Businesses with significant stakes in the outcome of climate and energy legislation ramped up lobbying spending earlier this year as they worked to shape the Senate bill scheduled to be unveiled this week.
Electric utilities and the coal, chemical and natural gas industries in particular boosted influence efforts and appear poised to receive key parts of what they sought in new climate policies.
Utilities and coal are likely to see language that lets power plants escape most penalties for greenhouse gas emissions in the early years of a carbon restriction program, according to those familiar with the draft legislation. Chemical companies could garner a delay in having to comply with new rules. Natural gas hopes to win incentives that would help companies increase their share of the energy market.
"Energy legislation is huge," said Ken Green, resident scholar at the American Enterprise Institute, a think tank that favors free market policies. "The entire coal industry could be wiped out. Natural gas could have huge gains. One sector has the incentive to defend itself by spending money. Another sector has the incentive to enrich itself by spending money."
Influence spending in the energy sector grew 25 percent in the first quarter of 2010 compared with the same period last year, an analysis of disclosure reports shows. The lobbying spending came as Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) worked on legislation seen as a last chance to pass a climate bill this congressional session. Kerry and Lieberman are scheduled to release the bill Wednesday without Graham (see related story).
Regardless of what happens this week or this year, the businesses that paid lobbyists to talk to lawmakers believe that eventually Congress will pass policies that will regulate carbon emissions. In addition to making their interests clear on that, many of those businesses also advocated for and against related energy policies under consideration including a U.S. EPA plan to regulate the companies emitting the largest amounts of greenhouse gas pollution.
When Congress is considering legislation on something that affects so much of the economy, Green said, "you'd expect them to have the full attention of the companies involved and having them lobby for a piece of the pie."
E&E examined spending for 10 industries potentially most affected by climate and energy legislation: oil and gas, electric utilities, chemical and related manufacturing, agricultural services and products, alternative energy, mining, coal, environmental groups, forestry and forest products, and natural gas. The industry data was compiled by the Center for Responsive Politics.
The $159 million spent by those sectors in the first quarter of 2010 includes lobbying on issues beyond energy. Companies also talked to lawmakers, their aides and the administration about a host of other policies including taxes, trade, financial reform, labor issues, health care and how money from last year's stimulus law will be distributed.
For many of the energy companies, a potential climate bill was a priority. Electric utilities, coal, chemicals and natural gas companies pushed forcefully.
Coal mining companies and their trade group in the first quarter spent 61 percent more on lobbying than they did a year earlier. The natural gas industry increased lobbying spending 33 percent. Chemical companies doled out nearly 27 percent more. Utility companies and their trade group spent nearly 90 percent more than in the early months of 2009, although a large portion of that increase stemmed from California's PG&E Corp. paying to fund a state ballot measure.
Oil and gas interests, alternative energy businesses, forest and forestry product companies and others in the energy sector also poured millions of dollars into influence efforts, though not at the same pace as they spent money in first quarter 2009.
"For all of these industries, lobbying would mean the difference between getting preferential treatment in a climate bill and not," said Tyson Slocum, director of watchdog group Public Citizen's Energy Program. "What's at stake is the difference between coming out ahead in the climate bill or breaking even or losing.
The Kerry-Lieberman bill is expected to require that by 2020, emissions levels fall 17 percent below 2005 levels, with emissions limits applying in different ways to power plants, petroleum refiners and manufacturers that use high amounts of fuel like chemical companies and paper manufacturers.
Those familiar with the legislation have said that it will give utilities -- which account for about 40 percent of annual U.S. greenhouse gas emissions -- more free emissions allowances than they received under the House bill passed last June. In addition, it is expected to include language those utilities have long argued for, a kind of top price for emissions permits and a way to push prices down if they get too high, such as issuing extra free allowances.
Electric utilities and trade group Edison Electric Institute sent an "army" of lobbyists to talk to lawmakers about the Senate climate bill, according to one person familiar with the influence efforts who asked not to be identified in order to speak openly. "EEI and the member companies worked this issue as hard as they have worked anything," this person said.
