Hill Heat

From the Wonk Room.

A major new study of the success of California’s green economy by economist David Roland-Holst finds that “California’s energy-efficiency policies created nearly 1.5 million jobs from 1977 to 2007, while eliminating fewer than 25,000.” Today, California’s per-capita electricity demand is 40 percent below the national average:

Total electricity use, per capita, 1960-2001

Instead of household income being lost to the capital intensive energy sector, Californians have enjoyed the benefits of their wages being plowed into job creating sectors, such that “induced job growth has contributed approximately $45 billion to the California economy since 1972.”

Energy Efficiency, Innovation, and Job Creation in California, by David Roland-Holst, an economist at the Center for Energy, Resources and Economic Sustainability at the University of California, Berkeley, is the first study of how the savings from California’s energy efficiency standards affected its economy through “expenditure shifting” away from the energy sector. The author explains:

When consumers shift one dollar of demand from electricity to groceries, for example, one dollar is removed from a relatively simple, capital intensive supply chain dominated by electric power generation and carbon fuel delivery. When the dollar goes to groceries, it animates much more job intensive expenditure chains including retailers, wholesalers, food processors, transport, and farming. Moreover, a larger proportion of these supply chains (and particularly services that are the dominant part of expenditure) resides within the state, capturing more job creation from Californians for California. Moreover, the state reduced its energy import dependence, while directing a greater percent of its consumption to in-state economic activities.

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.

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.

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

The nomination of Stephen J. Isakowitz to be the Chief Financial Officer of the Department of Energy. The draft of an original bill drawn from the text of bills: S. 731, S.962, S. 987, and S. 1115.

CQ:

A tenuous agreement to delay action on divisive issues blew up Wednesday as a Senate panel marked up its first major energy legislation of the year.

The Democratic and Republican leaders of the Energy and Natural Resources Committee had agreed not to consider amendments on coal and renewable electricity. But the deal fell apart when Republicans forced a vote on an amendment by Sen. Craig Thomas, R-Wyo., to create a new mandate for coal-based transportation fuels.

Democrats tightened ranks — despite the fact that many support “coal to liquids” technology — and defeated the amendment 11-12 in a party-line vote.

The panel went on to adopt, 15-8, an amendment by Chairman Jeff Bingaman, D-N.M., that would make various industrial facilities — including coal-to-liquids facilities — eligible for a 50-50 cost share program that would help pay for projects that capture the resulting greenhouses gases and store them underground.

The deal between Bingaman and ranking Republican Pete V. Domenici of New Mexico was intended to save controversial amendments for the Senate floor debate on the legislation. The underlying bill, which is still unnumbered, includes language from four measures that would address biofuels (S 987), energy efficiency (S 1115) and carbon sequestration technologies (S 962, S 731).

Although Republicans broke what one Democratic aide called a “ceasefire,” Democratic committee aides said Bingaman plans to keep his end of the bargain and withhold his amendment to create a “renewable portfolio standard” until the bill moves to the floor. That language would require utilities to produce 15 percent of their electricity from renewable sources by 2020.

Thomas and Jim Bunning, R-Ky., plan to bring their proposal to boost coal-to-liquids technology to the floor as well.

The committee also adopted by voice vote 22 minor amendments that had been cleared with staff on both sides of the aisle in advance.

02/05/2007 at 10:00AM