ENERGY POLICY:

Buzz builds for 'clean energy' standard, but passage won't be easy

Legislation advancing clean energy at first glance seems like a palatable option for a divided Congress, a kind of combination plate enticing lawmakers with varied morsels.

Key lawmakers from both parties praise the idea and lobbying efforts are starting. But the clean energy proposals now gaining buzz could be too ambitious for this Congress to stomach.

"Reports of a clean energy standard's life are greatly exaggerated right now," said Daniel Weiss, director of climate strategy at Center for American Progress Action Fund, the advocacy arm of the liberal think tank. "There's a long way to go before we'll see any movement on this."

A clean energy standard, or CES, would require utilities to generate a portion of power from sources that emit less carbon pollution like solar and wind but, also nuclear, coal with carbon capture and sequestration, and possibly natural gas. It would expand on the renewables-only mandates that failed to pass the last Congress.

In the first month of Congress "clean energy" has received bipartisan blessings.

Sen. Lindsey Graham (R-S.C.) has said that he plans to offer a CES bill. The Republican plans to talk with Sen. Mark Begich (D-Alaska), who has shown interest in working on a measure. Sen. Amy Klobuchar (D-Minn.) also has expressed interest in teaming up on a CES. Sen. Tom Carper (D-Del.) said last month that he would like to work on the policy (E&ENews PM, Jan. 5).

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday said that creating "good-paying clean energy jobs" in his home state topped his list of legislative priorities. Reid wants to boost renewable energy and clean water and transportation infrastructure in Nevada (E&E Daily, Jan.19).

There is also support outside of Congress.

Third Way, a centrist Democratic think tank, last week issued a proposal for a CES, saying such a measure was needed to "provide the certainty businesses have asked for and incorporate national energy goals into policy" (Greenwire, Jan. 11).

Center for American Progress has said it is working on a pitch for a CES (Greenwire, Jan. 7).

But passing a bill likely will be very difficult, analysts and political consultants said. To attract Republican votes, they said, any energy mandate needs to include nuclear power and coal with carbon capture and sequestration (CCS) as options, the very elements likely to repel some Democrats.

If natural gas is included in a CES, the measure would push utilities away from coal, analysts said. Coal has strong backing in both the House and Senate.

"All these fuels have their supporters," said Reid Detchon, vice president at the United Nations Foundation's Energy Future Coalition. "They all have enough votes to block something they don't like. None of them have enough votes to pass something that benefits them at the expense of the others."

Battles could erupt over whether a CES bill should block U.S. EPA from regulating the largest emitters of greenhouse gases, a move many Republicans and businesses want but that some Democrats and environmentalists oppose.

There are also some issues about whether House Republicans will back any government mandate and how to fund incentives. Many Republicans and conservative Democrats want to pare government spending.

Republican Rep. Fred Upton of Michigan, chairman of the House Energy and commerce Committee, likely would need to back CES for it to move forward in that chamber. A CES that imposes a fuel choice requirement on utilities could have a tough time winning his approval.

"It is not Congress' job to pick winners and losers. Any new mandates that increase costs or threaten jobs in this economy will be rejected," Upton spokesman Sean Bonyun said. "Rather than shutting plants down through onerous government regulations, we should be working to bring more power online and keep energy costs low for consumers."

Upton, Bonyun said, "is committed to an 'all of the above' approach that fortifies not only our nation's energy security, but our job security as well."

Though a clean energy standard might be a tough political sell, it is worth pursuing, said Joshua Freed, Third Way's director of the Clean Energy Initiative.

"Today it's difficult to see a path for it passing, but it's extremely early in the session and we don't know the real politics and the coalitions that are going to emerge," Freed said. "We are very realistic about our expectations."

"Politics is about the art of the possible," Freed added. "Our goal is to capture imaginations and show that this is something that is possible."

For CES to win passage, House Republicans need to see it as helpful both to nuclear and to the economy, Freed said. "A Republican champion needs to emerge in the House."

What is clean?

One of the thorniest issues in assembling a CES could be deciding what is "clean."