Utilities combined spent $67.2 million on lobbying in the first quarter, compared with $35.4 million in the same period last year. This year's amount is the highest for any industry in the power sector.
That total includes $25.1 million that PG&E Corp. spent to back a California ballot measure that would require citizens to approve or reject any municipal-owned power company bid for expansion. That expenditure is reported in PG&E's federal lobbying disclosure.
But other utilities focused on the federal climate issues. American Electric Power Co. Inc. spent $3.3 million on lobbying, a 91 percent increase from what it spent in first quarter 2009. (Of that total, $500,000 went toward supporting an Ohio ballot measure.)
The company talked to lawmakers about its desire to ensure that any climate policy passed by Congress pre-empt state laws. AEP also wants Congress to bar EPA from regulating greenhouse gas emissions.
It is not yet clear what the bill will say on pre-emption. In March, details emerged earlier that the bill then from Kerry, Graham and Lieberman would curb EPA's authority to regulate greenhouse gases and also would limit states' climate laws and regulations.
AEP, like other utility companies, also lobbied for a "fair distribution" of any free emissions allowances, said AEP spokesman Pat Hemlepp. The number of free allowances under the House bill was "a good start," Hemlepp said. Still, he said, utilities would have needed to buy a large number of permits, driving up electricity prices.
Trade associations have seen drafts and "reports we heard from them were that it fits closely with what we feel would fit best with the economy in the regions we serve," Hemlepp said. AEP provides electricity in 11 states, including Indiana, Kentucky, Michigan and West Virginia.
AEP also lobbied the Senate bill sponsors on a provision contained in the House climate bill that would allow the United States to add a kind of "carbon credit offset," to products imported from countries without climate regulations similar to those that the bill would impose domestically. AEP joined with labor union International Brotherhood of Electrical Workers in supporting the language.
There have been questions over whether such a tariff would violate trade agreements, and AEP asked to have that problem fixed. It is not clear how it will be addressed in the Senate bill.
Edison Electric Institute spent $4.2 million on lobbying in the first quarter, 63 percent more than what the trade group spent in the same period a year ago. Its lobbyists were "working to make sure that the utility sector would be able to have an adequate number of emissions allowances allocated from the offset," said EEI spokesman Jim Owen.
Slocum, with Public Citizen, said that utilities and their trade groups want as many free emissions permits as possible and delaying the effective date of the legislation as long as they can. "The goal of the entities representing big greenhouse gas emitters is to make sure their clients get as many free giveaways and free passes so they don't have to alter their business model in a significant way," he said.
Owen said utilities want to make sure there is not a consumer revolt.
"It's true, obviously, our members will have a fiduciary responsibility to protect shareholder interests. There's no ambiguity about that," Owen said. But a bill that causes electricity prices to rise would create a customer backlash that would "undermine the bill."
Coal companies pushed for many of the same provisions that utility industry lobbyists pursued. The fuel is used for half the country's electricity supply. But coal also wanted to make sure that it has a future.
If the timeline for carbon reductions and greenhouse gas emissions "falls too steeply, too early, for the technology that needs to be in place to reduce emissions," said Carol Raulston, spokeswoman for National Mining Association, "you basically drive coal out of the market. We're trying to remake half of electricity generation," she added. "You just can't make it happen by 2015."
Coal companies and their trade groups spent $4.7 million for lobbying in the first quarter, compared with $2.9 million in the same period in 2009.
Peabody Energy Corp., the world's largest coal company, spent the most in the coal mining sector, $1.7 million. That is a 31.3 percent increase from what it spent a year earlier.
As coal lobbyists made arguments to help keep the fuel alive, those representing the natural gas industry asked for language in the climate bill that would help that energy source, but likely hurt coal.
Natural gas wants incentives for utilities to switch from coal to natural gas, such as giving utilities that move to natural gas free allowances that they could then sell. The allowances are appropriate because natural gas has half the carbon emissions of coal, said advocates for natural gas who asked not to be identified.
