OBAMA STIMULUS CUTS EMISSIONS, CAN’T WAIT TO SEE ENERGY & CLIMATE BILLS

Everybody is watching, waiting for and opinionating on the potential economic impacts of the Obama Administration’s proposed American Recovery and Reinvestment Bill of 2009, passed by the House of Representatives in January and currently under revision by the Senate. Sponsored by Greenpeace USA and produced by the widely respected researchers at ICF International, GHG Impact of the Economic Stimulus Package offers a different perspective on the legislation.

First, it is vitally important to note that the report assesses the House plan and there are at least a couple of important Senate revisions that would significantly alter the bill’s impact on GhGs. First, the House legislation allows New Energy project developers to obtain Department of Energy (DOE) grants instead of taking production tax credits or investment tax credits as incentives. In an economy where nobody is making money, tax credits offer no incentive to invest.

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DOE grants are an ingenious alternative to tax credits because they would act like a secure loan in terms of the overall impact on the federal budget. They would provide urgently needed capital up front that would be earned back in the form of the taxes that would otherwise not be collected.

New Energy boosters in the Senate like Senate Committee on Energy and Natural Resources Chairman Jeff Bingaman (D-NM) are trying to find compromises that would get the grant idea into the final stimulus package. If the grant proposal does not make it into the Senate’s final bill, it might nevertheless endure the conference process in which House and Senate negotiators hammer out a compromise measure.

Another controversial energy-related aspect of the stimulus legislation likely to be dealt with in the conference process is an amendment from Senator Robert Bennett (R-Utah) that shifts $500 million of the $10 billion in loan guarantees allocated for New Energy and new transmission to loan guarantees that could go to "advanced nuclear" power plants or coal gasification, coal liquefying or “clean” coal plants. The shift clearly turns money intended for “clean” energy into money for “dirty” energy.

Nuclear energy creates no GhGs in the power generation process but mining the uranium required to produce nuclear fuel is highly GhG-intensive. Also, power generation from nuclear energy creates radioactive nuclear waste for which there is no established disposal process.

Anything that burns coal is inherently filthy, from the mining stage to the power generation stage. And there is no such thing as “clean” coal technology. It is a theory. As Ted Turner recently told Charley Rose, "nuclear might kill you but coal WILL kill you."

The shift of the loan guarantees has to do with the different accounting methods that would be applied to the nuclear and coal loans if they are included in the stimulus package as opposed to being left as they were established by the 2005 energy bill. The change in accounting methods would give the loans more “bang for the buck” but it is a dirty bang.

Daniel J. Weiss, senior fellow/director of climate strategy, Center for American Progress: "…this could be a real contentious issue in conference…This is the exact kind of spending President Obama said he didn't want in the recovery package. It will take a lot of time to spend this money and, once you do, it won't create many jobs…"

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Actual energy and climate change legislation will come from the Obama administration, through Congress, later this year. Given how hard Democratic leaders are fighting to keep New Energy and Energy Efficiency in the stimulus package, there is reason to be hopeful for what the future holds.

Meanwhile, there is every reason to believe Democrats can protect the New Energy and Energy Efficiency provisions of the stimulus package so that when it comes out of the legislative sausage-making it still packs environmental punch as well as economic potency. The sausage-making has, however, been ugly so far. Because economic benefit is the Democrats’ first purpose, it is important to remember the economic value of emissions reductions.

One calculation puts the 2025 cost to the U.S. of unchecked global climate change at $271 billion. The UK’s Stern Review found climate change could cost 5-to-20% of global GDP by 2100. These are long-term costs but they are enormous.

The Greenpeace/ICF report found the impact of the stimulus package, as it was passed by the House, would create all the intended short-term economic benefits and still be an approximately 1% reduction in U.S. greenhouse gas emissions (GhGs). Kert Davies, the Research Director of Greenpeace USA described this as “a not-insignificant first step” in the fight against global climate change. That makes for a “not-insignificant first step” in offsetting those enormous long-term economic costs.

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How would the stimulus package do this?

From the Greenpeace analysis of the report: “ICF was able to do detailed analysis of two portions of the proposed economic stimulus package entitled Clean, Efficient, American Energy and Modernize Roads, Bridges, Transit and Waterways. We excluded from the analysis those portions of the stimulus package where the greenhouse gas impact was impossible to determine (e.g. homeland security, Medicaid, unemployment benefits).”

