As many members of Congress battle to keep their jobs ahead of the November midterms, what impact will the elections have on the future of climate policy? During today's OnPoint, Tom Dennis, executive vice president at Cassidy & Associates, gives his take on why the Senate failed to pass climate and energy legislation this year and looks ahead to the prospects for legislation following the midterm elections.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Tom Dennis, executive vice president at Cassidy & Associates. Tom, it's great to see you.
Tom Dennis: Monica, thank you, appreciate an opportunity to be on your show.
Monica Trauzzi: Of course. Tom, as Congress shifts its focus to the midterm elections, there's a lot of looking back and finger pointing when it comes to what happened on climate this past summer. Ultimately, why do you believe the talks in the Senate failed?
Tom Dennis: Monica, this is a pretty tough season and this summer, after the Waxman-Markey bill had an opportunity to be viewed by many people, I think it's pretty fair to say that it was getting attacked from a lot of fronts and the ability to counter those attacks failed. Congress came back after being with their constituents over the summer, particularly in August and the mood was not good. And the notion of moving forward to adopt a very comprehensive program addressing both climate and energy just didn't seem to be in the cards. As we got into September, I think it became clearer that the Senate was reluctant to move forward, in great part because of the regional divide that exists on many of these issues. And, in the end, it was pretty clear that Congress just wasn't going to do anything until they got the mood expressed to them in terms of what was going to happen in November.
Monica Trauzzi: So, it sounds like politics was to blame here. Were things like the economy - how much of a factor did the economy play, other outside factors?
Tom Dennis: It's pretty clear people are hurting and the economy is, in fact, recovering, but the trickle-down effect in terms of jobs for many people who are out of work, it's hard to see that. And so, clearly, the economy does have and does play a very big role in how Congress looks at things, particularly when they go back and visit with their constituents. And in terms of uncertainty, the investment community, without question, is having serious doubts about what Congress is going to do. And, just like Wall Street, what they hate the most is uncertainty. And until such time as they can get some clear signals on what the Congress and the administration are going to do in terms of providing incentives for renewables, what they're going to do for nuclear power and other forms of energy, until those signals are clear, I think the investment community is going to remain skeptical and the cost of capital is going to remain high to finance many of the projects that, heretofore, we had hoped would move forward in a very quick manner.
Monica Trauzzi: You've been working in politics for a long time now. How big of a political blunder was this for Democrats?
Tom Dennis: I think there was a miscalculation on the ability to move forward with climate and energy in a comprehensive manner rapidly. These are very large questions and it takes basically an ability for both sides to reach some kind of an accommodation to address issues in a way that people are taking care of. I believe that the expectation that the Senate would move quickly was a total miscalculation. There's probably a lot of blame to go around in many places and not just in one particular sector. I think it's fair to say that the environmental community had expectations that they could move something in a comprehensive fashion. I harken back to Senator Bingaman's effort of a year ago June when he was able to move forward with a pretty robust program involving renewable electricity standards. Had that been passed, we probably would be writing or finishing the regulations to implement that program, which in its own right would have resulted in pretty significant reductions of greenhouse gases. That didn't take place and I personally believe that's quite unfortunate.
Monica Trauzzi: So, you mentioned Bingaman's RES. There are some discussions happening right now about the lame duck session and whether we might see a debate, a vote on and RES or some kind of energy package. Do you think that will happen? Does it make more sense for them to wait until next year to try to do something more comprehensive on energy?
Tom Dennis: Monica, I think it's a very good question and I think what it really boils down to are the results, again, of the election. If it turns out that Democrats are able to retain control of both houses there's a possibility that there would be a very hard push to try to do something. That said, I think most people believe the results of this election are going to be exceedingly close. And, therefore, whoever is in charge, either Democrats or Republicans, that they'll be in control with very slim margins. If that's the case, I suspect that there would be a very hard push to delay things until next calendar year. That said, again, I think there are opportunities to do something this year, particularly with respect to tax extenders. I don't believe that either Republicans or Democrats want to stop the development of renewables. And the benefits out of the tax code expire at the end of this calendar year. That has to be addressed, particularly if one expects the investment community to provide the capital that's necessary to finance these projects. And the tax benefits that are provided to renewables are absolutely essential, from a financial point of view, for them to be profitable.
Monica Trauzzi: Is there climate fatigue right now? When you talk to people in town about climate, after what happened in the Senate, are you met with a sigh and eye roll?
Tom Dennis: I think people are, in fact, quite tired about talking about it and the expectations or the identification of a scenario that one could see in terms of moving a climate bill forward, people are tired of that. Because the expectation really is that there's no opportunity, at least in my opinion, none whatsoever to do anything involving cap and trade. That's off the table. And I suspect it's going to be off the table for a considerable period of time. But, again, there are things that need to be done and that involves the RES. There has to be something done on transmission. We hear so much about the promise of wind and solar and, clearly, there are great opportunities, and particularly in the West. But without the benefit of resolving these issues involving high-voltage, interstate transmission, in my opinion, those resources will remain stranded. They're remote in nature as they are. They're intermittent and need to be backed up. And we're not doing enough and I personally don't believe that Congress is doing enough to address this issue. You can't just talk about renewables on the basis that if you talk about them enough that they will happen. Without the benefit of transmission, they'll remain stranded. It's unfortunate that, again, that is another issue that has been held hostage by the inability to move what people call a comprehensive program. We ought to be taking these things in chunks, move forward with things that you can do and get them addressed. I'm very impressed, as an example, on transmission with the policy that Wyoming Governor Dave Freudenthal has been advocating. And that is the policy of ownership neutrality. That it shouldn't matter whether transmission, in terms of the siting, is going to be on federal, state, or private land. That everybody ought to bear their appropriate burden and select the proper path. And, in that context, there's a lot of frustration and that is the inability to coordinate the federal reviews. Secretary Salazar is in charge of implementing a memorandum of understanding that would coordinate the federal effort. But, frankly, it's not happening and there are impediments out there. The forest service, as an example, basically takes the position that if you come in and ask for an opportunity to have a facility reviewed, the first question is, is there any other place you can put it? And people have to get into strategic alignment. The president's policy is to move forward to implement a very strong, robust program to get renewables employed. If their agencies are not in alignment it's unlikely that that's going to happen and I hope that Congress addresses this and that they address it soon.
Monica Trauzzi: OK, we're going to end it there. Thank you for coming on the show.
Tom Dennis: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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