As it made that argument, the natural gas industry accelerated its lobbying in the first three months of the year. Natural gas transmission companies spent $4.3 million, up more than 33 percent from a year earlier.
America's Natural Gas Alliance, a trade group for natural gas companies, spent $930,000. (That amount is not included in the natural gas total because Center for Responsive Politics places ANGA in the oil and natural gas industry category.)
"We're looking for incentives to transition to cleaner sources of power like natural gas," said Dan Whitten, spokesman for America's Natural Gas Alliance.
ANGA and others backing natural gas also lobbied for a "clean energy standard," which would be similar to the kind of renewable electricity standard (RES) that wind, solar and other green power sources want. An RES would require utilities to generate a portion of their power from renewable sources. Natural gas wants it expanded into a mandate for "cleaner" power choices.
"It doesn't take anything out of wind and solar but also recognizes the advantages that natural gas has in terms of reducing greenhouse gas emissions," Whitten said.
The American Petroleum Institute, the trade group for oil and natural gas companies, also backs a clean energy standard, said Lou Hayden, API's senior director of federal relations.
That collides with the interests of renewable power companies.
American Wind Energy Association, the trade group for wind, has been telling lawmakers that an RES is a crucial part of the industry's future. AWEA's lobbyists argue that it would give private investors the market security they need to fund wind projects. The trade group opposes expanding the pool of options.
"We do not support adding natural gas to the RES," said wind trade group CEO Denise Bode. "It is not renewable and has significant subsidies that have allowed it to increase market share from coal by almost by 7 percent without any new policy incentives."
AWEA, meanwhile, hopes that the Kerry-Lieberman bill will offer a renewable electricity standard that is more aggressive than the one in legislation (S. 1462) that passed the Senate Energy and Natural Resources Committee last year. That bill requires utilities to use 3 percent renewable power by 2011, with some of that allowed to come from efficiency measures.
But because of growth in the wind industry last year, wind and other renewable sources already represent about 3 percent of the market for electricity generation, said Rob Gramlich, AWEA's senior vice president for public policy.
AWEA in the first quarter spent the most on lobbying out of those in the renewable power sector, a total of $700,000. That is a drop from the $1.8 million it spent a year earlier.
Chemical spending rises
The chemical industry also increased lobbying spending in the first quarter compared with last year and seems likely to see some benefit in the Kerry-Lieberman bill.
Chemical companies and their trade group American Chemistry Council allocated $13.6 million, up 27 percent from the first quarter of 2009. The American Chemistry Council alone spent $2.7 million, the highest amount in the sector and a 181 percent increase from a year earlier.
The Dow Chemical Co. spent $2 million on lobbying in the first quarter, with climate and energy legislation topping its priority list, said spokeswoman Karen Jayne Leinberger. Dow advocated "for provisions that do not penalize energy intensive, trade exposed industries and (allow) U.S. manufacturing to remain globally competitive," Leinberger said in an e-mail.
Chemical companies fall into the category of what their lobbyists call energy-intensive manufacturers, those that use high amounts of fuel in making products and would be hit hard by carbon restrictions.
"There was a lot on the line for chemical companies like Dow and others," said Slocum with Public Citizen.
Kerry, speaking at the Good Jobs Green Jobs conference last week, said that energy-intensive manufacturers like glass, cement and chemical producers can expect a six-year delay before they must deal with the types of emission restrictions imposed on electric utilities.
"So they can plan and capitalize, and when they come under, they get a rebate just like every average American in order to cushion the impact so that we keep a total minimal impact on every part of the economy," Kerry said.
The chemical industry has argued that in addition to using a lot of power, it is an important player in a lower-carbon future.
"The chemical industry is also a leader in industrial energy efficiency as well as a leading solutions provider of energy-saving products such as insulation, solar technology and light-weight plastics," Leinberger said.
The American Chemistry Council, among its other issues, argued the fuels that chemical companies use to make products should be exempt from any carbon penalties, as the carbon in those fuels is sequestered in the resulting items like plastics.