With the House and Senate back in session, what will Congress do about hot-button issues such as increasing fuel efficiency standards, implementing a new renewable electricity standard, and mandating the production and availability of biofuels? During today's OnPoint, E&E Daily reporters Ben Geman, Alex Kaplun and Darren Samuelsohn preview the difficult negotiations expected during the upcoming energy conference. They also discuss the international and domestic climate discussions that are anticipated in the coming months.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today for a reporter's roundtable are E&E Daily reporters Ben Geman, Alex Kaplun and Darren Samuelsohn. Thanks for coming on the show guys.
Ben Geman: No problem.
Alex Kaplun: Sure.
Monica Trauzzi: Before for heading out for August recess the big news coming out of Congress was, of course, the House energy bill. Among the most contentious issues in both the House and the Senate were CAFE and a renewable electricity standard. On CAFE where do things stand now and how are things expected to shake out in the upcoming energy conference?
Alex Kaplun: I mean obviously House Democratic leaders didn't get kind of what they wanted out of CAFE when they passed the House bill. But even after they passed it people like House Speaker Nancy Pelosi had markedly set their intent on getting the 35 mile per gallon standard out of conference. I mean how that plays out once they actually get to conference is a little hard to tell, partially because you have this alternative proposal that has support of people who are going to be very key factors, like John Dingell, like a lot of moderate Democrats. And they're actually pointing out that that support now is more cosponsors then the original marquee bill. So it's going to be interesting to see how those two pieces of legislation actually play out once they're in negotiations.
Ben Geman: I do tend to think they'll come out with something. There's been this counter idea put forth by Dingell actually and some others that the whole CAFE issues should be shelved until they try to take up a global warming bill later in the year. And I honestly just don't think that's going to happen. I mean chances to do something on CAFE really don't come around that often and the idea that leadership in the House, or either chamber really, would be willing to sort of say, well, we're going to put it off now because there theoretically is going to be a bill that moves through on global warming, which is completely uncharted territory actually, as Darren can point out, I just don't see them waiting for that. If I had to predict I think something will come out of conference on CAFE.
Alex Kaplun: But I also think Dingell is a very key factor in all of this because as Ben mentioned, he used CAFE as sort of a part of a bigger climate change issue. And he also doesn't want to do anything on CAFE that he perceives as hurting the industry now. You know the speaker's office, obviously, has a lot of say over what happens in conference. She gets to name conferees, but Dingell is going to be a very key player. I would imagine he'd be the lead negotiator for the House in conference negotiations. So I mean if he sort of puts his foot down and says, "No, I'm not accepting 835 mile per gallon standard no matter what," or really pushing for the bill that he supports, I mean that could create some of the same problems with CAFE that they had when they were originally trying to do the House bill where sort of some moderate members and Chairman Dingell were not on the same page as the speaker.
Monica Trauzzi: And on to the renewable electricity standard. It didn't have much luck in the Senate, but it did get squeezed into the House bill. Is it going to be an uphill battle as it heads to conference? And who are the main players there who might have their say in this?
Ben Geman: Sure, well, what happened was the original House plan that was put out by Representative Tom Udall and some others and very strongly supported by environmentalists would have been a 20 percent national standard by 2020. And then they knocked it down to 15 percent in order to look for some more votes. And finally they kept it at 15 percent, but had this piece of it that said 4 percent of that could be met with energy efficiency measures. And that gave them enough to get over the top. Now, opponents of it though, and the folks who basically kept it from coming up for a vote on the Senate side still don't like it. I mean even with this sort of 11 with a 4 percent efficiency piece of it, that was actually a counterproposal that folks, well, Senator Bingaman had also wanted a 15 percent standard. He also added this efficiency piece when he couldn't get enough votes, it seemed, or couldn't get a vote on his standard. End of the day, even with this carve-out you still have the same people opposing it. You've got Southern lawmakers who feel that some of their states don't have enough renewable resources in order to meet the standard. You've got the investor owned utilities who don't want any kind of mandate on this issue, be it effectively 11 percent, be it 15 percent, be it higher. Again, there were enough votes in the House for this though and it's a bit of a question mark on the Senate side because it never actually got a vote, this 15 percent standard with the efficiency carve out. If I had to guess, I think it could probably get over the top. And also another thing to look at would be the politics were one way when they had the bill on the Senate floor because they were trying to add that as an amendment to the bill. The politics would be very different if it comes out of conference committee containing that provision because if somebody wanted to actually filibuster it they'd be taking down the entire bill. So, if I had to guess, sorry, this has been a long-winded answer, but if I had to guess I think that that lesser renewable portfolio standard will emerge from the conference negotiations.
