INDIANA:

Cap and trade takes beating in Senate race

In a nail-biting year for many congressional hopefuls, Indiana Republican Dan Coats is an outlier -- poised to easily reclaim the Senate seat he held for most of the 1990s despite a five-year lobbying stint that left Democrats eager to paint him as a Washington insider.

But Coats' race against Rep. Brad Ellsworth, a once-rising Democratic star whom most polls show trailing by at least 16 points, is equally anomalous when it comes to environmental policy. With coal and ethanol remaining central drivers of the state economy, and both candidates vying to blast broad climate change legislation more loudly, energy-minded Hoosiers could see little difference between a likely Sen. Coats and a long-shot Sen. Ellsworth.

"This is a conservative state that burns a lot of coal and eats a lot of corn," said Vince Griffin, vice president of energy policy at the Indiana Chamber of Commerce, in an interview, noting that most of the state's lawmakers "would look at this in a similar way."

Indeed, the energy priorities highlighted by both candidates read like veritable mirror images. Coats' plan calls for doubling the number of U.S. nuclear reactors within 20 years while promoting efficiency and maintaining coastal drilling despite the "tragic" Gulf of Mexico oil spill. Ellsworth, meanwhile, calls for "a comprehensive approach that includes domestic drilling, encourages construction of nuclear power plants" and also invests more in efficiency.

Despite their closeness on substance, Coats and Ellsworth have spent plenty of time on the trail vying over whose style is best suited to Indiana. The Democratic nominee, initially seen as his party's best hope to hold onto the seat vacated by retiring Sen. Evan Bayh (D-Ind.), has rapped Coats for lobbying on behalf of a hedge fund executive who backed cap-and-trade climate measures.

"Cap and trade would devastate Hoosiers," an announcer intones in one of Ellsworth's latest campaign ads. "But Coats was paid almost half a million dollars to lobby for it."

Indiana Democrats have sought to use the Republican's lobbying past as a weapon on a range of issues, launching a website to highlight links between his former firm and clients on Wall Street as well as in foreign governments.

Coats aides have countered that the GOP nominee did not push for passage of a climate bill but merely updated his client, financial manager Julian Robertson, on the status of various legislative proposals. Regardless of whether Indiana voters take a last-minute turn toward mistrusting Coats, however, he and Ellsworth are viewed as equally strong opponents of sweeping plans to regulate greenhouse gases.

Indiana environmentalists appear resigned to a new senator who sides against them on major clashes over emissions and renewables. Jesse Kharbanda, executive director of the Hoosier Environmental Council, lamented that Coats' readiness to "run away from" his lobbying on climate change "reflects a broader and disappointing trend where Republicans who have their own fine tradition of environmental protection, dating back to Teddy Roosevelt, have largely fallen silent."

Kim Ferraro, chief of the state's Legal Environmental Aid Foundation, sounded a similar note. "Folks that are running here and have any chance of winning here are going to be more of the conservative ilk that promote industry at the expense of the environment," she said. "I don't see any of the candidates that have any chance of winning to be different than what we've had in the past."

The Hoosier State's cultural alignment against environmental regulations tends to sway its Democratic and Republican lawmakers in equal measure, observed Indiana University-Purdue University Indianapolis political science professor Brian Vargus.

While Indiana politicians have spoken favorably of the state's growing wind-power capacity, Vargus said, "the only tie they make is economic development. It's not motivated by [the desire for] alternative energy, but more by 'How can we increase our revenue flow?'"

Vargus described Coats and Ellsworth as likely to bring similar environmental policy stances to the Senate. Indiana consumer advocate Grant Smith, executive director of the nonprofit Citizens Action Coalition, echoed that sentiment in observing "no discernible difference between the two" when it comes to basic energy issues.

But Smith, whose 36-year-old group often takes aim at conventional energy interests in fighting electricity rate increases, predicted that "there may be more openness on the one hand for [a renewable electricity standard] and not on the other." Bayh voted against an RES that cleared the Senate Energy and Natural Resources Committee and is now seen as a leading candidate for bipartisan accord in the coming months (E&E Daily, June 10).

Kharbanda contended that the state's senior senator, Richard Lugar (R), "has not categorically rejected an RES, so I think there is room for Mr. Coats to support it if he gets elected."

On the question of ethanol, Coats gave fodder to those who hope to wind down the current multibillion-dollar system of tax incentives for the biofuel by choosing a plant owned by Poet LLC to unveil his energy plan last month. Poet, the largest U.S. ethanol producer, has thrown its weight behind a plan to replace ethanol subsidies with infrastructure investments to promote on-the-ground use (Greenwire, Oct. 22).

"We don't see it as particularly sustainable from a renewable energy standpoint," Smith said of ethanol, but "I suspect [Coats] will be supportive in some way -- because he's from Indiana."

Coats' campaign did not return a request for comment by publication time on his approach to ethanol and the RES legislation.

2012 power struggle?

Lugar has become an energy power broker this year, proposing a carbon cap-free energy bill alongside Sens. Lisa Murkowski (R-Alaska) and Lindsey Graham (R-S.C.) that won him a consensus-building call from President Obama in June (E&E Daily, June 17). The potential for Coats to follow in his colleague's footsteps, however, may depend on which of their state's two White House contenders emerges as more powerful ahead of the 2012 election.

Lugar has stoked talk of a challenge to Obama from his former aide, now-Gov. Mitch Daniels (R). "I hope he will strongly consider it," Lugar told Indiana's 6News in August, "and I would just say that I'm not going to support anybody else until I know what Mitch is going to do."

But Daniels faces a potential homegrown challenger in Rep. Mike Pence (R-Ind.), who won this year's presidential straw poll at the Values Voter Summit, a high-profile conservative klatsch. The Lugar-Daniels camp and the more right-leaning Pence camp ultimately could exert competing pulls on Coats during his second stint in the Senate, particularly on energy issues -- such as the imported oil fee to which Daniels recently declared on the table.

"[Coats] would be very susceptible to influence from Lugar," said Vargus, the political science professor, but that all depends on how much clout the senior senator has within the Indiana GOP. "How influential [Lugar] is in the state party, which has embraced several tea party types, is very hard to tell."

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