 mpg average standard for cars, light trucks and SUVs (in line with HR 6)
• Separate fuel-economy standards for cars and trucks
• Distinctions between domestic and foreign-made vehicles in standards

Renewable Fuels Mandate

• By 2015, required production of 20.5 billion gallons of renewable fuels, with as much as 15 billion gallons coming from corn-based ethanol (HR 6 had 36 billion by 2022)
• By 2015, required production of 5.5 billion gallons of advanced biofuels—fuel not derived from sugar or starch and that can cut lifecycle greenhouse gas emissions in half
• National Academy of Sciences study within 18 months of mandate impact, followed by periodic reviews authorized by the Clean Air Act of technologies and the feasibility of complying with the mandate

PTC

• According to Hill Heat sources, the extension of the PTC is likely, though perhaps for as little as one year.

On Monday thousands of young energy and climate leaders will descend on Capitol Hill to send a message to Congress: we must pass the energy bill before Congress (HR 3221) so we can begin the transition towards a cleaner, safer, more prosperous future without oil dependence or global warming.

The day of events starts with several of these leaders appearing before Chairman Edward J. Markey and the Select Committee on Energy Independence and Global Warming. Chairman Markey and those testifying will then travel to the West Lawn of the Capitol to meet thousands of supporters who will call for more green jobs, more renewable energy, and higher fuel economy standards, among other clean energy measures.

Congress is currently considering energy legislation that would raise fuel economy standards for America’s vehicles to 35 miles per gallon by 2020, increase the use of renewable energy, and create millions of new “green collar” jobs.

Witnesses

• Billy Parish, Energy Action Coalition
• Brittany R. Cochran, Environmental Justice and Climate Change Initiative
• Cheryl Lockwood, Alaska Youth for Environmental Action
• Katelyn McCormick, Students Promoting Environmental Students
• Mike Reagan, California PIRG

05/11/2007 at 09:30AM

The Environmental and Energy Study Institute (EESI) invites you to learn about national renewable electricity portfolio standards such as the one included in the House energy bill (HR 3221, Sect. 9611) as the House and Senate go to conference on the energy bill. A Renewable Portfolio Standard (RPS) is a market-based mechanism that requires utilities to gradually increase the portion of electricity produced from renewable resources such as wind, biomass, geothermal, solar, incremental hydropower and marine energy. Twenty-five states and the District of Columbia have RPSs, covering over 40 percent of the nation’s electrical load. A national RPS has passed the Senate in the last three Congresses, although it is not included in the Senate energy bill (HR.6).

A national RPS has many attributes that can benefit all states, including lowering natural gas prices, providing manufacturing jobs, improving air quality, reducing greenhouse gas emissions and creating larger, stable markets for renewable energy technologies. A June analysis by the US Energy Information Administration (EIA) of a national RPS proposed by Senate Energy Committee Chair Bingaman (D-NM) requiring electric utilities to acquire 15 percent of their electricity from renewable energy sources by 2020, found net consumer cost to increase just 0.3 percent through 2030 compared to the reference case. EIA also found that by 2030, prices for natural gas and coal, two key fuels for the electric power sector, are lower with the RPS than in the reference case. Speakers for this event include:

• Leon Lowery, Majority Staff, Senate Committee on Energy and Natural Resources
• Chris Namovicz, Operations Research Analyst, Energy Information Administration
• Dr. Marie Walsh, Adjunct Associate Professor, Dept. of Agricultural Economics, University of Tennessee
• Jeff Deyette, Energy Analyst, Union of Concerned Scientists
• Bill Prindle, Deputy Director, American Council for an Energy-Efficient Economy

Some are concerned that not all states, particularly those in the Southeast, have sufficient renewable resources to satisfy a national RPS. In 2005, bioenergy was the largest component of renewable electricity production in the nation, comprising 56 percent of all renewable electricity and 1.3 percent of total electricity. This percentage can be increased significantly since each state has important biomass resources that can be utilized sustainably to produce clean, renewable, domestic energy. According to the EIA analysis, biomass generation-from dedicated biomass plants and existing coal plants co-firing with biomass fuel-grows the most by 2030, more than tripling from 102 billion kilowatt-hours (kwh) in the reference case to 318 billion kwh with the RPS policy. In addition to renewable energy, HR 3221 includes four percent energy efficiency (25 percent of the RPS credits) as part of the standard, which allows states to make use of low-cost efficiency opportunities to help meet the standard. At least three states (including Nevada, North Carolina, and Pennsylvania) include energy efficiency as part of their RPS. In August 2007, North Carolina enacted a Renewable Energy and Energy Efficiency Portfolio Standard requiring all investor-owned utilities in the state to supply 12.5 percent of 2020 retail electricity sales in the state from eligible energy resources by 2021.

