Hill Heat

From the Wonk Room.

The Obama economic recovery plan makes a major investment in the modernization of our electricity infrastructure, in order to transform an often-overwhelmed patchwork of balkanized regional networks into a national “smart grid” based on Internet-like technology. Repower America, Al Gore’s campaign to have America use 100% renewable electricity in ten years, argues that a national smart grid “will save money, increase reliability and protect consumers from outages, and make possible a clean electricity system.”

Building a smart grid requires both new technology and regulatory policy. In addition to a $20 billion investment in smart grid deployment, the recovery plan offers $2 billion in grants to promote a subtle but key shift in electric utility regulatory policy:

Policies that ensure that a utility’s recovery of prudent fixed costs of service is timely and independent of its retail sales, without in the process shifting prudent costs from variable to fixed charges.

Traditional electricity utility pricing discourages utilities from promoting conservation and efficiency—instead, the more wasteful their consumers are, the better. So demand goes up, utilities build new power plants, and still costs rise. Utility shareholders’ interests are pitted against the rest of society.

Therefore, several states have implemented policies that decouple profitability (“recovery of prudent fixed costs of service”) from demand (“retail sales”), by using public funds and rate adjustments to guarantee an expected annual profit for the utility company and to subsidize investment in energy efficiency.

Obama’s economic recovery package contains $2 billion in state-level block grants that will be released “only if the governor of the recipient State notifies the Secretary of Energy that the governor will seek, to the extent of his or her authority, to ensure” that decoupling and energy efficiency incentive programs will occur.

Because our electrical infrastructure is a vital public resource, the profits of utility executives and shareholders must not be put above the public good. As Public Citizen warns, decoupling for unregulated utilities can lead to “windfall profits for the industry.” The California electricity debacle exposed the great failure of the experiment of utility deregulation, and the recovery package does not go far enough to bring utilities back under control.

President Obama, Secretary of Energy Steven Chu, and legislators like Sen. Jeff Bingaman (D-NM) have stated that our entire nation needs to move to a low-carbon economy as rapidly as possible, highlighting transformation of the electricity grid as a key component.

Full decoupling language in the House-passed economic recovery package (HR 1):

From the Wonk Room.

On Wednesday, the Senate Appropriations Committee voted to increase “clean energy” loan guarantees by $50 billion in the economic recovery package (S. 336). This sum “would more than double the current loan guarantee cap of $38 billion” for “clean energy” technology:

TITLE 17—INNOVATIVE TECHNOLOGY LOAN GUARANTEE PROGRAM

The Committee also recommends an additional $50,000,000,000 to support the deployment of eligible technologies under the Section 1702(b)(2) of EPACT 2005 that will contribute to transforming the energy sector. This funding will add to the existing loan guarantee authority provided in other appropriations bills to support self-financed loan guarantees. The Committee is aware of the strong interest in the program and the large number of pending applications.

In contrast, the committee allocated only $9.5 billion exclusively for “standard renewable energy projects.” Although the loan guarantee program covers nuclear technology, carbon capture and sequestration for coal plants, coal-to-liquids projects, and renewable energy, the vast bulk of requested loans – $122 billion – are for new nuclear power plants. This $50 billion nuclear line item nearly matches the total allocation for genuinely clean energy in the House version of the stimulus package: only $52 billion in total for smart grid, renewable energy, and energy efficiency investments.

Unlike renewable energy and energy efficiency technology, investments in the nuclear industry generate few jobs or economic growth. The nuclear industry has developed through massive federal subsidization from research to deployment over decades. Such a massive expenditure of nuclear pork has no place in the economic recovery bill, according Brent Blackwelder of Friends of the Earth, who discovered the expenditure. Blackwelder called the appropriations “unconscionable”:

Now is not the time for another bailout boondoggle. Nuclear power is the most expensive form of energy there is. It takes 10 years or more to build a reactor, so it is impossible to claim with a straight face that this preemptive bailout has anything to do with creating jobs. Senate appropriators’ decision to include such wasteful spending in the stimulus is an example of Washington at its worst.

Today, Secretary of State Hillary Clinton announced that Todd Stern will be the special envoy for climate change:

With the appointment today of a special envoy, we are sending an unequivocal message that the United States will be energetic, focused, strategic and serious about addressing global climate change and the corollary issue of clean energy.

Stern was a senior fellow at the Center for American Progress, the liberal think tank run by John Podesta, the chair of the Obama transition. Stern was a partner at Wilmer Cutler Pickering Hale and Dorr, as Vice Chair of the firm’s Public Policy and Strategy practice. Stern wrote on international climate change policy for CAP, promoting the creation of the E-8, a coalition of nations “focused on global ecological and resource problems” – (United States, China, India, Russia, South Africa, Brazil, Japan, and the European Union).

Stern was Assistant to the President and Staff Secretary in the White House from 1993 to 1998. He also coordinated the Administration’s Initiative on Global Climate Change from 1997 to 1999, acting as the senior White House negotiator at the Kyoto and Buenos Aires negotiations.

