On the heels of the President's remarks on energy and climate policy this week, how will the Senate proceed with its negotiations? During today's OnPoint, Dirk Forrister, managing director at Natsource and a member of the International Emissions Trading Association's US working group, gives his take on whether the President's speech marked the end of cap-and-trade. Forrister, the former chairman of the White House Climate Change Task Force in the Clinton Administration, also explains how Senate legislation needs to change in order to garner 60 votes.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Dirk Forrister, managing director at Natsource and a member of the International Emissions Trading Association's U.S. Working Group. Dirk was chairman of the White House Climate Change Task Force in the Clinton administration. Dirk, wonderful to see you again.
Dirk Forrister: Thank you Monica, it's good to be here.
Monica Trauzzi: Dirk, I want to start off by getting your reaction to President Obama's Oval Office speech on the oil spill and energy policy. Senator Murkowski says the phrase "comprehensive climate and energy policy" is the new code for cap and trade. Yet there are other people who are saying cap and trade is dead. He didn't talk about emissions, so that means it's a no-go on cap and trade. What message did you hear in the president's remarks? What do you think he's trying to say about climate and energy policy and how the Senate should move forward?
Dirk Forrister: Well, first and foremost, I think the message of his address was primarily for the community on the Gulf Coast and that he was trying to reassure them that he's on top of the situation and escalating the amount of activity at the federal level to help them. The secondary message was kind of an inside-the-Beltway message and that code language of comprehensive climate and energy does kind of imply that there is more to it than an energy only bill, that simply satisfying the needs on the energy side is not going to be enough. And that, in fact, to unleash the clean energy investment that you want you need to greenhouse gas rules to be set up. I think he was giving himself a whole lot of wiggle room though on what the shape and size of that is.
Monica Trauzzi: Yeah and there's been criticism that the speech lacked specificity. I mean do we really have any clarity on where he wants energy policy to go?
Dirk Forrister: Well, I'm a wonk. I was looking for the detail, but I looked back at it and I thought in 17 or 18 minutes you can't expect a lot of detail and that's for his team to aggressively push on Capitol Hill. What I'm really looking for is what's the follow? Is it going to be a full-on administration effort on Capitol Hill to get the votes, to solve problems and to actually put the package together or are they going to continue to hang back? And I think that's what the nervousness is a little bit, is that there's a feel that the administration has kind of been waiting for something to come over the transom from the Senate that they could react to as opposed to going up to the Hill, like they did on health care in the end game, and saying here's what we want and working with them to develop that solution.
Monica Trauzzi: Right and it's still basically a guessing game when it comes to what the Senate's going to do next. So no real change based on the speech from Tuesday night on the path forward that the Senate will take?
Dirk Forrister: Well, what I took from it is he's put energy policy, environmental policy on the front burner, if it wasn't there already, because of the spill. Everyone knows now this is agenda item number one for the summer somewhere along side agenda item 1B, which is the Supreme Court nominee. But he is serious about this, he wants a solution and I think there's a range of things that he could take. But my suspicion is that for the energy industry they're not going to look at it as a complete package if the climate rules aren't agreed to. You kind of need to know what the lay of the land is going to be in terms of carbon regulation before you spend hundreds of millions of dollars on new energy infrastructure. And that's what we really need to do in this country. It's been a long time since we went on a spate of building new power generation facilities and it's time to do that, but you've got to get those rules right or else people are going to potentially invest in the wrong things.
Monica Trauzzi: So, this idea of having the Senate vote sometime this summer and then waiting until the lame-duck session to go to conference so the House doesn't need to take another serious vote on climate and energy, do you think that's looking like a realistic possibility?
Dirk Forrister: I mean it's a possibility. I mean I guess I still believe that there's time to get an agreement in the Senate and I've been up on the Senate side this week. I know the Senate staff, we're talking to their counterparts on the House side as they construct what they think would sell in the Senate. So, hopefully a conference is something that could take place in the fall and I expect that they would use up every minute of time available for that. And if they don't get it done, yeah, maybe lame-duck is a possibility, but I consider that pretty remote.
Monica Trauzzi: So, was the speech a signal that Democrats are, in fact, using the oil spill to their political advantage?
Dirk Forrister: Whether they're using it to their political advantage I think it's landed in their lap and if they don't do something about it they're going to get criticized. So I think Democrats have to use -- they have to respond and the answer can't be just a short-term band-aid on what the problems are. It has to include that long-term strategy that gets us moving to a better place.
Monica Trauzzi: In other climate news, the EPA released its analysis of the Kerry-Lieberman bill this week. It shows a modest increase in household energy costs. Is that enough to propel the legislation through or is any increase in energy prices a no-go at this point?
Dirk Forrister: Well, you know, I think the analysis highlights ways of keeping the costs down, which I think it's very important and that's a ball to keep one's eyes on. I think the question about how the reductions get phased in and how gently they get phased in is something that will continue to get looked at. But as I looked at it, you know, the headline numbers of $80 to $150 a family a year, well, that does seem like it's probably reasonable insurance against a problem like climate change that could have catastrophic consequences if we don't act.
Monica Trauzzi: So, if you had your druthers, what changes need to be made to the legislation? What should be kept in, taken out in order to get to those 60 votes?
Dirk Forrister: Well, you know, I'm hopeful that the core program sort of starts with the largest sources of emissions and that's generally the approach that both the House and Senate have taken. I think they could potentially stretch out the targets a little longer, which is something that I know that the senators have been looking at. As for how you treat the transport sector, I think that's the big question mark. It's been a problem ever since the House sort of - you know, that's really what's the nub of the problem of people calling it cap and tax is the fact that the House proposal auctioned so many allowances for the transport sector as opposed to the other sectors. And it may be that we need to come up with a different way of addressing transportation. And I think that's what's going to be the really big conversation over the next week or two, is you don't necessarily want to let the oil companies completely off the hook, but you also have to recognize that maybe phasing in the requirements on transport or treating them in a slightly different way, more with standards, is a potentially viable approach.
Monica Trauzzi: I know you're hopeful that there will be some kind of cap and trade emissions reduction mechanism in the final legislation in the Senate, but what do you think the likelihood of that is?
Dirk Forrister: Well, I'd say it's been waning over the past couple of weeks, just because of the predominance of concern about other issues like the oil spill and the like. And certainly Senator Graham pulling away from his participation decreased the odds of that. At the same time, what I find remarkable is that the power sector itself seems ready to deal on this, seems ready to go and ready to get clarity. And I think that's the place that if I were in the Senate right now I'd be focusing, is how do you build out from there, because you've got a good working partner at EEI, you've got good, well-meaning individuals in the power industry that are ready to step forward, that want to get this problem solved, want to get this monkey off their back and move forward and start to build new stuff. And so I think that's the core of what they ought to focus on now.
Monica Trauzzi: The administration has also announced a new oversight position at the Department of Interior to focus on offshore drilling. They've picked someone who doesn't have a whole lot of experience in the energy world, but do you think this signals the beginning of a major revamp of the Interior Department and is this just the first of many changes that we're going to see to that agency in the next few months?
Dirk Forrister: I do think that agency is going to get an incredible amount of scrutiny on sort of how they ought to be structured and who ought to be in charge of what. And it certainly is an agency that has been broken in many respects, in terms of their energy responsibilities. I mean I know that they have many other responsibilities that they carry out quite well, but the energy side of things has need of so serious reform. So I do think that continues to get looked at and this is just an initial response.
Monica Trauzzi: All right Dirk, we'll end it there. Thank you for coming on the show.
Dirk Forrister: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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