ENERGY POLICY:

Senate road for 'energy only' isn't as easy as some would hope

Looming just behind the climate change negotiators laboring in Senate conference rooms is "Plan B" -- an "energy only" bill that is smaller in scope and enjoys bipartisan support.

There is a committee-passed bill (S. 1462) waiting in the wings that has more offshore drilling for Republicans and more renewable energy requirements for Democrats.

But the bipartisan support enjoyed by the energy-only bill is countered by its bipartisan opposition, and it is hard to add up the needed 60 votes to move controversial legislation in the Senate. So, the balancing act for the scaled-down bill could be every bit as tricky as finding a "grand bargain" to pass a climate bill.

One leading industry analyst says without a strict limit on greenhouse gas emissions, the bill collapses.

"You won't get a bill without a carbon cap. You can't buy off enough liberals to pass it," said Kevin Book managing director of Washington-based consulting firm ClearView Energy Partners.

Sen. Byron Dorgan (D-N.D.) disagrees, and he wants the Senate to jump on the bill right now. "There are not a lot of weeks left in this legislative session, and my fervent hope is, I would say to those who have been working on climate change and blocking our ability to bring an energy bill to the floor of the Senate, I hope perhaps we could find a way to work together to bring the energy bill to the floor," Dorgan said yesterday on the floor (see related story).

And there are others beyond Dorgan and some of his fellow centrists, who say the landscape will shift in favor of an energy-only bill if Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) cannot cobble together a winning plan on climate.

"If Kerry-Graham-Lieberman doesn't move in the next few weeks, there will be pressure to move on some kind of energy bill," said an energy industry lobbyist.

Book allows that if oil goes back up to $120 a barrel as it did in 2008, sending gasoline above $4 a gallon, lawmakers will find a way to pass something even without limits on greenhouse gas emissions. But he said that kind of pressure just is not there this year.

The political essence of the the energy-only bill is a deal to trade offshore drilling off the coast of Florida for a "renewable energy standard" or RES, ordering utilities to use more renewables. Environmentalists and industry both get something they want, but not everything.

It sounds workable in principle. The bill passed out of the Senate Energy and Natural Resources Committee, chaired by Sen. Jeff Bingaman (D-N.M.), with four GOP votes (Greenwire, June 17, 2009).

Six Republicans voted against it for reasons as varied as nuclear power and property rights. At least one industry lobbyist believes their complaints can be resolved. But the prospect of a solid bloc of GOP opposition amplifies the fights between Democratic factions. Each will have leverage and in some cases their demands are mutually exclusive.

Take the two Democrats who voted against the bill in committee -- Mary Landrieu of Louisiana and Robert Menendez of New Jersey. Menendez voted against it because he opposes offshore drilling, but Landrieu opposed it after the committee shot down proposals to give coastal states a cut of the royalties from oil and gas drilled off their shores. Called "revenue sharing," the practice is supported by the oil and gas industry because it smooths the way for state approvals.

Landrieu's opposition reflects the position of pro-drilling coastal Democrats that they still need revenue sharing to get them to the table. For example, Virginia's two Democratic senators, Mark Warner and Jim Webb, support drilling off their state's coast, but only with revenue sharing. Virginia Gov. Bob McDonnell (R) has already decided how he wants to spend the money.

Sen. Mark Begich (D-Alaska) has listed revenue sharing as one of his conditions for supporting the bill. Close observers say at least one Republican, Sen. Richard Burr of North Carolina, voted against the bill because it lacked revenue sharing.

This is the result of Congress offering 37.5 percent of royalties to states in 2006 for drilling off their shores in the Gulf of Mexico, Book said.

"Now that there is a precedent, you're not going to get a state to go along without revenue sharing," Book said. "The question is how much and who's going to oppose it."

Book said there is room for negotiation on revenue sharing in a climate and energy bill such as Kerry-Graham-Lieberman. Interior senators like Dorgan won't swallow a 37.5 percent share, and he figures coastal legislators would balk at anything below 25 percent.

But Dorgan, who authored the Florida drilling amendment, and Bingaman both vehemently oppose revenue sharing. Dorgan, the chairman of the Energy and Water Appropriations Subcommittee, recently said revenue sharing would run into a "buzzsaw" of opposition.

Bingaman and Dorgan are not considered likely to vote against the bill if they are getting everything else they want in terms of drilling and an RES. But the prospect of losing out on billions of dollars in the future could cost votes among other interior lawmakers who are not as invested in the process.

Ten liberal senators have declared their flat opposition to coastal drilling and the revenue sharing they believe would encourage it. And that did not include anti-offshore drilling Republicans Susan Collins and Olympia Snowe from Maine.

Some liberals have signaled they might be willing to accept more drilling in exchange for strong limits on greenhouse gas emissions, but they do not want to give that chit away for what they consider a weak RES. "That's not enough," Book said.

And the outspoken opposition of New Jersey's Menendez demonstrates how the precedents of the deal cut in 2006 may spell trouble for an energy bill in 2010.

In the 2006 legislation, Florida was given a say on drilling up to 125 miles from its coasts. Book said New Jersey officials are likely to argue that their beaches are just as important.

The site where Virginia wants to drill is within 125 miles of New Jersey, and any oil spill would likely drift north with the current. Senators from Maryland and Delaware have coastlines even closer than Menendez.

The White House has also weighed in against an energy-only plan. "Again, we are very clear that we want comprehensive legislation," White House energy and climate czar Carol Browner said last week. "Every now and then, you'll talk of maybe an energy-only bill. We think that would be unfortunate" (Climatewire, April 7).

Another problem is money. The incentives and other programs in the Bingaman bill are expected to cost $13.5 billion. The original idea was to pay that with money from a cap-and-trade plan.

"If we ditch the climate side and just go with energy, how are we going to pay for all this spending?" said Kate Gordon, vice president for energy policy at the Center for American Progress, a liberal think tank.

But some Republicans say Democrats will be looking for an accomplishment as gas prices rise, the economy sputters and the election draws near.

"The bill has been held hostage by an unpopular climate bill," said Robert Dillon, spokesman for Sen. Lisa Murkowsi (R-Alaska). "In a month or so, when they realize they've gotten zero done, the question is, do they do something then?'"