Energy Bill: Waxman-Markey Spurs War of Words, Frenzied Round of Horse-Trading and Arm-Twisting

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The initial skirmishes have ended, giving way to an all-out battle over federal energy legislation sponsored by U.S. Reps. Henry Waxman and Edward Markey. At stake are tens of billions of dollars in new investments and capital spending that most analysts predict will fundamentally change the way energy is produced and consumed in the U.S. This is the most far-reaching piece of energy and environmental legislation to be considered by Congress in years.

Since being passed by the Waxman-chaired House Energy & Commerce Committee in late May on a largely party-line vote of 33-25, the American Clean Energy and Security Act of 2009 has triggered an inside-the-Beltway firestorm of competing studies, lobbying skirmishes, op-ed articles, blog wars, talking-head smack-downs and good old fashioned congressional horse-trading in an effort to sway congressional hearts, minds and votes on the omnibus energy bill.

The bill has ballooned from an initial length of about 650 pages to more than 900 pages. The bill's major provisions include:

• creating a system for companies to buy and sell allowances to emit carbon dioxide ("cap & trade")
• funding more detailed investigation and demonstration of technologies to capture and sequester carbon dioxide emissions
• funding deployment of various "Smart Grid" initiatives by utilities
• expediting interstate electric transmission siting
• expanding use of electric vehicles
• allowing oil and gas exploration in certain heretofore prohibited areas
• mandating use of renewable energy by utility companies

Waxman-Markey aims to significantly lower U.S. carbon-dioxide emissions from a 2005 baseline. By 2012, the bill would reduce emissions by 3%, and reductions would rise to 17% by 2020, 42% by 2030 and 83% by 2050. Broad deployment of carbon capture and sequestration (CCS) technologies on power plants would be necessary to attain the significant emissions reductions in the out years.

House Speaker Nancy Pelosi has said she wants to bring the bill to a full House vote before that body's July 4 recess. Nearly every constituency has found something to dislike in the bill. Deadline for final markup by other House committees passed last Friday, which spurred intense 11th-hour lobbying, arm-twisting and horse-trading on Capitol Hill. It wasn't immediately obvious which constituencies won and which lost, as the deadline for markup by other committees passed.

Florida lawmakers don't like the prospect of opening up the Gulf of Mexico to offshore oil and gas exploration. Utilities have been fighting for a greater share of free allowances to emit carbon dioxide. Congressmen representing agricultural interests want to make the bill more beneficial to farmers and agricultural interests. Environmentalists are unhappy because the bill only requires utilities to have renewable electricity account for 15% of their electricity production by 2020. Energy efficiency programs could count toward some of that 15% renewable portfolio standard (RPS) total.

In the weeks since the bill was passed out of the House Energy & Commerce Committee, the drumbeat of criticism from Republicans and pro-business organizations has steadily risen. Mindful that "tax" has become one of the more controversial words in the English language, lawmakers, utility leaders and business interests opposed to Waxman-Markey's "cap & trade" system have missed no opportunity to label it a "carbon tax."

The Wall Street Journal has featured news articles, blog entries, and op-ed articles criticizing the bill's projected financial costs and job losses as predicted by separate studies from Charles River Associates, the National Association of Manufacturers and other groups. Former governor and presidential candidate Pete DuPont advocated removing all subsidies from energy production and increasing nuclear power, which produces no carbon dioxide but does produce long-lived waste. Separately, three sitting Republican congressmen touted a Republican alternative to Waxman-Markey that called for licensing 100 new nuclear reactors during the next 20 years.

But supporters of Waxman-Markey have not been quiet either. Over the weekend, the Energy & Commerce Committee fired back, citing a study by the non-partisan Congressional Budget Office (CBO) that the "cap & trade" provisions of the bill alone would cost the average family "about a postage stamp per day," or $175 per year. But that sum didn't include the calculation of numerous financial benefits that could accrue from increased energy efficiency.

The Energy & Commerce Committee also cited a study from a friendly outside group, the American Council for an Energy-Efficient Economy, which calculated that the financial benefits of the bill's increased energy efficiency would total $22 billion in the year 2020, exactly the same figure the CBO estimated the cap & trade provisions would cost. In addition, Reps. Waxman and Markey cited another study estimating that up to 1.7 million new jobs would be created if the bill becomes law.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.