 |
|
The Incredible Shrinking Energy Bill
By Geoffrey Styles, blogger at Energy Outlook
Posted on Jul. 30, 2010

Ed. note: This piece first appeared on Energy Outlook, Geoffrey Styles’ blog. When legislation is introduced in the US Congress, most of the discussion typically concerns its specific provisions. Sometimes, as in the case of the "public option" absent from the final healthcare bill, notable omissions vie for attention. However, in the case of this year's greatly-diminished energy bill released this week by Senator Reid (D-NV), most of the controversy seems to be focused on its long list of missing elements, including but not limited to cap & trade, a national renewable energy standard for electricity, and extensions for various expiring renewable energy incentives. That's not to say that what's left doesn't deserve careful scrutiny, particularly provisions affecting offshore oil and gas drilling. But compared to the energy bill that might have been, this draft looks like a pitiful remnant, even at 409 pages. Although I can appreciate the frustration of those who expected Congress finally to enact cap & trade this year, I find the convoluted tactical arguments and finger-pointing over its failure to reach consensus on this issue to be mostly "inside baseball" rationalization. The clues adequately explaining its omission from the current bill are on display in the bill's title, "The Clean Energy Jobs and Oil Company Accountability Act of 2010". In other words, what happened to cap & trade this year was the recession and the oil spill. The former made the country less receptive to what is at its core a substantial new tax, while the latter scuttled the best chance for a bi-partisan "grand compromise" based on swapping expanded access to US off-limits oil and gas resources for stronger emissions regulations. Even though the taxation underlying cap & trade is intended to recognize a serious unpriced externality of our energy economy, it still represents a significant redistribution of wealth from energy producers and consumers to the government and the purposes for which the government chooses to spend the proceeds: at best a zero-sum game with frictional losses, and at worst--insert Waxman-Markey--a monumentally-distorting boondoggle. Then there's the missing national renewable electricity standard (RES), which in clear English is a mandate for utilities to obtain a defined and escalating percentage of the electricity they provide customers from selected renewable sources. The American Wind Energy Association (AWEA), the trade association for the US wind industry, sees this as an absolute necessity for their industry to continue growing and was vexed over its exclusion from the current bill--this in spite of the fact that the wind industry's main federal support, the Production Tax Credit, was previously extended through 2012, along with the valuable option to select an Investment Tax Credit instead. I see two practical explanations for this omission, though it's clear from the efforts of AWEA and other groups that it could still find its way back into the bill. First, the RES is really another tax. Instead of being levied on taxpayers by the government, it would be levied by utilities on ratepayers when the costs of the renewable energy projects or the tradable Renewable Energy Credits they can buy in lieu of buying green power are passed on to their customers. On a more practical level, with 29 states plus the District of Columbia already having equivalent Renewable Portfolio Standards in place, most of the best US wind and solar resources are already covered by such targets. A national RES might not add a lot more of these energy sources, but it certainly would trigger a scramble for the states with limited renewable resources to line up supplies from elsewhere. That might be good for the renewable energy sector, but it's of questionable benefit to a national economy still struggling to emerge from the recession. Also absent from this draft are the expiring renewable energy incentives highlighted in yesterday's New York Times editorial. These include the $0.45/gal. ethanol blenders' credit, about which I've blogged extensively, and the Treasury renewable energy grants offering up-front cash for the Investment Tax Credits that would otherwise require waiting for next year's tax return--assuming the recipient company had sufficient taxable income to benefit from the entire amount of the credit. These grants look problematic, as I noted last fall, when reports first surfaced that most of the money paid--approaching $2 billion--had gone to non-US firms. As I discussed at the time, this reflects the reality of a wind energy market in which US firms account for less than half of domestic sales, supported by a thoroughly-globalized supply chain, not unlike many other industries. The arguments pro and con too easily reduce to unappealing sound-bites. That leaves