This week on Capitol Hill, the lame-duck session appears to have lived up to its name, as doubts linger regarding the passage of a “bailout” for the auto industry and a potential second stimulus package. On Monday, an amendment to the Emergency Economic Stabilization Act providing $25 billion in emergency funding for the Big Three auto makers was introduced in the Senate, as well as the House-passed unemployment insurance (UI) extension and a larger economic stimulus package that includes UI, infrastructure spending, and economic energy assistance.  

Congress passed only an unemployment insurance initiative this week, which President Bush signed into law Friday morning. Congress is likely to return the week of December 8th to resolve the auto bailout issue.  

A much larger economic stimulus package will be drafted in January under the leadership of the Obama administration, in which we anticipate the inclusion of a clean energy infrastructure component. As Democrats look for a way to merge the issues of the economy and energy, there will be rapid movement towards a new energy plan that facilitates investments in clean energy and the revitalization of our economy with the development of green infrastructure.

Energy agenda

The Obama-Biden energy platform includes a vow to spend $150 billion over a decade to speed deployment of renewable power and fuels, low-emissions coal plants, plug-in hybrid development and other technologies. We anticipate that these priorities will be a central part of the Administrations 100-day agenda, as well as a comprehensive energy bill in the 111th Congress. Issues certain to be essential to the discussion include: requirements for clean, high-mileage, next-generation vehicles; widespread deployment of clean-coal technology; reduction of U.S. oil imports; and capping carbon emissions. There will also be an emphasis on energy efficiency in manufacturing, buildings, and commercial equipment.  

A renewed interest in clean electricity portfolio standard has also surfaced, accompanied by proposals for the expansion of the interstate electricity grid and integration of smart-grid capabilities. Projects and initiatives currently being discussed for short term action focus on clean infrastructure, with a consensus forming that the most pressing next step is to construct a smart grid system. Key energy players from FERC Commissioner Wellinghof to the Executive Director for Energy and Climate at the United Nations Foundation agree that “the grid is next,” and that it will affect the entire spectrum of the economy.  

This week Rep. Jay Inslee (D-WA), a possible contender for DOE Secretary, discussed the elements necessary to successfully implement a national smart grid system. His plan provides for the regionalization of the cost, for legislation addressing net metering, for increased R&D, and for assistance in the electrification of the transportation system. He also posed the question of whether federal financing, similar to that used for the national highway system in the 1950’s, would be appropriate for this particular project.

 Climate change

While the issues of energy and climate change remain a top priority of the Obama administration, as well as of the 111th Congress, proponents of climate change may have to wait a little longer for big policy announcements on global warming initiatives. Timing of comprehensive federal action will be slowed due to government transition, international considerations, economic complexities associated with cap-and-trade, and the compromise between competing proposals from key players.  

President-elect Obama has recently reconfirmed his commitment to a federal cap-and-trade scheme to curb GHG emissions. His energy advisers have said that they will take the time to think through the tough issues to deal with the scope and scale of the problem, the permit allocations, targets and time frames and cost certainty. Obama campaigned on a more aggressive approach to climate change than that of the 110th Congress’s most prominent legislation, the Boxer-Lieberman-Warner bill, by calling for more aggressive cuts in emissions and the auctioning of all credits. His top environmental transition aids have already raised “serious concerns” about the draft global warming bill released last month by current Energy and Commerce Chairman Dingell and Energy and Air Quality Subcommittee Chairman Rick Boucher.  

Senate Environment and Public Works Chairman Barbara Boxer (D-CA) announced plans Thursday to introduce legislation at the beginning of the next Congress that would direct the EPA to set up a cap-and-trade system for the regulation of greenhouse gases. She described the bill as ‘streamlined’ and aimed at meeting President-elect Obama’s call to reduce CO2 emissions by 80 percent by 2050. Sen. Boxer also revealed her intention of proposing a bill that would establish a grant program to reduce global warming emissions under the Clean Air Act. She said the bill would serve as an economic stimulus, allocating up to $15 billion a year to “spur innovation clean energy including advanced bio-fuels.”  