In sum, the report evaluated the impact of $24 billion of the $51.9 billion specified for New Energy and Energy Efficiency in the package.

The primary conclusion: Short term spending on Energy Efficiency (home and building upgrades and retrofits) is one of the best GhG-cutting and job-generating uses of money, and would also reduce energy bills. New Energy loan guarantees (and, presumably grants) would have similar impacts.

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Of the other ~$28 billion, though a lack of details made it necessary for ICF to estimate rather than calculate, it is likely to have a net reductive impact on GhGs. (Example: R&D in the areas of smart grid development and advanced batteries are likely to cut emissions while transitioning the federal vehicle fleet to ethanol is more questionable)

Some specifics from the Greenpeace/ICF report: (1) Smart Appliances cut energy waste AND energy bills. (2) Compact Florescent Light bulbs immediately cut waste and bills. (3) Local Government Energy Efficiency Block Grants: A one-time $6.9 billion investment generates $3 billion/year in savings and emissions reductions. (4) Energy Efficiency Housing Retrofits: A one-time $2.5 billion stimulus investment generates $1.25 billion in savings and cuts 87.6 million metric tons of GhGs over the life of the efficiency improvements. (5) Home Weatherization: A $6.2 billion investment cuts 8 million metric tons/year of emissions and 131 million metric tons over the lifetime of the insulation improvements.

ICF noted a special point in assessing the Modernize Roads, Bridges, Transit and Waterways part of the stimulus package. Spending all the stimulus money allocated to transportation for building new highways generates 10-to-50 times more GhGs than spending it for building new public mass transit systems or on repairing existing roads. Also, previous research found that mass transit spending creates 19% more jobs than new highway construction.

The crucial Senate cloture vote is expected Monday (February 9), just before the President’s primetime press conference. If the Senate Democrats can hold on to the Republicans who have endorsed the current compromise, there will be 60 votes for cloture (i.e., to end debate).

Final Senate approval would then come Tuesday (February 10) and bring on a House-Senate conference to resolve differences in the 2 versions of the package. That will be where the crucial provision for turning the New Energy tax credits to DOE grants will survive or be cut. It will also be where the $500 million in loan guarantees to New Energy that Republicans want shifted to dirty energy (and many other equally controversial provisions) will be hashed out.

Watch Joe Lieberman and the 3 Republican Senators (Susan Collins, Arlen Specter and Olympia Snowe) he has managed to bring along on the compromise Senate bill.

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Greenpeace & ICF: Stimulus Will Fight Global Warming; Groups say Recovery Package Would Cut At Least 61 Million Tons of CO2 Every Year
February 6, 2009 (Salem News)
and
Highlights of ICF International analysis: “GHG Impact of Economic Stimulus Package”
and
Obama recovery plan would cut emissions
Jim Snyder, February 7, 2009 (The Hill)
and
Energy Provision May Test Priorities
Steven Mufson, February 3, 2009 (Washington Post)
and
Bingaman Pushes Grant Plan for Renewable Energy
February 5, 2009 (Sustainable Business)
and
SCENARIOS: Here's what happens next on U.S. stimulus package
Jeremy Pelofsky (w/ Jackie Frank and David Wiessler) February 8, 2009 (Reuters)

WHO
William Grayson and Dr. Joel Bluestein, authors, ICF International; Kert Davies, Research Director, and Steven Biel, Global Warming Campaign Director, Greenpeace USA; Senator Jeff Bingaman (D-NM), Chairman, Senate Committee on Energy and Natural Resources; Senators Joe Lieberman (I-Conn), Susan Collins (R-ME), Arlen Specter (R-PA) and Olympia Snowe (R-ME)

WHAT
The American Recovery and Reinvestment Act of 2009, popularly known as the stimulus plan, is intended to create jobs and drive a U.S. economic rebound. GHG Impact of the Economic Stimulus Package evaluates how much the bill’s New Energy and Energy Efficiency spending will cut GhG emissions.

