LOBBYING:

USCAP, opponents craft rival energy strategies for new Congress

The battle planning has begun.

U.S. Climate Action Partnership, the businesses and environmental coalition that's pushed for federal action on greenhouse gases, is formulating strategies for the next two years as it faces a Congress that is likely to oppose any mandates.

USCAP leaders met last week to confer on how to approach climate with the next Congress. Individually, USCAP members are examining what they might be able to achieve both legislatively and with their own business policies.

"The chances for anything comprehensive are almost nil," said Eileen Claussen, president of Pew Center on Global Climate Change, a member of the coalition. USCAP members are realistic, she said, adding, "We're also committed to getting something done. We think it's critical to deal with these issues in a constructive way."

USCAP currently has 28 members. They include power generators AES Corp., Duke Energy Corp., Exelon Corp., NextEra Energy Inc., NRG Energy Inc., PG&E Corp., and PMN Resources, environmental groups the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the World Resources Institute, and several other groups and companies. The coalition has shifted over time, with some members leaving earlier this year (Greenwire, Feb. 16).

The coalition knows it must adapt to the new reality, several members said.

"Any real express advocacy on climate is pretty much off the table next year given this [incoming] Congress," said a USCAP company's lobbyist, who asked not to be identified so he could speak freely.

Meanwhile, they will be up against other energy interests that are looking for "a much more balanced approach than what we've seen over the last two years," said Frank Maisano, energy specialist at Bracewell & Giuliani, which lobbies for utilities, refiners, cement companies and manufacturers.

The new Congress needs to look not only at demand for power and carbon emissions "but also making sure that we're increasing supply," Maisano said, by allowing for more shallow- and deepwater drilling for oil and natural gas, expanding offshore and onshore renewables, and building transmission.

The U.S. Chamber of Commerce, which for the past two years has been cautious on climate policies, will be looking for "a rational 'all of the above' energy policy," spokesman J.P Fielder said. "We must ensure that Americans have adequate supplies of affordable, domestically produced fuel and power -- even as we work to bring renewable energies online and develop technologies that allow the clean use of traditional energy resources."

USCAP members said that initially they will aim to gauge the next Congress' mood and priorities before deciding goals or approaches.

"We're kind of reassessing our positions across the board in terms of what's feasible," said Duke Energy spokesman Tom Williams. "Everything's being looked at in terms of what we could get accomplished to move the ball forward."

Several members said there might be the possibility to advance small measures on energy efficiency. Congress might also be willing to pass a "clean energy standard," or CES, some USCAP members said, which would promote renewables along with cleaner power sources like natural gas and nuclear.

There could be tension within USCAP members, however, about what incremental actions Congress should pursue.

Duke Energy President and CEO Jim Rogers, speaking at an event last week during the U.N. climate summit in Cancun, Mexico, said he is concerned about Congress taking a piecemeal approach.

Rogers also talked about government operating in two-, four- and six-year cycles while businesses need to plan for the next 30 or 50 years.

"We don't have the luxury of a time out," Williams said.

Battle over EPA

In formulating strategies for the next two years, there will need to be both offense and defense, Claussen said.

"There's the defense strategy because there will also be attacks on EPA and EPA rules," Claussen said. "There will be lots of oversight hearings. There will probably be attempts to delay EPA's authority on greenhouse gas emissions or take it away entirely. A lot of people are trying to think through the best strategies for EPA."

The U.S. Circuit Court of Appeals for the District of Columbia on Friday refused to block U.S. EPA's new greenhouse gas regulations from taking effect on Jan. 2, 2011. That will mean the first nationwide limits on greenhouse gases from cars, light-duty trucks and large facilities such as coal-fired power plants, oil refineries and factories.

The court said those who sought a stay on EPA's action "have not satisfied the stringent standards" to justify stopping the agency while a court decides whether the rules are legal under the Clean Air Act (E&ENews PM, Dec. 10).

Businesses and industry groups that see EPA regulations as inappropriate and costly already have appealed to Congress to block the agency.

"It's almost certain that you're going to see legislation from both parties challenging EPA's authority to do this, pushing it off," Maisano said. "That coupled with more Republican members [in the Senate] and more Republican members in the House, I think you're in a different place with EPA."