Several groups, including the U.S. Chamber of Commerce and Deutsche Asset Management, continue to offer proposals for addressing comprehensive energy reform, while still other groups, such as the United States Climate Action Partnership (CAP), are urging Congress and President-elect Obama to make passage of climate change in 2009 a top priority, despite increasing concerns over the U.S. economy.  

Speaker Pelosi has recognized that cap-and-trade may take some time, and Sen. Bingaman stated last week that he believes a cap-and-trade bill would need at least a year to pass through Congress, due to its complexity and looming concerns about the economy. Others, such as Sen. Ben Cardin (D-MD) think Obama’s influence will result in a more rapid proposal addressing energy independence, due to the desire for action before the 2010 election cycle.  

We can expect the first days of the new Administration to focus on policy initiatives on U.S. environmental standards and a review of what they view as “failed policies” of the Bush Administration. Some have speculated that the Environmental Protection Agency (EPA) could be elevated to cabinet level status and that carbon regulation will actually be done under the existing Clean Air Act while Congress moves through the tough debate on climate change legislation.

Regulation

The EPA rejected a request to extend the public comment period on a notice of proposed rulemaking regarding the regulation of GHG emissions under the Clean Air Act. An investigation into the possible regulation of greenhouse gases under the Clean Air Act began after the Supreme Court’s decision last year that the agency must determine whether such emissions endanger public health and regulate them if they are found to be harmful. Industry groups asked for an extension of the comment period so that all interested parties would have adequate time to analyze the approximately 500- page proposal released by the EPA in July.  

The Obama administration and the next Congress will likely have the task of addressing regulations aimed at curbing GHG emissions, and Senator Boxer’s plans to move aggressively on climate in her EPW Committee specifically include the prospect of U.S. EPA regulations in the context of the Supreme Court’s Massachusetts v. EPA decision.

Post-election report

111th Congress

Both the Democratic caucus and the Republican conference held leadership races this week. Slots on the Democratic side were filled with close allies of Speaker Pelosi. Current Caucus Chairman Rahm Emanuel’s departure to the White House allowed Pelosi favorite John Larson (D-CT) to assume the influential role, while rising star Chris Van Hollen (D-MD) was appointed as the Speaker’s assistant and signed on for another term as DCCC Chairman. There weren’t many surprises on the Republican side, as Representative John Boehner (R-OH) was re-elected as the Minority Leader and Chief Deputy Whip Eric Cantor (R-VA) moved into the Minority Whip slot. The only excitement came as current NRCC Chairman Tom Cole (R-OK) pulled out of the race to keep his Chair, paving the way for Pete Sessions (R-TX) to take the position.  

The Leadership team currently stands as follows:

In the battle between Dingell and Waxman over the House Energy and Commerce chairmanship, Wednesday’s vote by the Steering and Policy committee resulted in a 25/22 outcome in favor of Waxman. The Steering and Policy Committee offered the Democratic Caucus a slate of recommendations to approve on Thursday, leaving the ultimate decision of who chairs the E&C committee to the full Caucus. The Caucus elected to give Waxman the Chairmanship on Thursday afternoon by a vote of 137/122. While both Dingell, the current chair, and Waxman favor measures to address climate change and rising energy costs, a committee chaired by Waxman could translate into more stringent environmental standards and more rapid implementation of emissions regulations. Waxman introduced H.R. 1590 in the 110th Congress, which calls on U.S. EPA to set up a cap-and-trade bill that would reduce mid-century emissions by more than 80 percent. His escalation to Chairman is seen as a victory for the Speaker and environmentalists that consider him a close ally on their initiatives. Speaker Pelosi announced Thursday that Dingell will stay on as a chairman emeritus.  