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WHEN
- Monday, February 9: President Obama holds town hall meeting in the Midwest to stress the need for the stimulus.
- 5 p.m. EST, Monday, February 9: President Obama’s first prime time press conference.
- 5:30 p.m. EST, Monday, February 9: Senate vote to limit debate on the stimulus package expected. The 58 Senate Democrats need 60 votes to end debate and presently have 3 Republicans (Susan Collins, Arlen Specter and Olympia Snowe).
- Tuesday, February 10: President Obama holds town hall meeting in the South to stess the need for the stimulus.
- Tuesday, February 10: Senate vote on amendment to reduce the stimulus package from $937 billion to $827 billion expected to pass.
- Subsequent several days or more: House-Senate Conference. The House stimulus package is at $819 billion. Party leaders appoint conferees to sort out differences on spending, tax cuts and incentives.
- When the conferees decide on a compromise stimulus package: The House and Senate vote on the final version and, if approved, it goes to President Obama to sign into law.

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WHERE
- Elkhart, Indiana: President Obama’s February 9 town hall meeting
- Fort Myers, Florida: President Obama’s February 10 town hall meeting.
- The ICF report provides state by state impacts. Example: Oregon – $90 million for mass transit investments, ~$7 million for the Energy Program, ~$23 million for the Weatherization Assistance Program; if the transportation money is spent on new highway construction instead of highway repair or public transit, it would add ~5 million tons of GhGs/year.

WHY
- Senator Bingaman’s proposal to shift grants from DOE to Treasury is modeled on the Emergency Economic Stabilization Act that created the Troubled Asset Relief Program (TARP). It would award the grant only after determining the project producer can protect taxpayers against losses. It assumes the grants will be earned back in taxes because demand for New Energy is expected to remain high, especially with the national Renewable Electricity Standard (RES) legislation expected from the Obama administration.
- Greenpeace recommendations based on the ICF report: (1) Increased funding for New Energy (A University of Massachusetts/Center for American Progress study shows New Energy job-creation potential is almost unlimited and Energy Efficiency investment creates 4.4 times the number of jobs as the same investment in nuclear energy, 2.6 times the number of jobs as coal. (2) Pass the grant provision to make New Energy “recession-proof.” (3) Eliminate loan guarantees for nuclear power and liquid coal and shift the money to New Energy incentives.
- The Greenpece/ICF reports showed the stimulus plan will cut 61.5 million metric tons of GhGs/year: (1) $2.5 billion spent on Energy Efficiency upgrades to homes could cut 7.3 million metric tons of GhGs and save $1.25 billion/year in utility costs. (2) A $6.9 billion state and local government investment in Energy Efficiency could generate $3 billion/year in savings cut GhG emissions 20+ million tons/year.
Transportation spending worst case scenario: New highways generate 250+ million tons of GhG emissions over the highway’s lifetime versus 4 million tons from new mass transit. After construction phase related emissions, public transit reduces emissions 15 million tons over its lifetime.
- Moving the $500 million in loan guarantees for dirty energy makes it subject to a different government accounting method. Under the method presently applied, the $500 million appropriation would generate ~$5 billion in loan guarantees whereas the shift would allow it to generate some $50 billion.
- DOE is presently limited to $42.5 billion in loan guarantees. In 2005, Congress limited nuclear power plant loans $18.5 billion. Utilities and power companies have already applied for ~$122 billion in loan guarantees for 21 new nuclear power plants.
- The Bennett amendment has no restrictions or quotas. It puts the loans in a category which allows the government to make them without setting aside money against the enormous risk a nuclear power plant represents.
- Without loan guarantees, it is almost impossible to obtain financing for new nuclear power plants, because of huge capital costs and long construction periods.

Recalcitrants in Congress say building a New Energy economy can’t be done but Al Gore has an answer with a familiar ring to it: Yes we can! From WeCanSolveIt via YouTube.

QUOTES
- Kert Davies, Research Director, Greenpeace USA: “The fact that the federal government could spend so much money and actually help slow global warming means we’ve really turned the page as a country…This is a real sign that we’re starting to move beyond the era of fossil fuels.”
- Senator Jeff Bingaman (D-NM), Chairman, Senate Committee on Energy and Natural Resources: "The House approach to addressing renewable energy financing is inadequate because it fails to protect the taxpayer and because it needlessly involves the Department of Energy…My proposal finds common ground by offering an alternative to financing through the tax equity markets in a manner that protects the taxpayer and doesn't create a refundable tax credit in disguise."
- Josh Dorner, spokesman, Sierra Club: "The credit risk to the taxpayer [of making loans to nuclear plant developers] is very significant…"