Slimmed-down U.S. Energy Bill

A slimmed-down
energy bill unveiled today by U.S. Senate Democrats focuses on
reforming offshore drilling and promoting the use of alternative
fuels for heavy vehicles.

While some industry groups, including the major oil industry
lobby, and some Republicans quickly denounced the measures outlined
by Senate Majority Leader Harry Reid, it is a step forward in the
long awaited energy reform in the US.

Unlike the comprehensive bill sponsored by Senators John Kerry
and Joe Lieberman earlier this year - which was very similar to
what the House of Representatives passed in 2009 and which would
have capped industrial CO2 emissions - today’s bill focuses on
requiring oil companies to cover all the costs of oil spills by
removing the $75 million cap on liability relating to economic
losses; provides rebates for vehicles that run on alternative fuels
and provides for the development of  a plan for deployment of
electric vehicles.

“This bill does not address every issue of importance to our
nation’s energy challenges, and we have to continue to work to find
bipartisan agreement on a comprehensive bill to help reduce
pollution and deal with the very real threat that global warming
poses,” noted Senate Majority Leader Reid.

Senate Democrats abandoned plans for a broad climate bill last
week, hoping that a narrower bill would pass before the Senate’s
August recess. With little support likely from Senate Republicans
and some cautious Democrats, that may not happen.

Reid said his scaled back bill would make sure BP is held
accountable for the massive Gulf oil spill. “We are making it
crystal clear that polluters, not taxpayers, will be held
responsible for cleaning up and paying for the damages caused by
their negligence,” he said.

This seems to be the major focus of the  24-page Clean
Energy Jobs and Oil Accountability Act, as the bill is titled. In
addition to ensuring that BP pays to clean up its mess; it provides
for investment in Home Star, an energy efficiency program that
lowers consumer energy costs ;investment in the Land and Water
Conservation Fund and seeks to reduce U.S.  dependence on oil
by making investments in vehicles that run on electricity and
natural gas. It also increases the amount that oil companies are
required to pay into the Oil Spill Liability Trust Fund.

Provisions to stimulate the use of alternate energy vehicles
include a Natural Gas Vehicle Infrastructure Development program; a
$3.8 billion program of rebates for “qualified owners” who place a
“qualified alternative vehicle into service by 2013;”  a
national plan to support the deployment of electric drive vehicles;
a $400 million Electric Drive Vehicle Deployment Communities
Program; and a 500-mile vehicle battery competition.

A short summary of the href=””
target=”_blank”>Clean Energy Jobs and Oil Company Accountability
Act notes the following:

Oil Spill Response and

The first part of the Clean Energy
Jobs and Oil Accountability Act would ensure that BP pays for the
damage inflicted by the Gulf of Mexico oil spill; would require oil
companies to invest in technologies that help to prevent and
respond to domestic oil spills; would force the Federal government
to address deficiencies in its response to catastrophic oil spills
in deepwater; would implement structural reforms to the Department
of Ocean Energy (known previously as the Minerals Management
Service) to address mismanagement and historical corruption issues;
and would correct antiquated maritime and admiralty laws.

 Reducing Oil
Consumption and Pollution

The Act includes provisions that
would encourage the retrofit of the nation’s heavy vehicle fleet to
use natural gas and the electrification of the nation’s
transportation sector.

 Clean Energy Job
Creation and Consumer Savings

The Act would provide $5 billion in
incentives for the Home Star program which will offer point of sale
rebates to encourage homeowners to make energy efficiency

 Protecting the

Also contained in the Act are
provisions for a Land and Water Conservation Fund over the next
five Fiscal Years to ensure land and water is protected long into
the future even from the effects of climate change.

Oil Spill Liability
Trust Fund

Finally the Act would increase the
$1 billion liability cap of the Oil Spill Liability Trust Fund to
$5 billion and increase the amount that oil companies are required
to pay into the Oil Spill Liability Trust Fund to 49 cents per

Most notably absent from the bill were provisions for a
comprehensive cap and trade system that would place absolute limits
on the amount of greenhouse gas emissions major polluters would be
allowed to release into the atmosphere. Nor does it include a
renewable electricity standard, a long sought goal of some
senators, businesses and clean energy advocates that would require
utilities to produce a certain percentage of their energy from
renewable sources.

There is a great deal uncertainty surrounding energy legislation
in the US capital as competing bills continually surface. In the
House of Representatives, Democrats plan to vote on Friday on a
tougher bill regarding the Gulf oil spill. Any differences between
the House and Senate bills would have to be reconciled, which could
prove difficult given the imminent  August recess and November

Republicans in the Senate have put forward an href=””
target=”_blank”>alternate bill, which they claim is more
appropriate, but it is also not expected to go far.

Meanwhile ,U.S. President Barack Obama reiterated his pledge to
work for a comprehensive bill combating global warming, which is
highly unlikely to be achieved this year. “I intend to keep pushing
for broader reform, including climate legislation,” President Obama
said, “because if we’ve learned anything from the tragedy in the
Gulf, it’s that our current energy policy is unsustainable.”

The failure to get comprehensive climate legislation passed this
year was not a surprise. And the Obama administration has been
quietly putting in place the machinery for Plan B, the regulation
of greenhouse gas emissions under the authority of the
Environmental protection Agency (EPA).

Since the U.S. Supreme Court’s 2007 ruling that greenhouse
gasses could be regulated as an air pollutant under the Clean Air
Act, EPA has been collecting information on emissions and putting
in place a set of rules that would gradually kick in over the next

The absence of a coherent energy policy framework or a national
cap and trade system will also help to shift the locus of action on
climate and energy matters to regional and state interests. U.S.
states have demonstrated considerable leadership in shaping
policies on renewable energy, electricity transmission, smart grid
deployment and nuclear power expansion.

This week the Western Climate Initiative, a partnership of
Western U.S. states and Canadian provinces released a comprehensive
plan for a regional cap and trade system that would comprehensive
strategy designed to reduce climate-warming greenhouse gas
emissions (GHG), stimulate development of clean-energy
technologies, create green jobs, increase energy security and
independence, and protect public health.

“I think we can expect some of the states to hit the gas pedal
now,” said Franz Litz of the World Resources Institute (WRI). The
push may become even harder if Congress succeeds in blocking or
limiting the authority of U.S. EPA to regulate greenhouse gas
emissions from stationary sources.

WRI has just published a href=””
target=”_blank”>comprehensive report outlining potential GHG
emissions reductions under existing U.S. federal authorities and
announced state actions through 2030.

An even broader question for Canadian policy makers is, “What
Now?” The Canadian federal government has been patiently waiting
for the pieces to fall into place in the American climate and
energy governance regime so as to initiate measures on this side of
the border that were essentially compatible with the U.S.

It is unclear to what extent a “Plan B” is being formulated in
Ottawa, though present indications are whatever emerges over the
next few months to deal with greenhouse gas emissions likely will
be close to whatever emerges from an EPA centered regulatory
regime. The infrastructure for a national emissions management
program in Canada is largely in place and the regulatory framework
with fixed emission caps could come into force as soon as 2012.


You can return to the main Market News page, or press the Back button on your browser.