01/11/2007 at 02:00PM

The Environmental and Energy Study Institute (EESI) invites you to learn about the loan guarantee provisions in the 2007 energy bills that have passed the House and Senate and await conference (HR. 6/HR. 3221). The Senate bill’s provision would significantly alter how the Department of Energy (DOE) provides taxpayer-funded loan guarantees for new energy technologies, especially to costly nuclear power plants. Section 124(b) of the Senate bill (HR. 6) allows loan guarantees to be given to multiple projects to construct an existing nuclear power design; exempts DOE’s loan guarantee program from Sec 504(b) of the Federal Credit Reform Act of 1990 (FCRA) which allows DOE to write unlimited loan guarantees without Congressional oversight; and gives DOE unfettered access to the Incentives for Innovative Technologies Fund (EPACT 2005) without requiring appropriations or any fiscal year limitation. This provision, if adopted, would eliminate Congressional authority and the safeguards provided through the appropriations process regarding expenditures for these potentially risky projects and shift enormous financial risk from Wall Street banks to America’s taxpayers. The House-passed legislation on loan guarantees is different; it says that no eligible technology can be excluded from consideration from loan guarantees.

Because of the likelihood of delays and cost overruns in building new nuclear power plants, Wall Street banks are unwilling to accept any financial risks for nuclear power loans. Six of the nation’s largest investment banks-Citigroup, Credit Suisse, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley- recently told the DOE, “We believe these risks, combined with the higher capital costs and longer construction schedules of nuclear plants as compared to other generation facilities, will make lenders unwilling at present to extend long-term credit.” Our briefing panel will discuss whether the loan guarantee provisions constitute a significant taxpayer liability and/or poor governance. Speakers include:

• Peter Bradford, President, Bradford Brook Associates; former Chair, New York State Public Service Commission and Maine Public Utilities Commission; and former Commissioner, U.S. Nuclear Regulatory Commission
• Jerry Taylor, Senior Fellow, Cato Institute
• Jim Harding, CEO, Harding Consulting
• US Government Accountability Office (GAO)

Not only is the cost to the taxpayers potentially very high, so is the risk. The Congressional Budget Office has said there is a good chance that the DOE will underestimate the costs of administering these loans and that more than 50 percent of new reactor projects will default on their loan repayments, leaving taxpayers at risk. U.S. taxpayers will be fully liable for any potential shortfalls. The nuclear industry ask is $25 billion for FY 2008 and more than that in FY 2009-more than $50 billion in two years. According to the Congressional Research Service, this is more than the $49.7 billion spent by the DOE for all nuclear power R&D in the 30 years from 1973-2003. This is also well over the Administration’s target of $4 billion in loan guarantees for nuclear and coal for FY 2008.

This briefing is open to the public and no reservations are required.

30/10/2007 at 10:30AM

Last week the Union of Concerned Scientists released a new version of “Cashing In on Clean Energy”, judging the economic and environmental effects of a 15% renewable electricity standard (RES) by 2020 (aka renewable portfolio standard (RPS)), the standard called for in HR 3221, the House energy bill. [The Senate version did not include the Bingaman amendment of the same standard, and the provision is at the negotiating table; the initial UCS study looked at a 20% by 2020 standard; the 1Sky/Step It Up campaign calls for 20% by 2015.]

Using an Energy Information Administration (EIA) model, The UCS found the following:

• Consumer savings would equal $13 billion to $18.1 billion in lower electricity and natural gas bills by 2020 (growing to $27.7 billion to $31.8 billion by 2030 if the standard does not increase)
• Clean, renewable energy capacity would increase between 3.6 and 4.5 times over 2005 levels
• Reductions in global warming pollution equal to taking between 13.7 and 20.6 million cars off the road

The ranges are generated for lower and higher RES scenarios, depending on implementation choices:

Under our “lower renewable energy case”: (1) all states opt into a provision that allows electric service providers to use energy efficiency to meet up to 27 percent of their annual targets, and (2) additional renewable energy generation from electric power providers having to meet higher targets under state standards is eligible. Under the “higher renewable energy case”: (1) states with renewable standards that are higher than the federal targets (there are 18) do not opt into the energy efficiency provision, and (2) additional renewable energy generation used to meet state standards is retired and not eligible for use under the national standard.

From CQ:

After negotiations with key Republicans, Senate Majority Leader Harry Reid said Friday he was prepared to seek a conference with the House on energy policy legislation.

“The Speaker wants to go to conference. I want to go to conference,” Reid, D-Nev., said on the floor Friday. “We know we can’t do a bill unless we include the Republicans in it.”

The unanimous consent to move to conference was blocked on a procedural basis by John Cornyn, R-Texas, Friday afternoon because many senators were traveling, but no objections were expected this week.

That said, the battle over CAFE standards remains strong, with the auto industry lobbying hard for the weaker Hill-Terry language (HR 2927). Last week GM Chairman and CEO Rick Wagoner met with Al Hubbard, director of the National Economic Council, Nicole Nason, the administrator of the National Highway Traffic Safety Administration, and EPA officials, and Ford CEO Alan Mulally is expected in DC this week.

Meanwhile, the natural gas industry is calling for expanded drilling:

The American Petroleum Institute, Independent Petroleum Association of America, and seven other trade associations representing natural gas producers, pipelines, and consumers jointly expressed strong concern Oct. 19 about US House energy legislation that they believe would reduce instead of increase domestic gas supplies. . . . The 2005 Energy Policy Act contains several provisions to encourage production in frontier areas, including ultradeep water, ultradeep gas, and offshore Alaska, which HR 3221 seeks to repeal, they said.