Energy Committee Federal Update
March 2, 2009


Senate Energy and Natural Resources Chairman Jeff Bingaman emerging energy plan includes an oft-mentioned mandate for power companies to produce renewable electricity, as well as contentious goals for increasing U.S. natural gas production and reining in incentives for oil and gas production. One section of Bingaman's draft focuses on "clean energy deployment" and includes not just a renewable electricity mandate but also the siting of a national renewable electric transmission grid; a so-called Smart Grid; production on public lands; and overcoming potential barriers for commercially capturing and storing carbon emissions from coal power plants and other fossil fuel emitters.

That initial carbon sequestration language is intended to set up a more extensive take on the subject as part of subsequent climate change legislation. In his address to the joint session Tuesday, Obama called on Congress to give him a plan setting up a market-based limit on carbon emissions. Senate Majority Leader Reid has set a goal of having the full Senate take up such a bill before Congress goes home for the summer in August. Bingaman, on the other hand, sees a climate change bill "as a second-year activity" this Congress.

Senate Environment and Public Works Chairwoman Barbara Boxer agrees it is important for Congress to act on a climate change strategy before the United States participates in international talks in Copenhagen this December. Boxer also said she likes the idea of having energy legislation go first because it will take care of some low-hanging fruit like energy efficiency "that will help us get more support" for a bigger climate change strategy.

Boxer said there is no timeline for introducing and getting a bill through her committee but said she sees no problem in finding time this year to deal with climate change and other Obama priorities such as energy and health care.

In the end, lawmakers might combine all energy and climate change items into one package during House-Senate conference talks, regardless of what the strategies are for moving individual House and Senate bills.

This coincides with House Energy and Commerce Chairman Henry Waxman's plan to move one large energy and climate change bill through his panel by Memorial Day. House Ways and Means Chairman Charles Rangel Wednesday said he plans to mark up his committee's portion or version of climate change legislation by Memorial Day.

This week both house continue hearings aimed at piecing together energy and climate change bills.

Senator Bingaman wants to mark up an energy bill before the spring recess and will hold hearings on two pieces of that plan. A hearing Tuesday examines creating a national smart grid, which delivers electricity using digital technology to promote energy efficiency and lower fuel use while reducing greenhouse gas emissions. A second hearing Thursday looks at a draft plan regarding energy research and development and will feature Energy Secretary Chu's first appearance before the panel since he became head of the department.

The House Energy and Commerce Energy and Environment Subcommittee continues a lengthy series of hearings Thursday on an energy and climate change package. This week's hearing examines the use of offsets in a climate bill.

White House/President’s Agenda

The budget submitted by President Obama sets the stage for a major effort this Congress to enact climate change policy, including assuming nearly $646 billion in revenue by 2019 paid by power plants and other emitters as part of an economywide greenhouse gas emission reduction plan. Obama is recommending an economywide limit on greenhouse gas emissions roughly 83 percent below 2005 levels by 2050. OMB's summary of the administration's FY10 $10.5 billion request for EPA — a 34 percent increase over what the agency was appropriated for this year — states the administration "will work expeditiously" with Congress and others to develop a greenhouse gas cap-and-trade plan that aims to cut emissions roughly 14 percent below 2005 levels by 2020.

Obama recommends the plan include the auctioning off of all of the emission credits that polluters would need to purchase to participate in the carbon market instead of giving some of those credits away for free. Revenue from this auction would begin to be doled out starting in 2012, with $120 billion going to "clean energy" technologies by 2019 and nearly $526 billion going to Obama's "making work pay" tax credit by 2019. Senior OMB officials said the overall revenue from a cap-and-trade program could be higher than current administration estimates. But the OMB summary also states that "the balance of the auction revenues will be returned to the people, especially vulnerable families, communities, and businesses to help the transition to a clean energy economy."

Obama's EPA budget request includes a $19 million increase for the agency to work on a greenhouse gas emissions inventory and help agency efforts in working with industries to report emissions data. "This will also allow for work on the necessary steps toward implementing a comprehensive climate bill," the OMB summary states.