Monica Trauzzi: And something else that you've been taking a look at it is how the oil companies fared in all of this. Are they likely to score any victories in the conference?
Ben Geman: Well, here's what happened. There's an awful lot of things in the House energy bill that they can't stand. They really sort of dodged a bullet on the Senate energy bill. On the Senate side there's not an energy tax package. The one that had been put out there would have been a roughly $28 billion tax package that mostly would've come out of the hides of the oil companies. And on the House bill, in contrast, you do have a smaller tax package, but that has several taxes on the industry that they're opposing. You've also got some provisions in that bill that would sort of rollback some efforts from the '05 energy bill to expedite leasing on federal lands. And beyond that you've got a whole bunch of other things in the bill that would repeal some royalty incentives and try and extract some payments from the industry, from producers that hold these notoriously faulty 1998 and 1999 leases. So, all of that stuff made it into the House bill, none of it made it into the Senate bill. So, I'm not exactly clear where that's going to go. I mean it's very hard for me to imagine that none of the oil and gas provisions from the House bill would surface in a conference report. But just what's in and what's out, it's hard to tell.
Monica Trauzzi: Biofuel is another major issue that you're all keeping an eye on in your respective beats. What will likely happen during the conference on that?
Ben Geman: Well, I think Alex can probably talk to this more than I can, but the Senate had a very substantial biofuels provision that was not in the House bill, which is expanding the renewable fuels mandate to 35, I think, billion gallons by 2022. I'm not exactly sure where that one's heading.
Alex Kaplun: I think there you have some of the same issue as CAFE, where, again, John Dingell has said, look, if we're going to do biofuels we need to do this as part of this whole climate change picture. And he's very intent on pushing that debate until the climate change bill. You haven't heard quite as much noise about it. I mean there are certainly people in the House who are big biofuels proponents and they would like to see the mandate expand as quickly as possible, but that's not the same sort of push for it as CAFE. I mean I think one of the really interesting things to note, you know, last time they did the biofuels mandate there was virtually no substantial opposition to it. Biofuels had so much support, ethanol in particular, that even lawmakers who had opposed in the past were sort of very quiet and kind of gave up the fight. This time around ethanol still has a lot of support, but there's also a lot of questions. You have issues with food prices, infrastructure, all kinds of things that people want to look at. And at more than any point in the last couple of years you really see people questioning exactly what ethanol is going to do. And I think proponents of expanding the mandate are going to have to deal with that issue. It's not going to be sort of, I think, as easy for them to get this through as they could the last time around.
Monica Trauzzi: Darren, many promises made about climate and the amount of attention that's going to be paid to the issue in the coming months. On the domestic front there are several major players that are going head to head about key issues in their climate proposals. How far can Congress actually get on this issue taking into account all the ideas that are circulating and all the uncertainty that still exists about a climate solution?