Carbon Control News reports that Georgetown Law professor Lisa Heinzerling will be joining the Environmental Protection Agency “to advise incoming Administrator Lisa Jackson on how to address climate change.” As Bradford Plumer notes at The New Republic, Heinzerling “was the lead author of the plaintiff’s brief in Massachusetts v. EPA back in 2007, in which the Supreme Court agreed with the plaintiffs that the EPA did, in fact, have the authority to regulate carbon-dioxide.”

Although the administration has not confirmed the appointment, Gristmill’s Kate Sheppard reports that Heinzerling’s voicemail recording at Georgetown says she is on a two-year leave from the school because she has “taken a position in the new administration.”

Hill Heat has learned that NRDC legislative director Karen Wayland will return to Congress as a climate and energy policy adviser for Speaker Nancy Pelosi (D-Calif.). Dr. Wayland holds a dual Ph.D. in geology and resource development from Michigan State University.

From 2001 to 2003, Dr. Wayland served as the American Geophysical Union Congressional Science Fellow for Sen. Harry Reid (D-Nev.), working on nuclear waste, water, energy and Native American issues, immediately upon completion of her doctoral dissertation.

From the Wonk Room.

Today, President Obama took a step to reverse Bush-era intransigence on the fight against global warming, directing “federal regulators on Monday to move swiftly on an application by California and 13 other states to set strict limits on greenhouse gases from cars and trucks.” In 2002, California passed greenhouse gas standards for vehicle emissions, since adopted by 13 other states. However, they have been blocked since then by litigation from the automakers in concert with the Bush administration.

The auto lobby continues to fight this long-needed change. In an interview with National Public Radio, Charles Territo of the Alliance of Automobile Manufacturers claimed the California standard would bring catastrophe:

At this difficult time, what we need is certainty and consistency, not confusion and chaos. And I think we’re all concerned that this would create chaos, not only for consumers, but also for dealers and for manufacturers.

The auto industry has long been able to handle California’s higher emissions standards for other pollutants. Jerry Brown, California’s attorney general, retorted that Detroit’s problems have come in large part because of its failure to innovate:

The irony here is the auto companies want a bailout, in many ways because they weren’t building the kind of cars that were compatible with today’s energy market – and at the same time, they want to keep going with their lawsuits, which have already cost millions and millions of dollars.

These auto industry lawsuits against the adoption of AB 1493 include:

The New York Times (John Broder and Peter Baker) and Washington Post (Juliet Eilperin and Steven Mufson) report that President Obama “plans to instruct key federal agencies to reexamine two policies that could force automakers to produce more fuel-efficient cars that yield fewer greenhouse gas emissions” Monday morning.

Obama’s main directives relate to California’s petition for an Environmental Protection Agency waiver to regulate tailpipe greenhouse gas emissions, as well as the 2007 Energy Policy Act’s raised fuel economy standards. Under Bush, the EPA denied the California waiver and the Department of Transportation failed to issue the standards called for under the energy act.

In addition, the president will direct federal agencies to take steps to increase efficiency and reduce pollution.

From the Times:

Mr. Obama’s presidential memorandum will order the Environmental Protection Agency to reconsider the Bush administration’s past rejection of the California application. While it stops short of flatly ordering the Bush decision reversed, the agency’s regulators are now widely expected to do so after completing a formal review process. . . .

Beyond acting on the California emissions law, officials said, Mr. Obama will direct the Transportation Department to quickly finalize interim nationwide regulations requiring the automobile industry to increase fuel efficiency standards to comply with a 2007 law, rules that the Bush administration decided at the last minute not to issue.

To avoid losing another year, Mr. Obama will order temporary regulations to be completed by March so automakers have enough time to retool for vehicles sold in 2011. Final standards for later years will be determined by a separate process that under Mr. Obama’s order must take into consideration legal, scientific and technological factors.

He will also order federal departments and agencies to find new ways to save energy and be more environmentally friendly. And he will highlight the elements in his $825 billion economic stimulus plan intended to create jobs around renewable energy.

Carl Pope, the 16-year executive director of the Sierra Club, has announced he plans to step down from his position when a new director is found. Pope noted the election of President Obama as “a very exciting time for the Sierra Club and the environmental movement.”

Pope released the following statement:

After 16 years I have decided to step down from my position as Executive Director of the Sierra Club. While I look forward to continuing to serve the Club in a new capacity, I am ready to turn the leadership of the organization over to someone new. Over these years I have made many wonderful friends, and experienced both joyful victories and tragic setbacks in our struggle for a sustainable future. I look forward to many more such victories as I continue this work. My decision comes at a very exciting time for the Sierra Club and the environmental movement. The election of President Barack Obama, and the increase in the number of environmental champions in the Congress, means that after eight years of bitter defense, it is time for America to resume its tradition of environmental leadership.

