Various events over the last couple of weeks have made the passage of any possible climate/energy bill more difficult. From Lindsay Graham's temper tantrum to the continuing catastrophe in the Gulf, the odds of passing a comprehensive cap and trade (or dividend or whatever you want to call it) seem to be slim and none, and slim just left town. So, what are the other options?
The Senate could decide to drop the cap on carbons and just push an energy bill. Senator Jeff Bingaman has proposed such a bill, the American Clean Energy Leadership Act of 2009 (PDF), or ACELA. ACELA contains a renewable energy standard (RES) rather than any kind of price on carbon. The RES is structured in this way:
2011-2013: 3%
2014-2016: 6%
2017-2018: 9%
2019-2020: 12%
2021-2039: 15%
This is a pretty weak standard. But the Senate likes weak, so you would think this bill would have a decent chance of passing. You'd be wrong. ACELA has it's detractors on the left & the right. From the New York Times:
Environmentalists and liberal senators from coastal states have never liked the offshore drilling provisions in the bill, which would allow rigs 45 miles off the Florida coast. And with oil gushing out of a well 50 miles off the Louisiana coast, the political momentum is on the side of opponents.
Republican opponents said it did not do enough to encourage states to allow offshore drilling because it did not cut states in on the royalties. And others complained that there was not enough encouragement for building new nuclear power plants.
And two Democrats voted against the bill for diametrically opposite reasons. Sen. Robert Menendez of New Jersey voted "no" because he opposes drilling. But Sen. Mary Landrieu of Louisiana opposed it because it was not pro-drilling enough.
Off shore drilling has clearly become the one issue that could kill any energy legislation. And, in the wake of the disaster in the Gulf, drilling proponents have not backed off their position in the. Senator Graham still supports it, as does Senator Landrieu. She said this just this week on the Senate floor:
"For advocates that say we can't afford to drill off of our coast, then what coast should we drill off of? Should we have all of our oil coming 100 percent from Saudi Arabia or Venezuela or Honduras or West Africa? We have to take responsibility to drill where we can safely, out away from our shores, and be as safe as we can be."
Maybe there could be a calculation made that any bill should just forget about addressing the issue. Is there anyway the Senate could get the votes without addressing off shore drilling? Well, maybe if you significantly increased nuclear power provisons in the bill. And there is a bill that could do that, written by Senators Jim Webb & Lamar Alexander. The Clean Energy Act of 2009 contains the following provisons:
A $10 billion appropriation that can leverage up to $100 billion in government backed loans for the development of clean, carbon-free energy to bring in investors and project developers to jump start efforts that are otherwise too capital-intensive up front.
$100 million per year for 10 years toward nuclear education and training. The nuclear revival cannot take place without a workforce and for that reason the bill provides much-needed support to educate and train craftsmen, engineers, operators and other workers.
$200 million per year for 5 years for a cost-sharing mechanism between government and industry to enable the Nuclear Regulatory Commission (NRC) to review new nuclear reactor designs such as small and medium reactors and help bring those technologies from concept into the market place.
$50 million per year for 10 years for much needed research to extend the lifetime of our current nuclear fleet and maximize the production of low-cost nuclear power.
$750 million per year for 10 years for research and development of low-cost solar technology, battery technology, advanced bio-fuels, low-carbon coal, and technologies that will reduce nuclear waste. Each of these will be funded at $150 million, annually.
So, the choice may come down to more off shore drilling or more nuclear. But would inclusion of the Webb/Alexander bill guarantee passage? This is not clear. So what could be done if there is no bill at all? Enter the Department of Energy Loan Guarantee Program. The Energy Policy Act of 2005 authorized the U.S. Department of Energy to issue loan guarantees to eligible projects that "avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases" and "employ new or significantly improved technologies as compared to technologies in service in the United States at the time the guarantee is issued". This includes the following technologies:
Biomass
Hydrogen
Solar
Wind and Hydropower
Advanced Fossil Energy Coal
Carbon Sequestration practices and technologies
Electricity Delivery and Energy Reliability
Alternative Fuel Vehicles
Industry Energy Efficiency Projects
Pollution Control Equipment
If there is no climate/energy bill, the WH will need to use the DOE loan program as a defacto energy bill. They've done this a bit already in awarding loans to nuclear, wind, and electric vehicle companies. They will also need to use the EPA to regulate greenhouse gasses. Of course, the Senate could always pass a bill to limit what the EPA could do, which would throw a wrench into this plan.
What is the best option? Well, I've always thought an energy only bill could work. But it would need to be stronger than ACELA. I would combine ACELA & Webb/Alexander, but make the RES more strict. I would also remove the off shore drilling, or at least significantly reduce it, in the hope that the increased nuclear could draw the votes necessary for passage. If that did not work, I would turn the DOE into a "green bank" of sorts, providing loan guarantees to any promising renewable energy project that qualified.