Hill Heat

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.

On Saturday, Sen. Pete Domenici (R-N.M.), ranking member of the Senate Energy and Natural Resources Committee, challenged the energy bill deal brokered by the Democratic leadership, attacking the inclusion of a Renewable Portfolio Standard (also known as the renewable electricity standard).

For weeks, my staff, along with Senator Bingaman’s, has been engaged in good faith negotiations with the House under a defined set of parameters laid out at the start of the process. We have made substantial bipartisan progress toward finalizing a bill. The legislation we have been working on contained a robust, much-needed Renewable Fuels Standard, important provisions on energy efficiency and carbon sequestration, and a long overdue increase in fuel economy standards. The parameters agreed to by Speaker Pelosi and communicated to us by Senate Democrats did not include a renewable portfolio standard.

Domenici complained particularly about what he saw as a lack of good faith.

At this time, I have instructed my staff to cease their work on the energy bill, since the final bill apparently will not be the product of our bipartisan negotiations. As someone who has been working for 35 years to forge bipartisan, good-faith compromises on tough issues like the federal budget and energy policy, I know that your word means everything. It is particularly disappointing for me to see that such a sentiment seems to be a thing of the past.

Sen. Domenici himself has failed to maintain such bipartisan compromises on this very bill. During the May committee markup of the Senate version of the energy bill (S. 1321, H.R. 6), Sen. Domenici failed to maintain a bipartisan deal to avoid controversial amendments during markup—Democrats had agreed not to introduce RPS in committee, and Domenici claimed Republicans would not introduce coal-to-liquids language. However, Sen. Craig Thomas, R-Wyo., introduced a coal-to-liquids amendment, breaking the deal.

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.

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.

Illinois senator and presidential candidate Barack Obama’s global warming/energy policy has developed significantly in the past year, from endorsement of coal-to-liquids funding to his policy platform unveiled yesterday.

Summary of Obama’s energy policy:

• 100% auction cap-and-trade with 1990 levels by 2020, 80% cuts by 2050
• $150 billion investment over ten years in clean energy and green jobs
• 2030 goals: reduce U.S. economy energy intensity by 50%, reduce oil consumption by 35%,
• Standards: 25% federal RPS by 2020, all new buildings carbon neutral by 2030, phase out traditional incandescents by 2014
• Smart grid with distributed generation
• Increase CAFE standards to 35 MPG, Renewable Fuel Standard to 36 billion gallons by 2022
• Require 60 billion gallons of biofuels by 2030
• Re-engage in UNFCCC