THE ENERGY/CLIMATE BILL, LIKE POLITICS, IS THE ART OF THE POSSIBLE

Climate bill shaped by compromise; Facing a mood unfriendly to sweeping changes in energy policy, House Democratic leaders and Obama had one thing that made interest groups more receptive: They were willing to negotiate.
Jim Tankersley, June 28, 2009 (LA Times)
and
Dennis Kucinich Lays Out Why He Voted Against Clean Energy Act
June 27, 2009 (The Cleveland Leader)

SUMMARY
From the earliest days of the Obama presidency, there was 1 crucial fact and 1 crucial question about the administration’s ambitious plans to create a New Energy economy. Fact: To get anything through Congress, there would have to be big compromises with conservatives. Question: After the compromises, would there be anything worth legislating?

The question’s answer began to take shape with the passage by the House of Representatives of H.R. 2454, the Amercian Clean Energy and Security Act of 2009 (ACESA), last Friday before Congress left Washington for its July 4th recess.

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An effort to forge successful compromise was approved at a March Oval Office meeting between the President and one of ACESA’s chief architects, Representative Henry Waxman (D-Calif), Chair of the powerful House Energy and Commerce Committee. At the time, many considered the chance of such significant change being enacted highly unlikely. The President told Waxman to proceed.

ACESA, says veteran environmental warrior Representative Ed Markey (D-Mass), Chair of the House Energy Subcommittee and the bill’s co-author, could fundamentally change the way the U.S. uses energy by – finally – attaching a price to the generation of greenhouse gas emissions (GhGs).

Waxman and Markey have long been engaged in the fight for New Energy and championed efforts to make a better place for it in the 2005 and 2007 energy bills. With the Democrats’ victory in 2008, they began preparing to do something they hoped would be really important.

Before the inauguration, Waxman and Markey met with farm groups, oil and natural gas executives, coal producers, manufacturering industry leaders and CEOs of the big utilities. The discussions centered on the Holy Grail of New Energy: Putting a price on GhGs. They also covered the Holy Grail of climate change: Putting a cap on GhGs.

The Waxman-Markey plan was built on 3 cornerstones: (1) The plan advocated by President Obama during his presidential campaign that called for requiring U.S. utilities to obtain 10% of their power from New Energy by 2012 and 25% by 2025 and called for cutting U.S. GhGs 20% by 2020 and 80% by 2050; (2) the European Union ((EU) Emissions Trading Scheme (ETS), which capped EU member nations' GhGs and provided a market through which those nations' emitters could maximize returns for using New Energy, installing Energy Efficiency and reducing their emissions; and (3) the successful cap&trade system through which the U.S. and other nations successfully solved the acid rain problem of the 1980s.

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The problem: Waxman, Markey and the Obama administration officials who joined them in strategy talks came to understand the problem clearly. Business and industry saw their plan as extremely – threateningly – expensive.

The solution: Veterans of Washington, Waxman and Markey knew the solution. Deal making. Success in the political world is entirely based on the understanding of one and only one aphorism. Politics is the art of the possible.

Activists on the left clamored for stronger New Energy subsidies and tighter cuts in GhGs. Conservatives on the right recoiled in horror at the changes and complexities of the Renewable Electricity Standard (RES) requiring utilities to use New Energy and of the cap&trade system limiting GhGs and establishing a whole new trading system.

Spurred on by an administration it is now clear wants accomplishments more than it wants ideological absolutes, Waxman and Markey searched out the sweet spot of support, where big business, big agriculture, big industry and prominent environmentalists could come together behind legislative action.

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In early May, President Obama had anther meeting with Waxman and Markey, compared the issue of energy to the issue of emancipation for President Lincoln and told them to keep negotiating.

With the White House behind them, Waxman and Markey crafted H.R. 2454.

To bring agriculture on board, they gave concessions on biofuels.

To bring coal-burning utilities, oil refineries, automakers and manufacturing industries on board, they cut the auctioned emissions trading allowances from 100% to 15% and gave 85% away free, making the cost of cap&trade in its early years affordable enough so the businesses’ leaders believed it would not compromise their ability to compete China and India.

To bring coal on board, they provided big funding for the development of “clean” coal and – probably not coincidentally – a large number of coal mining operations were greenlighted by the Environmental Protection Administration (EPA) during May and early June.

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Many big business leaders bought in. Nike Inc., Starbucks Corp., Exelon Corp., Symantec Corp. and PG&E Corp. as well as the huge multinational corporations in the U.S. Climate Action Partnership (US CAP) like Alcoa, Caterpillar, Conoco Phillips, General Electric, Rio Tinto and Shell called for an RES and cap&trade. Environmentalists like The Center for American Progress, Sierra Club, the Environmental Defense Fund and the Natural Resources Defense Council also accepted the deal, as did New Energy industry adovcacy groups like the American Wind Energy Association and the Solar Energy Industries Association.

Opponents of H.R. 2454 included the U.S. Chamber of Commerce and the American Petroleum Institute as well as Greenpeace, Friends of the Earth and most of the anti-coal activists leading the movement to stop coal burning and mountaintop removal coal mining. One of the many historic aspects to the legislation was that it brought together the American Petroleum Institute and Greenpeace.