Wishing to meet with President Obama’s White House energy and environment adviser Carol Browner, Sen. John Barrasso (R-Wyo.) has delayed the nomination of Lisa Jackson to be Obama’s Environmental Protection Agency administrator. He placed an anonymous objection to the unanimous consent resolution to move the nomination without a roll call vote on Tuesday, and raised his concerns with Sen. Barbara Boxer (D-Cal.), chair of the Senate Committee on Environment and Public Works, on Wednesday.

Barrasso spokesman Gregory Keeley tells E&E News:

The bottom line is Senator Barrasso is concerned about this new structure with an appointed energy czar in the White House with no accountability in the White House. Just about how that will operate. He wants to know that. He wants to ensure sufficient transparency and oversight. He wants to be convinced Congress will have the ability to get answers from the appointed czar, Carol Browner. At this stage, he’s not convinced that’s the case.

Yesterday, Browner participated in President Obama’s economic briefing, with National Economic Director Lawrence Summers, Office of Management and Budget Director Peter Orszag and White House Policy Council Director Melody Barnes.

Granta Nakayama, a Bush administration appointee, is the interim EPA administrator. According to E&E News, Nakayama “has been a noncontroversial figure since joining EPA as its top enforcement official in July 2005.”

UPDATE: E&E News reports that Granta Nakayama has resigned, with Mike Shapiro replacing him as interim EPA administrator.

Shapiro, 60, has previously been a senior official in the Office of Water, director of EPA’s Office of Solid Waste, and deputy assistant administrator in EPA’s Office of Air and Radiation, where he helped implement the 1990 Clean Air Act amendments. He also has held positions in EPA’s Office of Prevention, Pesticides and Toxic Substances.

From the Wonk Room.

Today, in the first hearing of the House Energy and Commerce Committee under the leadership of Rep. Henry Waxman (D-CA), a coalition of corporations and environmental organizations renewed their call for an industry-friendly cap and trade system. The U.S. Climate Action Partnership made a tremendous splash two years ago by coming out in favor of a cap-and-trade system to limit greenhouse gases. Though their recommendations overly benefited polluting industries, USCAP’s call for mandatory action changed the political tide in Washington. They deserve credit for moving past conservative rhetoric that denies the need to act, and for stating that “action by the U.S. should not be contingent on simultaneous action by other countries,” a common excuse for delay.

But climate change science and politics have moved on in the past two years, and USCAP has lost its mantle of leadership. Their proposal fails to satisfy the scientific, economic, and societal principles that must underlie any “framework for legislation to address climate change”:

EMISSIONS TARGETS. USCAP’s recommended emissions limits are insufficient to prevent catastrophic climate change. They call for U.S. emissions to be reduced by at most 7 percent below 1990 levels by 2020. However, as Center for American Progress fellow Joseph Romm indicated in a recent report, “A U.S. climate bill should set a target of reducing U.S. greenhouse gas emissions 20 to 30 percent below 1990 levels by 2020.” Furthermore, USCAP calls for “generous limits on the use of offsets” of two to three billion tons of CO2 a year, which means actual emissions wouldn’t have to begin reducing until 2030.

MONEY. USCAP calls for provisions to prevent emissions permits from exceeding a “threshold price” and for “a significant portion of free allowances should be initially distributed to capped entities and economic sectors.” In other words, polluters should be protected from paying the cost of compliance with the already fatally weakened cap. This will lead to windfall profits for polluters at the expense of consumers. President-elect Barack Obama and other progressive leaders have joined the Center for American Progress in calling for full auction of emissions permits to fund public investments and protect low-income consumers from economic hardship.

USCAP members include major global warming polluters in multiple industries—chemical (Dow, DuPont, Johnson & Johnson), oil and gas (Rio Tinto, Shell, BP America), manufacturing (Alcoa, Caterpillar, Siemens, GE, Boston Scientific), automotive (Ford Motor, GM, Chrysler, Deere), and utilities (Duke, PG&E, Exelon, FPL, PNM), as well as the financial services industry that would administer a cap-and-trade system (AIG, Marsh, Xerox).

The environmental organizations in the partnership are the Natural Resources Defense Council, the Environmental Defense Fund, the World Resources Institute, the Pew Center for Climate Change, and the Nature Conservancy. However, the National Wildlife Federation has left the partnership, saying that it instead will work to “enact a cap-and-invest bill that measures up to what scientists say is needed and makes bold investments in a clean energy economy.”

Responses below:

E&E News reports that Harlan Watson, Bush’s Special Envoy to the United Nations Framework Convention on Climate Change at the U.S. Department of State, will join the minority staff of the House Select Committee on Energy Independence and Global Warming. As the lead negotiator for the United States, Watson opposed U.S. involvement in emissions reductions. Watson will become a “distinguished professional staff member” for Rep. James Sensenbrenner of Wisconsin, the ranking minority member of Rep. Ed Markey’s (D-MA) non-legislative committee.

In other staff moves: Sources tell Hill Heat that Andrew Wheeler, the Republican staff director for the Senate Committee on Environment and Public Works, is leaving Sen. James Inhofe’s (R-OK) employ.