U.S. Energy and Climate Change Policy: What to Expect in 2009

Bloomberg Law Reports: Sustainable Energy, Vol. 2 Issue 1 pp.1

January 2009

By Doug Smith, Kyle Danish, and Megan Ceronsky

The November elections dramatically reshaped Washington’s political landscape, especially in the area of energy and climate change policy. President-elect Barack Obama made clean energy and climate change solutions a central theme of his campaign, and the leaders of more robust Democratic majorities in the Senate and the House of Representatives are pursuing similar agendas. Thus, one might guess that Federal legislation on greenhouse gas regulation and renewable energy requirements, for instance, is just around the corner.  While the clean energy agenda certainly received a boost in the elections, however, political challenges remain, and other serious problems facing the Nation will compete for attention in the early days and months of the new Administration and Congress.

Unfinished Business from 2008

When the 111th Congress and the Obama Administration take the reins of the U.S. government in January, they will inherit a number of important unresolved energy and climate policy issues.

Climate Change

Despite a major legislative push in 2008, the Federal government has yet to develop a coherent policy to address greenhouse gas emissions. The Senate Environment and Public Works Committee reported a comprehensive climate change bill sponsored by Senators Lieberman (I-CT) and Warner (R-VA), and the full Senate debated this cap-and trade bill (S. 3036) for several days in June 2008. The measure garnered 48 votes for cloture, 12 shy of the 60 needed to break a Republican-led filibuster. Thus, while this bill made more progress through the legislative process than climate bills in prior Congresses (and forced Senators and constituency groups to focus on important details of the program for the first time), the experience also made clear that future such legislation will require a broader coalition of supportive legislators.

Despite a major legislative push in 2008, the Federal government has yet to develop a coherent policy to address greenhouse gas emissions. The Senate Environment and Public Works Committee reported a comprehensive climate change bill sponsored by Senators Lieberman (I-CT) and Warner (R-VA), and the full Senate debated this cap-and trade bill (S. 3036) for several days in June 2008. The measure garnered 48 votes for cloture, 12 shy of the 60 needed to break a Republican-led filibuster. Thus, while this bill made more progress through the legislative process than climate bills in prior Congresses (and forced Senators and constituency groups to focus on important details of the program for the first time), the experience also made clear that future such legislation will require a broader coalition of supportive legislators.

In the House, climate legislation did not get to the committee mark-up stage. In the closing days of the 110th Congress, Energy and Commerce Committee Chairman John Dingell (D-MI) and Energy and Air Quality Subcommittee Chairman Rick Boucher (D-VA) released a draft climate change bill intended to serve as a focal point for debate in the upcoming Congress. Like the Lieberman-Warner bill, the Dingell- Boucher draft proposes an economy-wide cap-and-trade program in thoughtful detail. However, this proposal has not been considered by the Energy and Commerce Committee, and, as discussed below, the leadership of that committee will change in the coming Congress.

In addition to comprehensive climate change legislation, there are other open items on the climate change agenda. For example, the Bush Administration initially denied a Clean Air Act preemption waiver requested by the State of California that would have allowed California to implement greenhouse gas emission standards for new automobiles; however, the Obama Administration is expected to reconsider and reverse that decision and let California (and 17 other states) proceed with state regulation. The U.S. Environmental Protection Agency (EPA), under new leadership, will also need to decide what to do next with the rulemaking initiated in response to the Supreme Court’s

Massachusetts v. EPA decision concerning regulation of greenhouse gas emissions under the Clean Air Act. The Bush Administration released an advanced notice of  proposed rulemaking—essentially a scoping document—last summer, and received comments in December 2008.

Energy Policy

While Congress enacted significant energy legislation in both 2005 and 2007, some issues could not be addressed in those bills. For instance, Congress considered, but did not pass, proposals for a Federal renewable electricity standard that would require utilities to meet a minimum proportion of their sales with renewable generation sources. Other measures, such as tax incentives for renewable energy resources, have been extended only for short periods and will need to be reconsidered by the incoming Congress. Finally, there are new, emerging issues that have not yet received serious consideration by Congress, such as updating the rules for electricity transmission to support the deployment of renewable energy resources in remote areas, and changes in law that may be needed to support development of carbon capture and sequestration infrastructure.

While Congress enacted significant energy legislation in both 2005 and 2007, some issues could not be addressed in those bills. For instance, Congress considered, but did not pass, proposals for a Federal renewable electricity standard that would require utilities to meet a minimum proportion of their sales with renewable generation sources. Other measures, such as tax incentives for renewable energy resources, have been extended only for short periods and will need to be reconsidered by the incoming Congress. Finally, there are new, emerging issues that have not yet received serious consideration by Congress, such as updating the rules for electricity transmission to support the deployment of renewable energy resources in remote areas, and changes in law that may be needed to support development of carbon capture and sequestration infrastructure.

Competing Priorities

Of course, the incoming Congress and Administration are also inheriting other momentous policy problems, including the wars in Iraq and Afghanistan, the credit crisis and reeling economy, and a domestic auto industry on the brink of bankruptcy. Thus, energy and climate initiatives will have stiff competition for attention in the early months of 2009.

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Reprinted with permission from Bloomberg Law Reports.