Some of the companies within USCAP, like Duke Energy, have declined to take a position on whether EPA should regulate greenhouse gas emissions. Others see EPA's move as necessary.

"The issue is important enough that if Congress isn't going to act, EPA should," said a lobbyist with one USCAP company, who declined to be identified in order to speak freely. That company would prefer that Congress act on climate, he said, but "without the overhang of EPA, they'll never do anything."

On the offensive climate front, getting any movement in Congress could be challenging, Claussen said.

"I think there's a small chance, not a big chance, of something emerging over the next two years," Claussen said. "At a time when there's no money and very little interest in mandates, it's hard to figure out what the path is."

CES debate

A CES could be difficult to achieve, Claussen said.

There could be difficulty "getting some meeting of the minds on a path forward," Claussen said, but "the bigger problem is what kind of form does it take?

"If you like incentives and there's money to do them, how do you do it," Claussen said. "At the same time, she noted, many of the newly elected Congress members seem likely to oppose mandates.

"I don't know how you can do it without one or the other," incentives or mandates, Claussen said. "That's going to be difficult."

A CES would also "be more palatable to more industries than just a RES," Maisano said, referring to a renewable energy standard that would mandate just a certain level of renewables. A policy that also looked at nuclear and other sources, Maisano said, would be "much more likely to attract Republicans."

The chamber is looking for "substantial public and private investment in a broad array of clean energy technologies and alternative energies," Fielder said in an e-mail. "Innovative financing and regulatory certainty are needed to bring emissions-free projects online."

A significant expansion of emissions-free nuclear energy is essential, Fielder added. "We have been a proactive leader in this arena for years."

Within USCAP, there is some disagreement over a CES. There are supporters and others who are cautious.

"We've been longtime supporters of a CES," said Brian Hertzog, PG&E's director of corporate relations.

As the parent company of the PG&E utility in California, the business faces a state mandate that a growing amount of power come from renewable sources. That level is likely to be far higher than what the next Congress would be inclined to put in a CES, Hertzog said. But the company, he said, sees a CES as a "way to move forward."

"Climate and energy issues are still hugely important. We want to see what opportunities there might be to make progress," Hertzog said, adding, "incremental progress."

But Duke Energy has been "concerned" about a clean energy standard, said spokesman Williams.

"That's something we can look at," Williams said, but it does have an aspect of "father knows best from Washington; this is what you need to do in the state.

"It's certainly worth looking at, but we have some concerns that the federal government would be picking technologies," Williams said. "That's better left to the states."

A federal policy of penalizing carbon emissions is better economically, Williams said, adding "clearly that's not going to happen over the next two years, so we have to find some new approaches."

Both USCAP members and other businesses see energy efficiency measures as another possibility for action.

"Energy efficiency is the cheapest and most immediately accessible 'alternative energy,'" said Fielder, of the Chamber of Commerce.

PG&E wants continued funding and promotion of programs like Home Star, which provides rebates for purchases of energy efficient equipment and appliances, Hertzog said.

But Claussen, who was director of EPA's Office of Atmospheric Programs when that agency launched the Home Star program, said it is not enough.

"These programs are good, but our emissions went up, so it doesn't do the job," Claussen said.

Winning public support

While business members of USCAP are studying what they can seek legislatively, one environmental group in the coalition is looking at voters.

"It's probably a good time for a number of organizations supporting action on climate to take a step back and figure out how can we work to convince the public that there's a case to made for comprehensive action," said Eric Haxthausen, director of U.S. climate policy for the Nature Conservancy.

Work on that front has fallen short, he said.

While many organizations "did great work on this," Haxthausen said, "at the end of the day, it clearly wasn't sufficient."

"It's clear that we can do a better job at articulating what is happening as a result of climate change already," Haxthausen said, "things that are happening on the ground where people live."

Green groups need to make sure people know that climate change is connected to forest fires in Western states and rising sea levels along the coasts, Haxthausen said.

"Putting the spotlight back on that ... and away from abstract policy discussions is going to be important," Haxthausen said. "Once people start to focus on those concrete impacts, they'll [have] perhaps a heightened sense of urgency about the issue."

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