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Watered-Down “Energy-Only” Climate Bill Approaches July 14, 2010

Posted by Jamie Friedland in Climate Change, Coal, Congress, Politics.
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Earlier this week, Senate Majority Leader Harry Reid announced that he will introduce energy legislation in two weeks.

Sen. Reid said he will push a bill that accomplishes four goals:

  1. Enhance oil rig safety requirements
  2. Create clean energy jobs
  3. Boost alternative energy/reduce oil consumption (read: increase efficiency)
  4. Reduce “pollution” from electric utilities

An aide later confirmed that the “pollution” to which he referred was in fact GHGs, but that he would not even mention GHGs or carbon dioxide explicitly is indicative of the political volatility surrounding this issue.

On the one hand, it is heartening to hear that the Senate will attempt to pass a climate/energy bill this year.  Just this week, four leading climate scientists explained in Politico that “The urgent need to act cannot be overstated.”

Even if a bill cannot pass, Sen. Sheldon Whitehouse (D-RI) correctly opined that merely having an energy debate is advantageous for the Democratic energy agenda because it forces the “Party of No” to again block necessary and largely popular reform, with its job creation and increased energy security.

Chief of Staff Rahm Emanuel signaled last month that a utility-only bill would have the White House’s blessing, which is not surprising given their track record of centrist compromises.

However, many in the environmental community are less than thrilled that Sen. Reid has decided on a utilities-only approach.  After all, the House or Representatives passed an economy-wide cap last year.

But the Senate has a different political climate, and with the filibuster in place, senators representing just 10.2% of the nation’s population can block any bill they choose (go down to the “SPECIAL RANT.” Also I’d like to take this moment to profess my love for Gail Collins to the world). The prospects of even just a utilities-only bill passing are slim, so the comprehensive energy reform this country so desperately needs is simply not possible at this time.

Power plants burning fossil fuels unsurprisingly release large amounts of GHGs. A utility-only bill would limit the amount of carbon dioxide they can emit.

So, what would a utilities-only bill look like?

Sen. Jeff Bingaman (D-NM), chair of the Senate Energy and Natural Resources Committee, introduced a utilities-only energy over a year ago: S.1462.  It passed out of his committee in June 2009 with bipartisan support.  This bill, the America Clean Energy Leadership Act of 2009, aka “ACELA”, would reduce energy-sector emissions by 17% in 2020 and by 42% by 2030.

Environmental groups hate this bill.  David Roberts at Grist has been covering this bill for over a year now.  His two-word summary: “ACELA sucks.” Why?  A number of reasons outlined here.  But I will explain the major ones that are the result of the utilities-only approach and apply to any bill of this type.

Senators John Kerry (D-MA) and Joseph Lieberman (I-CT) have abandoned their earlier cap-and-trade bill (the American Power Act) in favor of their own utilities-only approach.  One thing their new bill has in common with Bingaman’s is the emissions targets.  Both bills seek to lower electric sector emissions by 17% in 2020 and 42% in 2030 (Kerry/Lieberman also set an additional target of 83% by 2050.)

As Joe Romm, a former Assistant Secretary of the Department of Energy and arguably the nation’s most authoritative commentator on energy policy put it:

“Meeting such a 17% target [for 2020] in the utility sector alone, as in the latest incarnation of the watered-down bill, would be utterly trivial.” -Joe Romm, Climate Progress.

This is because we are currently underusing our natural gas power plants.  American utilities have built an excess of relatively efficient natural gas combined cycle (NGCC) plants over the last 20 years.  Currently, the NGCC fleet operates at an average of 41% of its capacity.

In that absence of carbon-pricing, utilities choose to meet increased electricity demand by ramping up their dirtier, more inefficient coal plants because coal is currently cheaper than cleaner natural gas.  A recent MIT study found that ramping up production at existing natural gas plants instead of coal plants could cut U.S. power-sector CO2 emissions by 10% - today, and without any additional capital investment.

In other words, utilities could meet over half of their emission reduction obligations for 2020 simply by pulling back the coal lever and pushing forward the natural gas lever and not changing a single thing.  I’m not saying we shouldn’t make this switch: it would reduce not only GHG emissions but also those of other coal air pollutants like sulfur and nitrogen oxides.  But a 17% utility-only decrease is barely even a step in the right direction and hardly constitutes energy reform.

More information on our underutilized natural gas capacity here.

Note that even the Waxman-Markey climate bill that passed the House last year had the same 17% target.  It is also far too weak.  However, that was an economy-wide reduction.  Limiting that reduction the energy sector guarantees that this bill will be largely ineffective in the short term.

Grist’s David Roberts and CFR’s Michael Levi wrote good pieces explaining the pros and cons of a utility-only approach a few weeks ago.  A note for reading Mr. Levi’s piece: it defends a utility-sector cap-and-trade program.  Bingaman’s bill caps the energy sector without a trading program.  We do not yet know whether the upcoming Senate bill will contain cap-and-trade, but I personally doubt it.

The morale of the story is that a utilities-only would be a very small step in the right direction.  Like potential EPA regulations, if paired with strong followup bills that address manufacturers and transportation etc, this could potentially be part of the solution.

Electric utilities release about 1/3 of our GHG emissions, and even in an economy-wide cap-and-trade program, roughly half of the emission reductions are expected to come from utilities.  When we generate roughly half of our electricity with a fuel as dirty as coal, switching off of it offers major reductions.

This graph shows the relative emission reductions in different sectors that would be expected under an economy-wide cap-and-trade program. Energy is by far the biggest column.

However, a 17% target, which is highly likely, is too weak, and a utility-only bill is, on its own, not a climate solution.  For those people who support incrementalism to achieve reform in this political climate, such a bill is a tiny increment.  But it is a short shuffle down the path to a sustainable energy future.

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