Nuclear and carbon capture and sequestration are needed to attract Republicans, said Frank Maisano, energy expert at the Bracewell & Giuliani law firm.

"You don't have a CES from a Republican standpoint unless you have nuclear in it and probably some sort of acknowledgement of clean coal," Maisano said. Those elements also could bring in coal-supporting Democrats like Sens. Jay Rockefeller and Joe Manchin of West Virginia, Maisano said.

The U.S. Chamber of Commerce, a powerful lobbying group, said that the CES would offer more options for compliance than renewable energy standard proposals last session.

"From our perspective it's encouraging that it has sort of moved toward that because the CES is a broader standard," said Matt Letourneau, director of communications for the U.S. Chamber's Institute for 21st Century Energy. "What we're looking for is the broadest array of energy sources that reflect the geographical diversity that our country has."

But inclusion of nuclear and some coal would alienate some environmental groups that are key Democratic supporters. Some of those groups vowed to combat CES passage if the bill includes those elements.

"As an environmental group we don't have the luxury of being one-dimensional about what is clean energy or not," said Dave Hamilton, director of global warming and energy programs at the Sierra Club. "We still don't believe that nuclear or CCS can pass muster as clean energy."

There are significant environmental costs with coal, Hamilton said, such as the practice of blasting away mountaintops to reach the fuel.

The League of Conservation Voters and Environment America also disagree with calling nuclear and CCS "clean."

"We're definitely fighting against those pieces being part of an energy standard that moves forward this Congress, said Sara Chieffo, LCV's deputy and legislative director.

Some environmental groups also are concerned that some lawmakers might want a federal CES to cancel out state rules with stronger renewable energy mandates. And if a CES included language to block EPA, stopping it "would be our top priority," said Sean Garren, clean energy advocate with Environment America, a federation of state-based environmental advocacy groups.

Other more conservative environmental groups, however, support some of the concepts that could be in a CES, including expansion of nuclear.

"What we need to do ultimately to address climate change is take advantage of every low emission source that's feasible to us," said Tony Kreindler, Environmental Defense Fund's national media director for climate. "Nuclear's certainly an option. There are challenges in the economics. There are challenges in safety. If those can be addressed, we think it's a viable option."

Freed believes environmental groups that oppose the idea of a CES might in the end support a bill if one moves forward, Freed said.

"It's going to be hard for advocates in clean energy to kill the first major victory in environment and energy we've had the potential to have in several years," Freed said.

High costs

Cost concerns also will be hard to surmount.

New nuclear reactors run $7 billion to $9 billion each and CCS is not yet economically viable. So while a CES bill might give power generators a wider choice of energy sources than a renewables-only mandate, some of the choices are not really feasible, said one utility industry expert who asked not to be identified in order to speak freely.

"Are the options reasonable and achievable?" the industry expert said. "That's what we're going to have to look at very carefully."

No CES bill has been offered this session, but if the legislation looks similar to bills introduced last session, it could be problematic, the industry person said.

"The primary concern that we would have is that something along those lines would really burden customers with higher utility rates," the expert said. A mandate could function as a kind of "utility tax," he said.

Letourneau with the U.S. Chamber's energy institute also voiced caution on spending.

"There's a general concern in the business community about our overall financial picture," Letourneau said. "Clearly our deficit is growing at an alarming rate."

That does not mean, however, that the trade group "wouldn't support subsidies that make sense," Letourneau said.

Some experts do not see the money problems as insurmountable.

Nuclear is expensive to build, but after that the fuel is very low-cost, Maisano said.

"Once you have a fixed asset, you have a fixed asset," Maisano said, adding that nuclear does not "have the volatility of a [natural] gas or a coal price."

There are loan guarantee programs in place to help nuclear plant developers, Third Way's Freed said. And once a few plants have been built, he said, economies of scale will help drive down costs.

"We need to start building them again," Freed said. "That's part of the challenge."

But to others, the problems with a CES will be too hard to overcome in this Congress.

"There are so many questions that are opened by this that have to be answered in a policy climate that's going to be very, very difficult to get anything done," said Sierra Club's Hamilton. "You would have to thread about 40 needles to get this done."