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:
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.
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.
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.
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.
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.
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.