Energy Policy

Sen. Bingaman previews energy legislation, discusses prospects for cap and trade in Senate

With the Senate expected to roll out an energy bill in the coming weeks, what will the core components of the legislation be? During today's OnPoint, Senator Jeff Bingaman (D-N.M.), chairman of the Energy and Natural Resources Committee, discusses expectations for the bill and comments on how one of the provisions, a renewable electricity standard, may affect its prospects for bipartisanship. Bingaman discusses whether President Obama's call to double the nation's supply of renewable energy in the next three years is feasible in our current economic climate. He also explains how the Senate climate process may unfold this year and what role he would like his committee to play in the discussions.


Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Senator Jeff Bingaman, chairman of the Energy and Natural Resources Committee. Mr. Chairman, thanks for coming on the show.

Jeff Bingaman: It's great to be with you.

Monica Trauzzi: Chairman, coming off of a week of big financial and budget news and a major address by the president, it's clear that energy, clean energy development, is going to be a key component of this administration. Your committee is working on creating a new energy bill, what can we expect to see as the key portions of that bill?

Jeff Bingaman: Well, I hope there will be several. First focus would be energy efficiency, seeing what more we can do there and building efficiency. We had a good hearing this week on building efficiency and I think it's clear that the federal government needs to do more to promote efficiency in residential construction, in commercial construction. The Smart Grid, clearly, everyone has agreed that we should move to a Smart Grid, but we now have to get down to the details of what does that mean? How much additional authority has to be provided to FERC to actually involve itself in planning and siting and cost allocation decisions to get that additional transmission capacity built? What else is needed by way of incentives for utilities to provide interactive communication with their customers so that they can do a better job with demand-side management and reduce the need for more power plant construction in that regard. I think the whole issue of deploying clean energy technologies, we tried, as many people know, to put a loan guarantee program in place in 2005. It hasn't worked as we had hoped. The new secretary is trying very hard to make it work. We want to help him in that regard, but we also need to look at whether something more substantial is required than just the loan guarantee program that's currently in law. So those are examples of the kinds of things we're going to be looking at.

Monica Trauzzi: What's the timeline on the roll out of the bill? When can we expect to see it?

Jeff Bingaman: We're hoping to be able to mark up a bill in the next four to five weeks.

Monica Trauzzi: The renewable electricity standard, something near and dear to your heart, is that expected to be part of this as well?

Jeff Bingaman: Well, I hope I can be and whether it's going to become part of it as part of the committee deliberations or when the bill is considered on the Senate floor, I don't know. But as you're aware, we've passed a version of the renewable portfolio standard or renewable electricity standard through the Senate now three times in three previous congresses. The House passed it in the last Congress and we were not able to pass it in the Senate. So, I'm optimistic that this time we will be able to pass a bill through the Senate and House and get it to the president for signature.

Monica Trauzzi: But there are still some issues with it. There are some Republicans that disagree with some of the provisions in the bill. One of the issues that Senator Murkowski has with the proposal is that it's one-size-fits-all and it sort of puts certain regions of the country at a disadvantage. Are you taking that into account? That perhaps the Southeast is not going to be able to meet these requirements in the RPS because of the types of renewables that they're able to produce?

Jeff Bingaman: Well, we clearly want to take all of those considerations into account. I think there are, of course, experts who say that when you look at biomass and biofuels and the potential to produce energy from those sources, the Southeast is not at that substantial a disadvantage relative to other parts of the country. But I do think we want to build some flexibility into whatever we try to enact and basically provide the incentive and the impetus we can for more use of renewable energy and more production of renewable energy from whatever source.

Monica Trauzzi: The RPS at this point would require utilities to generate as much as 20 percent of their electricity by 2021. Are the proposed target strong enough? I mean considering what the president has said even just this past week about increasing our renewable energy capacity, can we do more than that?

Jeff Bingaman: Well, I don't know and I think that will be one of the key things we learned in our discussions in the committee and on the Senate floor as to whether or not people think more could be done. Obviously, we have many in the industry who say we cannot do more and we need to just make the right judgment as to who is right.

Monica Trauzzi: Are you confident you can make the energy bill a bipartisan bill, especially with something like the RPS?

Jeff Bingaman: Well, I'm hoping we can make the energy bill a bipartisan bill. We have done that in the past, both in 2005 and in 2007. And I hope that this year we can do that again. I don't kid myself into thinking that all aspects of the bill are going to be supported by a strong bipartisan majority. There may be provisions in there that are not strongly supported, but I think at the end of the day I hope the bill is such that everyone will think it's worthwhile to support the final version.

Monica Trauzzi: You mentioned some of the transmission and grid development issues that you'd like to address in the energy bill and the president has proposed doubling the nation's supply of renewable energy over the next three years. Considering the amount of work that actually needs to be done in terms of transmitting and Smart Grid development, is that goal at all feasible?

Jeff Bingaman: Well, I think it is feasible. I think a lot of it is going to depend upon how quickly we can get through this economic downturn. I think that the economic recession we're in is delaying progress on energy projects, just as it's delaying a lot of other things in our economy right now. And we put provisions in this latest stimulus package that are intended to further incent companies to go ahead with renewable energy, but nobody knows exactly how much affect those are going to have.

