ENERGY POLICY:

Senate committee markup begins, but heavy lifting is weeks away

The Senate Energy and Natural Resources Committee begins marking up major energy legislation tomorrow but will not tackle controversial items until after the two-week congressional recess, leaving more time to negotiate areas including a nationwide renewable power mandate.

While tomorrow's meeting is expected to be smooth, it nonetheless marks the beginning of Democratic efforts to advance energy and climate legislation that will include items almost certain to face resistance among many GOP lawmakers and some moderate Democrats.

Democratic leaders in both chambers are currently planning to merge energy measures with a cap-and-trade bill that places first-time mandatory limits on U.S. greenhouse gas emissions.

In the House, Energy and Commerce Chairman Henry Waxman (D-Calif.) is expected to circulate a draft energy and climate bill this week ahead of a markup before Memorial Day (see related story). On Friday a spokesman for Senate Majority Leader Harry Reid (D-Nev.) said the senator also continues to support a one-bill strategy. The aide did not say when energy legislation may be brought to the floor.

In the nearer term, the Senate energy panel will take up four measures tomorrow that are supported by both Chairman Jeff Bingaman (D-N.M.) and ranking member Lisa Murkowski (R-Alaska), who do not favor combining the energy bill with a climate bill.

They are: a draft bill to bolster Energy Department research and development programs, speed DOE hiring and expand energy-sector work force training; S. 661, which establishes new efforts to improve the manufacturing sector's energy efficiency and competitiveness; S. 598, a bill to change and accelerate the way appliance efficiency standards are set; and S. 531, a bill to study the energy sector's water use and find ways to reduce it.

The efficiency measures are aimed at improving existing areas like the Energy Star labeling program and DOE's appliance efficiency standards, and launching new programs and studies.

For instance, the appliance bill would set deadlines for when DOE must respond to petitions seeking new or amended product standards, while the industrial efficiency bill authorizes DOE grants that would help establish a new revolving loan fund that helps manufacturers use technologies that curb energy use (E&E Daily, March 23).

Laying a "foundation"

While these energy efficiency measures are largely noncontroversial, experts say reducing demand provides the greatest near-term opportunities for reducing greenhouse gas emissions. In addition, the draft research and development bill comes at a vital time for DOE.

Energy Secretary Steven Chu has vowed to expand and improve the agency's portfolio of science and technology development and deployment programs, and DOE is also undergoing a major transformation thanks to roughly $40 billion in new funding through the economic stimulus package.

One provision would provide for new "critical" hires of people with very high levels of expertise in scientific or technical fields. The provision -- aimed at helping attract top people from industry and universities -- could help DOE become better able to compete with the private sector by allowing these hires' salaries to be as high as vice presidential pay, which in 2009 is $227,300.

The bill also expands authorization levels for several DOE research and development programs.

Bingaman spokesman Bill Wicker said tomorrow's session is a "foundation ... we will build on later." He predicted most of the amendment action would come in subsequent markups but added "that's not to say we are going to race through this and have a five minute markup" at this week's session.

Battles await

The real drama will come in the next two markups after the break as the committee is expected to tackle issues including a renewable electricity standard, transmission siting and development measures that would expand Federal Energy Regulatory Commission authority in this area, renewable energy on federal lands and other topics.

"There are a lot of issues that need discussion," said Anne Johnson, a committee spokeswoman for Murkowski. "This is very far reaching legislation." Republicans have not settled on what issues they will prioritize, and further plans will likely come together over the two-week Easter recess.

A renewable electricity standard -- which would require utilities to obtain escalating amounts of power from wind, solar, geothermal and other renewable sources -- is a major priority for Bingaman, environmental groups and Democratic leaders.

But the plan also faces its share of skeptics, a group that includes a handful of committee Democrats. Bingaman has said he hopes to move the measure through committee but could also try and add it through a floor amendment if the committee votes prove elusive.

Sen. Evan Bayh (D-Ind.) is among the committee Democrats who have expressed concerns about disparate regional effects, and met with Bingaman on Friday about the RES issue.

Bingaman has floated a plan that requires power providers to obtain 16 percent of their supply from renewables by 2019, and 20 percent in 2021 and for almost two decades thereafter. The plan allows a fourth of the target to be met with energy efficiency measures. Environmentalists are rallying around a more aggressive plan introduced by Rep. Ed Markey (D-Mass.), the chair of the Energy and Environment Subcommittee.

Clean energy financing -- changes await?

The bill is also slated to include measures that change federal programs for financing a variety of low-carbon energy projects, although this will not be addressed until after the recess.

Various ways to create a federal "clean energy" bank have been floated by Bingaman and others in the past, and the issue remains a work in progress but is getting close, Wicker said. "We continue to have good, productive conversations with DOE staff on a good approach," he said.

Changes to DOE's loan guarantee program could be part of the effort, including moving some functions and oversight outside of the agency.

Lawmakers on both sides of the aisle have been upset about the slow pace of the Energy Department federal loan guarantee program authorized in the 2005 Energy Policy Act. Energy Secretary Chu has made accelerating the program a major priority and earlier this month announced the first loan guarantee of $535 million for a California company to expand solar panel production.

However, lawmakers could still alter the program. A undated "discussion draft" obtained by E&E would make a suite of changes to the loan guarantee program and also set up other financing mechanisms for low-carbon energy projects.

One provision would provide the Treasury Department a significant new role. It would create a "Clean Energy Investment Fund" in Treasury, and the Energy secretary would draw on this fund to carry out the loan guarantee program.

It also makes other changes to the program's rules, including requiring DOE to accelerate loan guarantee application reviews by DOE. It says that to the maximum extent possible, DOE should seek to consolidate reviews to allow final decisions on applications to be issued 180 days after an application is submitted.

Beyond changes to the loan guarantee program, the bill would create independent administration within DOE called the "Clean Energy Deployment Administration," with an administrator and directors appointed by the president and subject to Senate confirmation.

The Clean Energy Deployment Administration would have a suite of tools at its disposal for financing clean energy projects, including direct loans, equity investments, loan guarantees and other options. Also, it allows for transfer of DOE's role in the 2005 loan guarantee program into the clean energy bank some time after 18 months.

Schedule: The markup is tomorrow at 10 a.m. in 366 Dirksen.

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