Fueling Energy Alternatives for the Future

Posted October 15, 2008 at 3:20pm

While lawmakers may have fled Washington, D.C., to focus on the election, various energy producers are looking ahead to what is anticipated to be another busy legislative session for them in the 111th Congress.

The Democratic majority’s focus on energy independence and global warming saw several major energy initiatives signed into law in the 110th Congress. They include the first Congressional increase in federal fuel- efficiency standards in three decades, a major boost in biofuel mandates, the end of a long-standing ban on offshore drilling and the last-minute extension of a suite of renewable energy tax incentives.

But key lawmakers are already looking ahead to a rapidly growing “to-do” list in the next session.

“There is a great deal of work that remains to be done in order to secure our energy future,” Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) said last month during a floor speech in which he cited a laundry list of issues that he plans to address in a comprehensive energy bill early next year.

Various energy sectors are already preparing for that push, as well as renewing efforts to establish a sweeping new federal cap-and-trade program to reduce global warming. That effort in particular will have a major effect on how Americans produce and use electricity.

The stakes couldn’t be higher for the coal industry, which produces nearly half of U.S. power but is also a major source of carbon dioxide emissions responsible for the warming climate.

“Climate change legislation needs to acknowledge that coal will remain a primary source of American energy,” said Corey Henry, a spokesman for the National Mining Association, which represents coal producers. “It must recognize the inextricable link between environmental well-being and economic well-being.”

The industry’s top legislative priority is winning Congressional support for widespread deployment of clean-coal technology that will allow the United States to continue to use its massive coal reserves to generate electricity.

Henry said the NMA would like to see as much as $2 billion spent annually for the next 15 to 20 years on carbon-capture-and-sequestration technology, or CCS, which in theory would capture and safely store harmful carbon dioxide emissions underground.

In addition, the coal industry will continue to press for federal support for the burgeoning coal-to-liquids industry, which envisions large quantities of aviation fuel produced from domestic coal reserves. The CTL advocates won a handful of tax-friendly incentives this session and will press for their extension and long-term contracting authority for the Defense Department, a major potential market for the fuel.

Another sector closely watching the unfolding climate debate is the nuclear industry. As the sole existing power source capable of producing large quantities of energy without harmful carbon dioxide emissions, nuclear generators could see a major boon under a cap-and-trade regime.

“I think we have the most to contribute to the climate change issue,” said Alex Flint, the senior vice president for governmental affairs for the Nuclear Energy Institute, the industry’s leading trade group.

Flint said the group’s legislative focus is pushing the continued implementation of a 2005 energy law that contains substantial support for the nuclear industry, including tens of billions of dollars in federal loan guarantee authority to woo wary investors.

In addition, the NEI will press for policies that support its goal of seeing four to eight new nuclear plants online in the United States by 2016. Flint noted increasing nuclear interest by Members in both parties in the 110th Congress, support that he says is likely to increase next year with mounting concerns over energy independence and global warming fears.

The booming ethanol industry will also continue to receive Congressional scrutiny next year.

Bob Dineen, president of the Renewable Fuels Association, an industry trade group, said the organization will be focused on implementation of the new renewable fuels standard, which dictates an increasing quantity of biofuels — such as ethanol — be blended into fuel supplies nationwide.

The energy bill signed into law by President Bush in December 2007 tops out at 36 billion biofuel gallons in 2022. “It was a monumental piece of legislation,” Dineen said last week.

But Dineen expects the industry will continue to parry attacks by opponents of the new standard, including livestock growers and food producers, who complain the RFS is driving up food prices by diverting crops from the dinner table to the gas tank.

Dineen said ethanol producers will continue to highlight the role of high gasoline prices in escalating food costs, while stressing that ethanol production actually lowers food prices by displacing petroleum use.

Finally, renewable energy advocates — who enjoy broad support from both parties — will continue to press their cause in the next Congress. Both the wind and solar sectors won hard-fought extensions of favorable tax incentives as part of the Wall Street economic bailout plan passed earlier this month.

A long-term extension of a production tax credit favorable to wind producers will be a key priority for the American Wind Energy Association, according to Greg Wetstone, the group’s senior director of government and public affairs. The economic bailout only extended the credit for one year, which hampers investment in the growing industry and will prompt yet another extension fight.

“It’s very clear that the wind power industry should not be subject to the year-to-year vagaries of the Democratic process,” Wetstone said, noting the thousands of jobs supported by the sector.

The wind and solar sectors will also press for improvements to transmission infrastructure for renewable sources, as well as the creation of federal renewable energy standards.