Monica Trauzzi: Switching gears to climate, Senate Majority Leader Harry Reid has established some aggressive timelines for cap and trade to make its way through the Senate. How is the Senate climate process going to unfold this year?

Jeff Bingaman: Well, I don't know. I wish I had the answer to that. As you know, last year we had a bill that came out of the Energy and ...

Monica Trauzzi: Environment and Public Works?

Jeff Bingaman: ... Environment and Public Works Committee under Senator Boxer's leadership and that legislation came to the Senate floor. It was not finally enacted, but I think in addition to that there were, I think, four or five other bills pending in the Senate. One of which I proposed myself along with six other senators. I don't know if we'll follow that same model this year or not where we'll have a bill that is supported by committee and other bills that are developed and have a chance to debate and consider different aspects of those bills on the Senate floor. I don't know of a different procedure that's been adopted as yet.

Monica Trauzzi: How would you like your committee to be engaged in the climate debate?

Jeff Bingaman: Well, the members on our committee have expressed a great interest in being involved in this debate and we have scheduled some briefings to just keep committee members informed as we find useful folks to come in and brief us on what's going on on cap and trade and how it works and what the different proposals are. I don't expect that we would try to report legislation on the subject, but I do think that separate from what the committee does in a formal way, I do think there are quite a few members that are very focused on the issue and will probably take an active part in supporting some of the individual bills that are introduced.

Monica Trauzzi: There was a lot of criticism last year about how the Lieberman-Warner debate was handled. How does the Senate need to approach the debate this year in order to not have some of those similar problems?

Jeff Bingaman: Well, I hope that we - you know, this is a very complex subject, trying to write a cap-and-trade bill, at least in my view its complex. And when you change one piece of a proposed regime, cap-and-trade regime, it impacts on other pieces as well. So the ideal thing would be to have a structure of a cap-and-trade system that comes to the floor for consideration that has good support, both parties supporting it in a pretty broad cross-section of the Senate. How we get from here to there, I'm just not sure.

Monica Trauzzi: From what you sit today, are the votes there to pass this through this year?

Jeff Bingaman: I don't know. I don't know. As I say, it's hard to know because we don't yet have a concrete outline or framework that we could go and ask people about yet. It's still unclear. I would doubt that the votes are there this year to pass the kind of bill that we considered last year, but that doesn't mean that we couldn't get the votes to pass a significant cap-and-trade bill.

Monica Trauzzi: Are you feeling, is the Senate feeling pressure from the international community to come to the Copenhagen meeting with something very concrete and substantive?

Jeff Bingaman: Oh, I think that the people in the administration would very much like us to be to a point where we have enacted our own cap-and-trade legislation in time for that meeting to occur in Copenhagen. I think that would be ideal, but frankly, I think it is more important that we get agreement on a cap-and-trade proposal that will actually work and that will result in reduction of greenhouse gas emissions. And that's the part we haven't yet solved.

Monica Trauzzi: In his budget proposal the president calls for oil company tax breaks and subsidies to be repealed and Senator Murkowski argues that this is going to make it very difficult for these companies to do business. What is your take?

Jeff Bingaman: Well, I don't have a take on all of the various proposals the president made regarding the oil and gas tax provisions, but a couple of them I thought made some sense. The one he has proposed, as I understand the budget proposal, that we go ahead and establish some kind of excise tax on offshore drilling in the Gulf of Mexico, which would then be offset by royalties paid. That would be a way to ensure that for all of the production of oil and gas in that area, the taxpayer receives something by way of royalty or excise tax. I think that's an appropriate provision. It's one that we talked about before. I supported it in committee. We tried to pass it on the floor and were not able to in the last Congress. Section 29, that's another, the deduction under Section 29 is something that as originally proposed the idea was this is to encourage domestic manufacturing. It's hard to argue that producing oil is manufacturing. But the definition of what was eligible for Section 29 got very expanded before that was enacted. I think it's appropriate to look at that and see whether that's still appropriate to maintain as a domestic manufacturing incentive. This is something that I think went into law in 2004, it's not something that the oil and gas industry had before that time and I don't know that it's something they need going forward.

Monica Trauzzi: Before we go, I want to touch on biofuels, because the ethanol industry has been hit hard in the last year. There have been some big companies filing for bankruptcy. There's a lot of concern that these companies are not going to be able to meet the requirements of the renewable fuel standard. Have you considered paring back the targets?

Jeff Bingaman: I haven't seen a great drum beat to pare back those targets as yet. I think folks are still unsure enough about the future and what's going to be happening to the price of oil, to the price of gas, to the price of ethanol going forward, for us to making that kind of a judgment. I guess I would think it somewhat premature for us to try to legislate a change in that as part of an energy bill that we might mark up in four or five weeks.

Monica Trauzzi: OK, we'll end it right there on that note. Thank you for coming on the show.

Jeff Bingaman: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]



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