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Al Gore championed H.R. 2454 in a high profile appearance before Waxman’s committee and in behind-the-scenes phone persuasion with fence-sitting House members in the days leading up to the historic vote. James Hanson, the NASA climate scientist Gore made famous when he brought him to Washington in 1989 to testify to a Senate committee and become the prophet of climate change, staunchly opposed the bill. Hanson was arrested protesting mountaintop removal coal mining the day before the bill was passed.

The struggle to turn the H.R. 2454’s proposals into a first-ever U.S. New Energy standard and a landmark, game-changing U.S. mandatory GhG cap&trade system did not end with the House vote. ACESA's provisions only become law if the Senate approves them and the accompanying measures in its own bill and if a House and Senate conference committee can reach accommodation over whatever differences there might be in their bills.

In other words, look for more compromising.

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COMMENTARY
Putting a price on GhG generation has been the Holy Grail of New Energy since the fight began in earnest in the 1970s. Solar, wind and geothermal energies got a foothold when the price of oil and natural gas rose due to the Arab oil embargoes and other international tensions. The New Energies had a chance at getting a significant place in the U.S. energy mix until the Reagan administration cut off funding to New Energy R&D in the early 1980s.

Breakthroughs nevertheless came, albeit slowly. By the end of the 1980s, wind turbines had become more efficient and solar power plant technology had emerged. But the price of oil went down to $10 per barrel in the 1990s and the price of natural gas followed. New Energy could not compete but, with an incipient awareness of global climate change giving it far more credence, producers renewed the 1970s pioneers’ message: If the fossil fuel industries paid for the harms they do to health and the environment, they would be much more expensive, expensive enough to make the nearly consequenceless New Energies into a great bargain.

Now, in 2009, Democratic leaders have compromised audaciously to get ACESA through the House of Representatives and put a price on emissions. In the greatest test of her leadership she has yet faced, Speaker of the House Nancy Pelosi (D-Calif) promised she would get it done by the July 4th recess and she did.

Pricing emissions will raise fossil fuel costs but revenues from the auction of permits will be used to compensate ratepayers and overall energy costs will go up little. (click to enlarge)

Opponents question the real importance of this historic accomplishement. Does it have anything more than marquee value? An EPA analysis showed H.R. 2454 might not significantly alter U.S. oil imports. A Union of Concerned Scientists study showed there might be more New Energy without the weakened RES in the bill than with it.

Still, ACESA takes U.S. energy policy into new frontiers. It institutes a New Energy standard and a cap&trade system despite the incredible recalcitrance of House conservatives and the enormous lobbying monies spent on behalf of vested interests. Activists would have liked to see the Democratic leaders call the bluff of the conservatives by putting stronger measures in their bill but it is hard to believe veterans like Pelosi, Waxman and Markey would leave anything on the table that it was possible to take in the final pot.

In the wake of the House's passage of the Waxman-Markey bill, hailed by those with long memories as a landmark accomplishment, Progressive Representative Dennnis Kucinich (D-Ohio) published an op-ed explaining why he was against the legislation. He detailed the giveaways to coal and nuclear, the weakness of the New Energy standard and the potentially corruptible complexities of cap&trade.

Kucinich was quite right in almost every point he made. If the majority of his Democratic colleagues had agreed with him, there would be no energy and climate legislation on its way to the Senate. Maybe that's good and maybe that's bad, but that's certainly politics. Waxman, Markey, Pelosi and the President did what was possible.

In the fall, Senate Majority Leader Harry Reid (D-Nev) and Senate Chair of the Energy and Natural Resources Committee Jeff Bingaman (D-NM) will try to carry the ball further down the field. If Senators Reid and Bingaman are successful against the power of the filibuster weilded by the recalcitrant conservatives in the Senate, U.S. energy policy will never be the same. Mr. Kucinich, whose seat in Congress is secure, can come back next year and see if it is possible to make U.S. energy policy even better.

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QUOTES
- Henry A. Waxman (D-Calif), Chair, House Energy and Commerce Committee: "[The President] realized [in March] that this was a very tough bill to get through…"
- Elaine Kamarck, Harvard/Kennedy School of Government, former advisor to Al Gore: "There's a point at which you've got to ask yourself, what are we doing here? What's the point?"
- Emily Figdor, federal global warming policy director, Environment America: "We think there's a lot of problems in the bill…[but] we need to take that first step. We're so long overdue."
- Edward J. Markey (D-Mass.), Chair, House Energy Subcommittee: "[If it becomes law] we will have fundamentally changed our relationship with energy and how it's generated in this country.. There is a new political recombinant DNA…working with business and consumer interests to create a pathway that works for both. This bill demonstrates that."

The compromises rendered the final proposal as weak as the weakest of those studied by NREL. But is it stronger than no action? (click to enlarge)

- Waxman: "That was an essential compromise…It would be very disruptive to the economy had we not recognized that certain regions of the country were heavily dependent on coal."
- Representative Melissa Bean (D-Illinois), a “yes vote on the bill: "Many of the folks who are supporting the bill now from the private sector, that I know, said they didn't think they'd be here today…And they're surprised at . . . how their concerns were listened to."
- Dan Weiss, environmental advocate, Center for American Progress: "They know what price the political market will bear…"
- Greenpeace: "[Waxman-Markey is] a victory for coal industry lobbyists, oil industry lobbyists, agriculture industry lobbyists, steel and cement industry lobbyists."
- Carol Browner, director, White House Office of Energy and Climate Change: "It's a strong bill…It's a good bill. And it happened because everyone was able to keep their eyes on the prize while still making some concessions."