us with what is currently in the bill, which I have so far only had time to skim. It seems to consist mainly of well-intended but overly-politicized efforts--one section is entitled the "Big Oil Bailout Prevention Unlimited Liability Act of 2010--to hold BP accountable for the Gulf Coast oil spill and to address the liability for future spills, while trying to reduce the chances of another one. That sounds like motherhood and apple pie at this point, but as always the devil is in the details; implementing some of these details would leave the US with a much smaller offshore oil capability. That might appeal to environmentalists but would be catastrophic for energy consumers, our trade deficit, and US energy security. And why would you charge the Secretary of Energy with issuing a monthly report, starting in September or October, on the economic and employment impact of a deepwater drilling moratorium that is only intended to last through November? Interestingly, the bill would also establish a Congressional version of the President's oil spill commission, this time with specific technical criteria for appointment to this body. Alternative, compromise versions of the bill's oil provisions are already emerging from within Senator Reid's own party, and with a lot of luck we could end up with measures that would actually make offshore drilling safer and more responsible without killing it--and the roughly 30% of domestic oil production it provides. In addition to its oil spill provisions, the bill also offers some generous tax credits for converting heavy-duty trucking to natural gas, along the lines of the Pickens proposals I discussed last Friday, plus similar help for vehicle electrification and infrastructure, yet more energy efficiency measures (this time focused on homes), and funding for an old government program to buy up land and waterways for parks and nature preserves. All of this is notionally paid for ("PAYGO") by raising the Oil Spill Liability Trust Fund fee on all the oil produced and used in the US from $0.08 to $0.45 per barrel, which would directly increase the size of the fund to cover future disasters from $1 billion to $5 billion, while indirectly making all the bill's other provisions appear deficit-neutral. The proposed fee increase has the potential to raise an extra $2.5 billion per year. It's not clear whether even this slimmed-down bill can garner enough votes to pass in the Senate, let alone do so before the summer adjournment. In any case I'd expect the version that comes up for a final vote--if it does at all--to look somewhat different than this draft. It would almost certainly grow much longer, a malady that has afflicted all major legislation in recent Congresses. Whether it will actually make a meaningfully-positive impact on the serious energy challenges the US faces remains to be seen.
|
|
|
Back Home
Back to Top
|
 |
|
|
Refinery Closures Lead to Rising Gas Pri...
By Robert Rapier
Feb. 3 2012, 12:40 EST
|
In The Head Of U.S. Energy Secretary Chu
By Professor Ferdinand E. Banks
Feb. 2 2012, 12:41 EST
|
The Volt: What Happens When Ideology Get...
By Marita Noon
Feb. 1 2012, 3:04 EST
|
Ninety Seven Percent Is Not What You Thi...
By Art Horn
Jan. 31 2012, 1:07 EST
|
State of the Union: "All Out, All o...
By Geoffrey Styles
Jan. 30 2012, 1:04 EST
|
Iran Sanctions
By Andrés Cala
Jan. 27 2012, 5:30 EST
|
Time, Newsweek Bury Keystone
By Michael J. Economides & Peter C Glover
Jan. 26 2012, 11:08 EST
|
Super Fracking & the Next Shale Gale
By Peter C Glover
Jan. 24 2012, 11:55 EST
|
The Falklands and Other Dangerous Disput...
By Steve H. Hanke
Jan. 23 2012, 12:42 EST
|
Venture Socialism?
By Robert Rapier
Jan. 19 2012, 3:41 EST
|
The Covert ‘War’ In Iran
By Peter C Glover and Michael J. Economides
Jan. 17 2012, 11:49 EST
|
Beware the Next Oil Choke: Iranian Lesso...
By Andrés Cala
Jan. 13 2012, 11:05 EST
|
|
|
|
DIY Solar Panels Made of Grass That Anyo...
By Tafline Laylin
Feb. 3 2012, 5:17 EST
|
UK Gas Curve Signals U.S. LNG Imports
By Oleg Vukmanovic
Feb. 3 2012, 2:25 EST
|
S. Korea Faces 18-Percent Iranian Oil Cu...
By Lee Chi-dong
Feb. 3 2012, 2:21 EST
|
Exxon Still Biggest Oil Stock, But No Lo...
By Forbes
Feb. 3 2012, 2:03 EST
|
Once, Men Abused Slaves. Now We Abuse Fo...
By Jean-François Mouhot
Feb. 3 2012, 1:35 EST
|
Rosneft, Gazprom Pump Russian Oil Output...
By Vladimir Soldatkin
Feb. 2 2012, 12:33 EST
|
China Reinforces Energy Supplies
By Yvonne Lee and Aaron Back
Feb. 2 2012, 12:26 EST
|
EPA Won''t Take It -- Nor Should They
By Ken Silverstein
Feb. 1 2012, 5:04 EST
|
Falling Solar Prices Good For Climate, B...
By Erik Kirschbaum
Feb. 1 2012, 3:42 EST
|
Oil Industry Sees No Threat From Electri...
By Tom Bergin
Feb. 1 2012, 12:38 EST
|
New State Law Targets Fracking Industry
By KSAT
Feb. 1 2012, 12:21 EST
|
Exxon to Keep Its Foot On Gas Pedal
By Tom Fowler
Feb. 1 2012, 12:14 EST
|
|
|
|
Pemex Seeks To Add Conoco, Shell Subsidi...