Darren Samuelsohn: A lot of the attention has been focused on the energy bill that moved through before the recess. Going forward, this is supposed to be where the attention will be in the fall. Look at it, I guess, as two separate tracks. You've got a House track. You've got a Senate track. In the Senate there have been, I think, six, seven, eight bills introduced, so I'm just focusing on power plants. So I'm looking at the entire economy. John Warner and Joe Lieberman, right before the break, threw out a discussion draft that they wanted over the course of the break to get members to look at, to study, and then they'll come back. And then, apparently, they're going to try and mark something up in a global warming subcommittee in the Environment and Public Works Committee, which I think they have the partisan votes and then they have John Warner as the extra Republican to move it through there. And then Senator Barbara Boxer wants to move it through the Environment and Public Works Committee. She's dealing with a committee that historically has been pretty partisan and, you know kind of, when the Republicans were in control, went into some gridlock on the President's Clear Skies proposal a couple of years ago. Here she's certainly got John Warner to rely on as a vote. She's dealing though with Max Baucus as a Montana Democrat who's up for reelection in 2008, who has voted no in the past on carbon caps and what's he going to do will be a good question. Harry Reid is certainly watching that one closely. There's a whole bunch of senators, I'd say 33, 34 senators who are up for reelection in 2008 and they have got to be considering would a vote on the floor on climate change, as it moves forward, going forward, do they want to vote yes or no on a mandatory caps on carbon dioxide? And there's a whole long list, from Mary Landrieu to Mitch McConnell, who are possible senators who are going to be very crucial to watch in terms of will there be a 60 vote margin? My vote counting on the Senate for climate change legislation certainly shows that they're within striking distance of 60 votes of members who are at least interested in a carbon cap. Whether or not they're all in agreement on what it's going to be is another question. You certainly have members on the left, members in the middle, you know, Republicans who are showing support or interest in carbon caps are probably not going to be supporting the same thing that Barbara Boxer would support. And I'm not even talking about the house, where John Dingell, Rick Boucher have said they want to move a cap and trade bill through. I think they're a little bit further behind than the Senate. I think the staff, over the August recess, has spent their time trying to write a bill. You know, John Dingell talking about a carbon tax, which is certainly very interesting. And he could be trying to put a double barrel package together of carbon taxes, tax incentives to encourage people to reduce their use of fossil fuels, and then a cap and trade bill on top of that. And in terms of what kind of prospects they have for moving a bill through, the entire Energy and Commerce Committee, certainly John Dingell, if he wants to mark up a bill and move it through committee, I'm sure he can, but then getting it through the full House is another question.
Monica Trauzzi: You'll also be covering all of the post-Kyoto discussions that are happening in the coming months. Several major meetings are scheduled, two of which are happening in September. What are the key challenges facing countries as they try to come up with a post-Kyoto strategy?
Darren Samuelsohn: That's a whole big enchilada that they're trying to bite off there. I mean it's huge, from China, and whether or not you could get China to just come to the table and agree to anything more than what the national commitments are that China has put forward, whether they be on fuel efficiency or trying to improve their automobile efficiency standards. I mean they're dealing with air pollution and water pollution in China, is their major issues as they're thinking ahead to the Beijing Olympics and sort of the whole world focusing on them. So, certainly, getting China interested and getting other developing countries to the table has been an issue since 1997, even before that. The United States is huge in the international debate as well. President Bush plans his own summit right after the United Nation's meetings. In Washington he's got the 15 largest polluters in the world, I guess, coming together. And they're going to be looking for some sort of voluntary, long-term aspirational commitments, which might be the way to get everybody to the table to talk. Certainly the Europeans, certainly the Japanese are going to be pushing harder and pushing for more. All this feeds into the bigger picture Bali negotiation process in December, and then spinning it way forward two more years to 2008-2009 is when they ultimately want to have a successor to the Kyoto Protocol ready to go.
Monica Trauzzi: All right. And Alex final question. On the heels of the Minneapolis bridge collapse a lot of attention is being paid to the nation's aging infrastructure. And one of the things you're going to be following in the coming weeks is a recent proposal by James Oberstar to essentially create a gas tax to pay for infrastructure improvements. Explain what's happening there.
Alex Kaplun: Yeah, what Oberstar wants to do is, and he's already introduced legislation in this regard, is essentially create a fund that's going to be specifically for bridge repairs and bridge construction. And he sort of floated a couple ideas of how to fund that. But the idea that's getting the most attention is a gas tax. I don't think they've pegged down a specific number, but it's going to be somewhere around a one cent to 5 cent increase, somewhere in that level. I mean that's not substantial in sort of the overall cost of a gallon of gasoline, but it's already becoming sort of a very interesting political issue. Anytime someone raises the idea of the gas tax immediately it becomes attacked. You know, they haven't done it in a while. A couple of years ago when they were doing a highway bill there was talk of it and sort of no one wanted to touch it. And I think it will be sort of interesting how it plays out politically, sort of what wins out, the idea of taking more money out of consumers or funding all these bridge repairs that people say are very necessary. And it's kind of going to be a big political battle in the fall.
Monica Trauzzi: All right. A lot to keep an eye on. Thanks for coming on the show.
Alex Kaplun: Sure.
Ben Geman: Thank you.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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