State of the Planet

News from the Columbia Climate School

What the U.S. Midterm ‘Shellacking’ Means for Energy Policy

President Obama’s midterm “shellacking,”  to use his own term, was hailed by some pundits as the official death of “cap and trade.” Obama himself declared that there would be no comprehensive energy reform bill in the foreseeable future. Instead, he advocates working with Republicans to pass smaller “piecemeal” legislation.

Obama remarked in a White House conference the morning after the elections that many House Democrats lost the midterms in part because they supported the controversial Waxman-Markey bill. That bill would have placed a price across the board on carbon emissions.  However, a Huffington Post analysis shows that 84% of House Democrats who voted for the “American Clean Energy and Security Act” were re-elected, while only 44% of those who voted against the bill won another term. Although the Waxman-Markey bill may not have played as large a role at the polls as detractors claim, the sour voter sentiments arguably demonstrated that Democrats do not have a mandate to enact any bill that would add to the perception, real or imagined, of short-term tax increase and job loss.

As early as July of this year another comprehensive energy reform bill, introduced by Senators John Kerry (D-MA) and Joe Lieberman (I-CT) had already effectively died in the Senate. The bill would have charged a market price per ton of carbon emissions for power plants beginning in 2013 and for large manufacturers starting in 2016. Unable to obtain enough Republicans support, Democrats compromised with key Republicans to only charge a price for emissions from utilities.  However, the watered-down version also failed to garner the 60 votes needed to overcome a Republican filibuster.

Partially demoralized by the divisive healthcare vote, the Senate abandoned plans to pass an energy bill that would cap carbon emissions. The election of Scott Brown, who campaigned heavily against the healthcare vote in one of the bluest states, not only cost the Democrats the filibuster-proof majority, but further energized Senate Republicans to uniformly oppose comprehensive energy reform. Now with a commanding majority in the House and a filibuster-proof minority in the Senate, Republicans are emboldened to push forward their agenda, and scale back the energy-related initiatives enacted by Democrats in the last four years, including rolling back tax breaks for companies investing in offshore drilling and subsidies for home-retrofitting.

One of the first victims of Republican leadership is widely speculated to be the House Select Committee on Energy Independence and Global Warming, created by Speaker of the House Nancy Pelosi (D-CA) in 2006 to bring attention to climate change. However, in a perverse twist of events the ranking member of the Select Committee, Rep. Jim Sensenbrenner (R-Wis.), announced that he would like to conserve the panel  but with a change in focus.  A U.S. Supreme Court decision in 2007 cleared the way for the EPA to regulate carbon as a pollutant under the Clean Air Act, due to commence on January 2nd, 2011. Sensebrenner wants the panel to investigate EPA’s alleged overreaching role in regulating emissions across the country.  “The oversight and subpoena power wielded by the Select Committee would put a tall hurdle in the path and would further expose the economic destruction these policies would bring,” he said. Senator Jay Rockefeller (D-WV) is also drafting a legislation that would impose a two year delay before EPA can start regulating carbon.

Besides the potential battle over executive overreach that may ensue, there is hope that House Republicans and Obama may cooperate on several fronts related to alternative energy over the next few years. The first area where the interests of Obama and Republicans intersect is energy independence and security. The election defeat reminded Congressional Democrats that they need to more actively welcome ideas from the other side of the aisle.  Senator Mitch McConnell (R-KY) recently told reporters that he hoped Democrats would collaborate with Republicans on “nuclear power and clean coal technology the president said that he’s for and that most of my members are for.”

Lamar Alexander (R-TN), the number three Senate Republican, said in late September that Republicans winning the Congress would “help” not hurt the prospect of energy reform because Republicans are eager to “write [smaller] bills” instead of a comprehensive climate bill. Now with the elections over, Alexander’s alternative energy bill, which would add 100 nuclear plants, suddenly became easier to pass.

Following campaign attacks charging Obama with ignoring jobs and the plight of the average worker, Republicans are now in the driver’s seat with regards to job creation. Both Obama and House Republicans may want to move forward on small bills that would generate jobs through electric car manufacturing, nuclear power plant upgrading, coal with carbon capture and storage and natural gas production. Bipartisan support may also be reached on expanding solar and wind power projects, many of which have been such advocated by unlikely red state constituents in Texas and the desert Southwest. Moreover, with sufficient arm-twisting, Senate Democrats may convince moderate Republicans to support initiatives that would expand and extend tax credits for research and development of more efficient batteries and a smarter electricity grid.

Another positive step forward that so far has been receiving little national media attention happened in California: voters rejected Proposition 23, which would have suspended the mandated curbing of greenhouse gas emissions from Governor Schwarzenegger’s Global Warming Solution Act of 2006 until the state’s unemployment rate fell to 5.5%. Challengers to Prop 23 argue this is a huge victory for climate change legislation, since the vote was the largest public vote on climate change in U.S. history. The “No on 23” campaign, which was supported by a coalition of environmentalists, small businesses and venture capitalists, outspent supporters of Prop 23 by a margin of 3 to 1. The refining companies, Valero Energy Corp., Tesero Corp, and Flint Hill Resources spent $10 million to back the measure. For his part, Governor Schwarzenegger accused these companies as having “black-oil hearts” and dismissed claims that Proposition 23 would protect jobs.

At the same time, Californian voters also passed the “little-noticed” Proposition 26 that stipulates a 2/3 majority vote in the state legislature to impose fees associated with environmental damage (a 2/3 vote is currently required to raise taxes). The mixed signal sent by voters may create confusion for regulators and businesses; environmental regulation through fees on polluting businesses may have to be decided in the courts.

Proposition 23 supporters hope that the California vote is a bellwether for what will happen in the country down the road and will energize support for other state legislations, even in the absence of a national climate bill from Congress. This may be overly optimistic given the divided political landscape of the country. Despite the midterm loss, those hoping for climate change legislation are hoping the soon-to-be Republican controlled congress will at least support small legislation in the spirit of energy independence and job creation. We hope that politicians on both sides of the aisle realize that small pieces of legislation that would slowly move the country  towards a carbon neutral path is preferable to political gridlock.

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