By Laurence Iliff
Feb. 3 2012, 1:55 EST
|
Petrobras Shuts Fifth Most Productive We...
By Lucia Kassai and Peter Millard
Feb. 1 2012, 12:41 EST
|
US Refiners, Union Prepare For Possible ...
By Fox Business News
Feb. 1 2012, 12:12 EST
|
Marathon Weighs Pipeline Option
By Gina Chon and Ryan Dezember
Feb. 1 2012, 11:45 EST
|
Obama: Meeting US Energy Needs Will Requ...
By EV Wind
Jan. 31 2012, 2:24 EST
|
Union Tells US Refinery Workers To Prepa...
By CNBC
Jan. 30 2012, 5:55 EST
|
Oil Drilling Increased, API Says
By UPI
Jan. 30 2012, 4:32 EST
|
DOE Announces Grants To Study Concentrat...
By EV Wind
Jan. 27 2012, 5:01 EST
|
Anadarko Finds Oil Offshore Brazil
By Karen Eeuwens and Peter Millard
Jan. 27 2012, 3:27 EST
|
Cuba Oil Project Drilling To Start
By BBC News
Jan. 27 2012, 3:09 EST
|
Accusations Of Delay In Disclosing Volt ...
By Matthew L. Wald
Jan. 26 2012, 4:39 EST
|
FirstEnergy Closing 6 Coal-Fired Power P...
By Boston Globe
Jan. 26 2012, 2:58 EST
|
|
|
|
Italian Refineries To Shut Down Over Ira...
By Press TV
Feb. 3 2012, 2:00 EST
|
Bulgarian Coal Miners Call Off Strike
By Reuters
Jan. 23 2012, 11:59 EST
|
Chevron Gas Discovery Boosts LNG Plans
By News
Jan. 20 2012, 3:08 EST
|
Ukraine Seeks Compromise With IMF
By James Marson
Jan. 20 2012, 12:10 EST
|
Shell Joins Nova Scotia’s Offshore
By Daily Staff Biz
Jan. 20 2012, 11:29 EST
|
UAE To Set Up Clean Energy Project In Af...
By Haseeb Haider
Jan. 18 2012, 4:01 EST
|
Bulgaria Bans Chevron From Fracking For ...
By Carin Hall
Jan. 18 2012, 10:49 EST
|
Norway Awards 60 New Oil Production Lice...
By Kjetil Malkenes Hovland
Jan. 17 2012, 11:35 EST
|
Ukraine Says Won’t Sell Gas Pipelines To...
By Reuters
Jan. 13 2012, 12:58 EST
|
EU Iran Oil Embargo Timing Still In Ques...
By Frances Robinson
Jan. 13 2012, 11:30 EST
|
Vestas Cuts Over 2,000 Jobs After Profit...
By John Acher and Shida Chayesteh
Jan. 12 2012, 12:43 EST
|
Oil Companies Still Eye Norwegian Acreag...
By Kjetil Malkenes Hovland
Jan. 11 2012, 5:45 EST
|
|
|
|
Rosneft Gets License For Three Oil And G...
By Jake Rudnitsky
Jan. 31 2012, 12:28 EST
|
Russia Unveils Ambitious Coal Industry P...
By Svetlana Kalmykova
Jan. 25 2012, 5:23 EST
|
Russia Orders Oil Companies To Freeze Ga...
By Fox Business
Jan. 23 2012, 1:40 EST
|
3rd Reactor Shut Down In Czech Republic
By Voice of Russia
Jan. 23 2012, 12:06 EST
|
Miners Strike In Bulgaria Continues
By Sofia Echo
Jan. 18 2012, 3:18 EST
|
Russia Concerned About Iran’s Uranium En...
By CBS News
Jan. 10 2012, 2:38 EST
|
Putin Speaks Of Atomic Energy ‘Renaissan...
By Washington Post
Dec. 12 2011, 3:46 EST
|
Russia Rejects Iran Oil Ban
By Daniel Fineren
Dec. 7 2011, 12:15 EST
|
Floating Nuclear Power Station Helps Bal...
By RT
Dec. 6 2011, 4:21 EST
|
Japan And Korea Cooking On Russian Gas
By RT
Dec. 1 2011, 11:03 EST
|
Billionaire Awarded Controversial Energy...
