ENERGY POLICY:

Green lobby weighs 'political realities,' finds CES isn't so bad

The wind industry's largest trade group a few months ago rejected the idea of a "clean power" mandate on utilities that included nuclear, some coal and natural gas as options. But American Wind Energy has a new opinion today.

With talk starting about an energy bill, the wind influence group finds itself receptive to the policy it previously dismissed.

"We're open to talking about anything at this point," said Rob Gramlich, AWEA's senior vice president of public policy.

The wind industry, along with other energy trade groups and companies, is re-examining its positions on the clean energy standard, or CES, along with other energy issues as it lobbies lawmakers in the new Congress. As advocacy begins, many are reconsidering a policy they had not backed before.

Sen. Lindsey Graham (R-S.C.) said Wednesday he is starting work on a bill that would require utilities to generate a portion of power from clean energy, which would include renewables, nuclear and coal with carbon capture and sequestration. The CES is thought to be more popular with Republicans than the greens-only requirement called the renewable electricity standard, or RES.

Groups representing energy sources potentially affected by such a measure are setting up meetings with lawmakers, particularly the newest members of Congress. For businesses like nuclear, it is time to move into the spotlight. For others it is time to consider concessions in order to make gains.

"Most of our opposition to the CES over the last year was just that the RES had already been through the process, was thoroughly vetted, was keyed up and ready," Gramlich said.

But that RES that wind companies, other renewable-energy companies and environmental groups wanted never made it to the Senate floor for a vote. Those supporters are readjusting their priorities.

"At the end of every Congress you kind of have to start from scratch," Gramlich said. "We kind of have to go back and see where people want to go."

The Center for American Progress, a liberal think tank, also is taking a new look at a CES. It expects to have a proposal in about a week. The group, like AWEA, had last year backed the RES as its first choice.

"As long as the RES was on the table everybody was very supportive of the RES," said Kate Gordon, vice president of energy policy at the Center for American Progress. "That would have been an ideal bill."

The CES now is a good option to help drive demand for renewables and keep new businesses alive, Gordon said.

"Political realities being what they are, we have been open to it for a while," Gordon said.

"There's a real question whether this Congress will take up anything on energy," Gordon said. "A CES could address a lot of the concern Congress members have. It seems like a pragmatic way forward."

Shaping proposals

For the nuclear industry, a CES that includes the fuel as an option would be a kind of new frontier, said John Keeley, spokesman for the Nuclear Energy Institute.

As they meet with new members, the nuclear industry's trade group is "educating them on our technology and the need for loan guarantees and the role nuclear plays, and reminding them of the administration's support for our technology."

Nuclear has bipartisan support, Keeley said. And a CES with nuclear would give a federal seal of approval on the technology, he said.

"If the federal government says this is a source that we endorse ... I would have to think that potentially that would be an inducement for spurring investment," Keeley said, adding, "If it is a mandate, it would certainly help."

The trade group for independent natural gas companies said that natural gas should be considered as part of a CES. The group does not yet have a policy in support or opposition to CES.

"Natural gas is the one fuel that can produce large-scale environment benefits now for the utility sector, and so it certainly should be considered as any part of clean energy legislation," said Dan Whitten, spokesman for America's Natural Gas Alliance.

Graham has not mentioned natural gas as part of his plan for a CES bill. But the fuel has supporters in Congress, including the House's 32-member Congressional Natural Gas Caucus. But producing natural gas largely means using hydraulic fracturing, a technology that some environmentalists condemn as dangerous to water supplies.

Whitten disagrees with that view.

"There's no need to trade environmental quality for strong economy, jobs and clean energy production," Whitten said. "Hydraulic fracturing has been used for 60 years on over a million wells safely."

There is disagreement within the natural gas industry, however, about whether a CES -- even one that included natural gas -- would benefit the fuel.

Some in the natural gas industry will be encouraging Congress instead to not enact either a CES or an RES, said one natural gas lobbyist who asked not to be identified to speak freely. Some companies believe it will mean less natural gas will be used. Electricity demand is not growing significantly, the lobbyist explained. So utilities that had to generate 10 percent clean energy have to cut back elsewhere.

"When you have a renewable mandate, since there's not going to be electricity growth, it has to come from somewhere," the lobbyist said. "If it doesn't come from coal, it comes from natural gas."

Utilities are more likely to cut back on natural gas first, he said, because it's more expensive than coal generation.

Even if natural gas were added to a CES, the lobbyist said, it is likely still a net loss.

As he and others who oppose a CES talk to lawmakers, he said, they will argue, "Treat everyone equally. Don't give away a bunch of financial incentives."

A CES could face a tough battle for passage, the lobbyist said.

"Any kind of national mandate, you have some new members who instinctively will be opposed," the lobbyist said. "So the chances of any of this are not good."

The Center for American Progress has not finished its policy proposals but is looking at natural gas among the options.

"Natural gas is an option that should be on the table" along with industrial efficiency, Gordon said. "What it's going to take is a lot of conversations about what the best way forward is."

The think tank also is looking at a CES that would have what Gordon termed "regional variations." Potentially there could be six regions, Gordon said. She declined to discuss specifics while the proposal is under development.

"The Midwest has a lot of carbon industries and dependence on coal but also great wind energy," Gordon said. "The Southeast has very good biomass but hasn't built up the infrastructure."

The regional variations could help address the concerns lawmakers have that their home state would be hurt, Gordon said.

Bigger bill

A CES is likely to be a piece of a larger energy bill, Gramlich said. That bill could come partly in reaction to rising gasoline prices, he said, and that could provide an opportunity to talk about the role of wind.

"The gas prices will illustrate in the public's mind again the danger of being reliant on one energy source," Gramlich said. "There's going to be a resurgence in interest in fuel diversity policies.

"In the electricity sector, the nation has been very reliant on one single resource," Gramlich said. "There's going to be a policy discussion about whether we really want all of our eggs in one basket.

"There are a number of policies that can improve our resource diversity," Gramlich said, adding that it is too early to know which ones will advance.

While they are meeting with lawmakers to talk about CES, nuclear's trade group is also talking money.

Nuclear needs a bigger pool of loan guarantees, Keeley said. The Department of Energy last year offered $18.5 billion worth of those, he said, but that number falls far short of what is needed. A number of new reactors are poised to receive construction and operations licenses from the Nuclear Regulatory Commission.

With a new reactor costing $7 billion to $9 billion, Keeley said, more loan guarantee money would help those plants come online.

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