What would a Romney administration mean for current energy policy and regulations? During today's OnPoint, Kevin Book, managing director at ClearView Energy Partners, discusses the components of the Romney-Ryan energy plan and explains the role it will play as the elections near. He also discusses the future of the production tax credit for wind energy as part of a larger tax package.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Kevin Book, managing director of ClearView Energy Partners. Kevin, it's nice to have you back on the show.
Kevin Book: Thanks for having me back, Monica.
Monica Trauzzi: Kevin, with Congress back in session this week expectations are pretty low on how much they can actually get done, but there are a couple of critical items on the table, namely tax extenders. What's the future of the PTC in your view?
Kevin Book: The Production Tax Credit is widely supported by not just Democrats, but also Republicans. We count 49 members in the House Republican Congress who are strongly levered to wind back home. It's their constituents, it's their businesses. So it doesn't look like you're going to get a tax extenders bill without the PTC, bigger question is do you get a tax extenders bill and that may have as much to do with what else is riding on that bill or what that bill is riding on. Broader tax extensions, beyond the business tax extensions, the '01 and '03 Bush tax extensions, easy catalyst for the bill to pass. Otherwise, it's a lame duck session question and it looks more likely than not right now.
Monica Trauzzi: Republican presidential candidate Mitt Romney did say that he'd allow the credit to expire. Does the issue somehow make its way into the election discussions?
Kevin Book: It already basically has. If you're going to go to Iowa and say that you don't like wind, you better find a way to like ethanol and, in fact, Governor. Romney did. In his energy policy released last week he pointed out very clearly that he did. But the point I think is that you have a real problem. It's an expensive credit and if you're going to be cutting things, it stands out. So what is going to be done to reform it? In a three-ways Republic in Washington, PTC reform is a real future. Right now it's more of a political necessity. We don't think either party lets it go.
Monica Trauzzi: Moving beyond the PTC, speaking more broadly about energy, there's such a critical link between energy and jobs. So how much of an issue will energy play in the presidential election moving forward?
Kevin Book: It's kind of funny, I mean in many ways energy shouldn't be one of those easy election issues, because most people want the same thing. You have to work pretty hard to find differences, because who doesn't want cheap, clean, available, reliable energy? Well, they found differences and it's now first in the Republican pitch for new jobs. Well, we'll basically have to see what bears out, but you have a very challenging proposition, because it isn't just about jobs for the people who want to resist energy policy the way the Republicans are offering it. They're concerned about environmental issues and environmental values that have largely dropped out of sight in this campaign. And so the discussion isn't as easy as just saying count the jobs, it's also going to be a question of winning buy-in from the opponents.
Monica Trauzzi: Was Romney invalidating the science of climate change when he made that jab at Obama at the RNC or was that just rhetoric? I mean is that a clear example or a depiction of what he actually thinks about climate?
Kevin Book: I think Romney's line was probably his best line and may have been one of the best lines in the entire convention, Clint Eastwood included. But what he did was he pointed out that the world's problems were less proximate than the economic problems of the present. That point of view is not universally held. It's certainly not held in other countries and so it's a problematic point of view. As President Romney he will face real climate issues from Europe, pressure from Europe in April of 2013, because of the European emissions trading scheme counting the aircraft emissions from the U.S. So, it's a perspective that he offered rhetorically. It would be hard to see him stand behind it in practice.
Monica Trauzzi: What do you think the most critical component of the Romney/Ryan energy plan is?
Kevin Book: Far and away the point that they make, that they're going to give states power over federal lands, is clearly the decisive difference. Really, you have a significant amount of production upside in the producing states that are-with a large portion of federal lands in them that could be sped up a lot. The point is it hasn't slowed down that match yet, but if you look forward four years, the policies that are going into place now, including things like the BLM fracking rule, could make a very big difference. A Romney administration has been telegraphed as one that would be pro-production and speedy when it comes to permitting as well.
Monica Trauzzi: So, how much of an overhaul of current policy and regulations are we talking about under a Romney administration?
Kevin Book: Well, the problem is that some of the regulations, things like the mercury and air toxics standards, which are pretty ironclad at this point, they're facing their judicial test and we'll see. Or, for that matter, the greenhouse gas emissions rules, those have been tested and largely proven, but rules that aren't yet finished could be rewritten much more leniently and rules that have been implemented could be enforced more leniently. The area where there's perhaps the greatest latitude for Romney to make a difference on day one turns out to be coal. Because so much of the regulations governing Appalachian coal mining have been done by guidance, rather than the regulatory process, some of which is being challenged in court right now. That truly could change on day one.
Monica Trauzzi: But some of those changes will be dependent on Congress. How likely is another divided Congress and then how does that impact the prospects for actually changing things if Romney does win?
Kevin Book: Well, another divided Congress is looking increasingly likely regarding sort of the changes in perspective on the Missouri race. And if you look forward, you ask, well, what does that mean? It means that there's no chance to undercut the regulatory process at a federal level by defunding the operations of the EPA or the BLM or for that matter any other regulatory body. That doesn't necessarily mean that Congress is impotent, but it's largely going to be I think more of a bit player to another four years of regulatory led energy policy.
Monica Trauzzi: All right, we'll end it there. Thank you, Kevin. Thanks for your perspective.
Kevin Book: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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