By Brian Solomon
Nov. 9 2011, 12:47 EST
|
Russia Must Reduce Oil Dependence, Diver...
By VOA News
Nov. 9 2011, 11:29 EST
|
|
|
|
Iraq’s Oil Law May Be Pushed Till End Of...
By Kadhim Ajrash and Nayla Razzouk
Feb. 3 2012, 2:18 EST
|
Iran Pipeline To Supply Gas By End Of 20...
By Kalbe Ali
Feb. 1 2012, 1:00 EST
|
Explosion ‘Rocks Syrian Oil Pipeline’
By Eoin O’Cinneide
Feb. 1 2012, 12:36 EST
|
US Lawmakers Take Next Step On New Iran ...
By CNBC
Jan. 31 2012, 2:35 EST
|
BP To Start Jordan Gas Exploration Soon
By Mohammad Tayseer
Jan. 30 2012, 5:20 EST
|
Abu Dhabi To Tap Nat Gas To Meet Fuel De...
By Steel Guru
Jan. 27 2012, 4:48 EST
|
Iran Says It May Cut Off Its Oil Exports...
By Rick Gladstone and J. David Goodman
Jan. 27 2012, 3:24 EST
|
Iran To Provide Ethanol Fuel Soon
By ISNA
Jan. 26 2012, 4:00 EST
|
India Offers Pak Oil Pipeline
By Pawan Bali
Jan. 26 2012, 1:10 EST
|
Iran Mulls Pre-empting EU Oil Embargo
BY Benoit Faucon
Jan. 26 2012, 12:09 EST
|
India, Pakistan Say Strategy Soon For Ga...
By Economic Times
Jan. 25 2012, 4:03 EST
|
EU Imposes Iran Oil Embargo
By Henry Chu and Paul Richter
Jan. 25 2012, 12:57 EST
|
|
|
|
Chinese Move On Uranium Explorer
By NZ Herald
Jan. 25 2012, 5:38 EST
|
Chinese Company Sinopec Ready To Boost L...
By Neil Wilson
Jan. 23 2012, 12:46 EST
|
China’s Shenhua To Open Coal Mine In Aus...
By Reuters
Jan. 19 2012, 1:43 EST
|
China To Retrieve More Natural Gas
By Zhou Yan
Jan. 12 2012, 12:01 EST
|
Japan Asks Qatar To Ensure Stable LNG
By Mainichi News
Jan. 10 2012, 12:41 EST
|
Indonesia To Begin Renegotiating With CN...
By Platts
Jan. 9 2012, 12:38 EST
|
CNNC Unit Gets Regulatory Approval For I...
By Economic Times
Jan. 6 2012, 1:30 EST
|
PetroChina Buys Full Stake In Oil Sands ...
By AP
Jan. 4 2012, 11:46 EST
|
China Buys Russia, Vietnam Oil As Iran S...
By Florence Tan
Jan. 3 2012, 4:38 EST
|
Cnooc, Sinopec Vie Over Fracking
By Dinny McMahon
Dec. 15 2011, 3:54 EST
|
China Gas Rejects 2.2 Bln Sinopec/ENN Bi...
By Donny Kwok and Denny Thomas
Dec. 14 2011, 4:04 EST
|
China Refines Overseas Oil Grab Strategy
By Tom Bergin
Dec. 12 2011, 3:18 EST
|
|
|
|
North Korean Leader Kim Backs Natural-Ga...
By Henry Meyer
Feb. 3 2012, 5:04 EST
|
Japan Protests China’s Possible East Chi...
By Mainichi Daily News
Feb. 1 2012, 2:00 EST
|
Japan Finds Water Leaks At Stricken Nucl...
By Reuters
Jan. 30 2012, 5:52 EST
|
Rio Tinto Denies Australian Coal Force M...
By Platts
Jan. 30 2012, 5:45 EST
|
Asians Resist Notion Of Iran Oil Cuts
By RFERL
Jan. 30 2012, 4:36 EST
|
Another Japanese Nuclear Reactor Suspend...
By Times Live
Jan. 25 2012, 5:27 EST
|
IAEA Begins Review Of Japan’s Nuclear St...
By Reuters
Jan. 23 2012, 12:03 EST
|
Edano: Japan Bracing For Nuclear-Free Su...
By Mitsuru Obe
Jan. 19 2012, 11:42 EST
|
Petronas And Shell Sign Oil Recovery Dea...
By Today Online
Jan. 18 2012, 3:26 EST
|
U.S. Presses South Korea To Reduce Oil
By Choe Sang-Hun
Jan. 17 2012, 10:48 EST
|
Japan Wants To Keep Importing Iranian Cr...