Rep. Edward Markey (D-CT), the current chairman of the Select Committee on Energy Independence and Global Warming, is in a position to take over the Energy & Air Quality Subcommittee chairmanship from Boucher (D-VA). Markey is a staunch supporter of aggressive climate change legislation. This move, coupled with Waxman’s recent election to E&C chair, would indicate a shift to the left on the issues of energy and climate change in the 111th Congress. Legislative proposals offered under such a dynamic would likely trend toward favoring deeper and more rapid emissions cuts, an all-auction cap-and-trade system, and higher federal RPS levels.  

Senator Jeff Bingaman (D-NM) will remain the chairman of the Senate Energy and Natural Resources Committee and will have a commanding role in leading the energy and climate debate. Senator Lisa Murkowski (R-AK) will become the top Republican on the committee.  

In other Committee developments, Senator Lieberman (I-CT), who supported John McCain over President-elect Obama, was not stripped of his Chairmanship of the Homeland Security and Government Reform Committee. He was, however, removed from the Environment and Public Works Committee, which included stripping him of a subcommittee gavel.

Obama administration

We are in the midst of monumental change that will impact America's energy, economic and climate change policy landscape in the immediate future, as well as in the long-term. The incoming Administration has expressed the view that the country has sorely lacked comprehensive federal climate policy for too long, and will take this opportunity to develop a clean energy team in order to raise the issue of climate change to the White House level. New faces in the Administration and in key Committee positions will shape the face of energy policy as the new Administration and the 111th Congress advances the 'green revolution.'  

As the Obama transition continues to move forward, rumors continue to swirl about possible appointees for key administrative positions. Former Clinton Interior Deputy Secretary David Hayes is in charge of transition planning for all of the key energy and environmental agencies, including U.S. EPA and the Interior, Energy and Agriculture departments.  

Many names have surfaced as speculation abounds regarding who might lead Obama's Energy Department. Among them are several governors: Kansas' Kathleen Sebelius, Michigan's Jennifer Granholm, Colorado Governor Bill Ritler, and California Governor Arnold Schwarzenegger.  

Others mentioned as possible DOE leaders: Resources for the Future President Phil Sharp, a former Democratic House member from Indiana; Massachusetts Institute of Technology physics professor Ernest Moniz, who served as DOE undersecretary under President Clinton; and, Rep. Jay Inslee (D-Wash.), a vocal backer of renewable energy. More recently, the names of Sen. Jeff Bingaman (D-NM) and Rep. Jerry McNerney (D-CA) have been thrown into the ring, as well as FedEx CEO Fred Smith and Google’s director of climate change and energy initiatives, Dan Reicher.  

There are several contenders for a spot as EPA administrator, including: Clinton-era EPA Deputy Administrator Robert Sussman; attorney Robert F. Kennedy Jr.; New Jersey Department of Environmental Protection chief Lisa Jackson; former Pennsylvania Department of Environmental Protection Director Kathleen McGinty; World Resources Institute President Jonathan Lash; and Ian Bowles, the head of the Massachusetts Executive Office of Energy and Environmental Affairs.  

The Obama administration may also create the position of a climate or energy czar at the White House as part of an effort to integrate the work of federal agencies working on these issues.  

Playing into all energy legislative prospects is the fact that there are three Senate seats still undecided, which will determine whether the Democrats will capture the 60 votes needed to cut off Republican filibuster. Democrats already have won confirmed victory for six seats held by Republicans, expanding their effective majority from the current razor-thin 51 seats to at least 57 seats — the biggest number for either party since the Democrats held 57 in 1993.  

At a meeting between President-elect Obama and Sen. John McCain earlier this week, the latter iterated a plan to partner with the incoming administration to implement its global warming agenda. Notwithstanding the loss of his position on the Environment and Public Works Committee (a punishment for his campaign efforts on behalf of Sen. McCain), Sen. Joe Lieberman (I-CT) stated he would still continue legislative efforts with McCain to enact a climate bill.