Energy Industry Updates for March 2010

With Health Care Reform Out of the Way, Is Comprehensive Energy and Climate Change Legislation Next?

The thunderbolt that struck Washington, D.C. — literally and figuratively — early on the morning of March 22, 2010 not only changed the fortune of the health care reform legislation but also put back in play many of President Obama's other key legislative initiatives, including the energy and climate change proposal.

Some speculated in January 2010 that the election of Massachusetts Republican Scott Brown to the U.S. Senate had reshaped the political landscape unlike any political event in a generation, and had dealt health care and the energy and global climate change proposals a crippling blow. But, in retrospect, Mr. Brown's election now seems to have been the high-water mark in the opposition to health care reform. It's a whole new ballgame on a series of Obama legislative initiatives that includes the energy and global climate change legislation.

Already there has been a move in the Senate to achieve consensus on energy and to seize this new-found initiative. That activity is now likely to accelerate in the next few weeks. Recall that the U.S. House of Representatives passed comprehensive energy/cap and trade legislation on June 26, 2009 in a close partisan vote (219 – 212). As recently as January 2010, senior Democratic senators on the Energy Committee had signaled resistance to the cap and trade proposals passed by the House, indicating that a clean energy bill with research funding and renewable energy standards was all that could be expected to emerge from the Senate.

But in recent days, Senators John Kerry (D-Mass.), Lindsey Graham (R-S.C.), and Joe Lieberman (D-Conn.) have begun to circulate the outline of a climate and energy bill with detailed concepts of the proposal being sent to the EPA for analysis. The bill would then be sent to the Congressional Budget Office for revenue scoring.

These three senators are attempting to balance the wish lists of environmental groups and the interests of major industries that would be impacted under the plan, which aims to put a price on U.S. greenhouse emissions. They are aiming to reduce greenhouse emissions to 17 percent below 2005 levels by 2020 and to 80 percent below 2005 levels by 2050. Power plants would be covered starting in 2012 and other industries beginning in 2016, while a carbon tax would be levied on fuels. The bill would promote more nuclear power and offshore oil and gas production. Rather than impose an economy-wide cap and trade system for carbon emissions, the senators are focusing on a...