By Mari Iwata
Jan. 12 2012, 10:56 EST
|
Cyclone Toward Australia Intensifies
By Robb M. Stewart
Jan. 11 2012, 10:52 EST
|
|
|
|
South Sudan, Kenya Sign Agreement To Bui...
By Jared Ferrie
Jan. 25 2012, 3:56 EST
|
Explosion Rocks Chevron’s Oil Rig In Bay...
By Osa Okhomina
Jan. 17 2012, 10:51 EST
|
Mozambique Protest Blocks Coal Train Lin...
By AFP
Jan. 13 2012, 12:46 EST
|
Pengassan To Shut Gas, Oil Production On...
By Taiwo Ogunmola
Jan. 13 2012, 12:22 EST
|
Nigeria Oil Union Threatens Oil And Gas ...
By Washington Post
Jan. 12 2012, 10:58 EST
|
Shell Restarts Production At Bonga Oil F...
By Sarah Kent
Jan. 5 2012, 3:05 EST
|
Violence Erupts In Nigeria Over Petrol P...
By Independent
Jan. 4 2012, 12:27 EST
|
Nigeria Gas Price Protest Turns Violent
By CBS
Jan. 3 2012, 4:49 EST
|
Shell Offshore Spill Affecting 115 Miles...
By Washington Post
Dec. 22 2011, 11:46 EST
|
Petrobras To Expand Pre-Salt Oil Drillin...
By Rodrigo Orihuela
Dec. 21 2011, 10:44 EST
|
French Nuclear Group To Monitor Health I...
By Monica Mark
Dec. 12 2011, 4:00 EST
|
Nigeria Joins Egypt, S’Africa In Solar P...
By John Ofikhenua
Dec. 9 2011, 4:05 EST
|
|
|
|
Nuclear Approvals To Be Resumed At Slowe...
By Liu Yiyu
Feb. 1 2012, 4:48 EST
|
Unusual Event At U.S. Nuclear Plant Not ...
By People Daily
Jan. 31 2012, 2:29 EST
|
S. Korea President Lee To Visit Turkey
By CRI
Jan. 30 2012, 5:49 EST
|
Indo-Pak Civil Nuclear Cooperation Possi...
By Daily Times
Jan. 27 2012, 4:53 EST
|
Turkey, Iran Calls On Quick Resumption O...
By Xinhua News
Jan. 20 2012, 5:39 EST
|
Italian Minister Says Reject Nuclear Pow...
By EurActiv
Jan. 19 2012, 4:10 EST
|
Vietnam Joins World In Peaceful Use Of N...
By People Daily
Jan. 18 2012, 3:43 EST
|
Russia Warns Attack On Iran Could Unleas...
By Washington Post
Jan. 18 2012, 11:26 EST
|
Niger To Pursue Nuclear Plans Despite Fu...
By Reuters
Jan. 17 2012, 11:25 EST
|
India To Talk To France, US For Nuclear ...
By MSN
Jan. 12 2012, 12:30 EST
|
Doomsday Clock Moved Closer To Midnight
By Doyle Rice
Jan. 11 2012, 5:50 EST
|
Iran, West Say Ready To Resume Talks
By Tehran Times
Jan. 6 2012, 1:43 EST
|
|
|
|
Solar Energy Industry Expects Boom
Feb. 2 2012, 1:00 EST
|
Russian Nuclear Giant to be Privatized
Feb. 2 2012, 1:00 EST
|
Venezuela Oil Exports to US Decline
Feb. 2 2012, 1:00 EST
|
Obama Expedites Wind Energy Off Atlantic...
Feb. 2 2012, 1:00 EST
|
Poland OKs Massive Fracking Efforts
Feb. 2 2012, 1:00 EST
|
N. Gas Gets Cheaper as Exxon Keeps Drill...
Feb. 2 2012, 1:00 EST
|
US Domestic Oil Production Rising
Feb. 2 2012, 1:00 EST
|
Chevy Volt Sales Fall After Fed Probe
Feb. 2 2012, 1:00 EST
|
Shell Sees Large Oil Refining Surplus
Feb. 2 2012, 1:00 EST
|
Fracking Disclosures Required in Texas
Feb. 1 2012, 1:00 EST
|
How Alt. Energy Could Threaten the Plane...
Feb. 1 2012, 1:00 EST
|
Cyprus May Get a N. Gas Terminal
Feb. 1 2012, 1:00 EST
|
|
|
|
|
|
|