Hill Heat

From the Wonk Room.

At the Big Tent in Denver, Center for American Progress President and CEO John Podesta, Sierra Club executive director Carl Pope, and oil billionaire T. Boone Pickens engaged in a discussion about our energy future. Pickens, who believes that our global oil production is at its peak and will soon inexorably decline, discussed his “Pickens Plan” for a massive increase in wind and solar electricity production and a shift for trucking fleets from diesel to natural gas. Podesta noted that the climate crisis is evident today, in the flooding in Florida and the increasing threat of powerful hurricanes. “The cost of doing nothing,” Podesta said, “is extremely substantial.”

This panel of three highly powerful individuals from the environmental, progressive, and conservative energy industry communities represented a remarkable confluence of priorities, in recognizing the energy crisis and the need to get off oil. As Carl Pope described:

If our politics was even vaguely functional, anything that all three of us agree on would have happened long ago. We have some very deep profound political problems. Our politics are broken.

Pickens himself, a highly influential fundraiser for right-wing politicians, described how his money has gotten him access in Washington but that he had learned that his contributions don’t translate to policy. He expressed his enthusiasm for the ability of the Pickens Plan campaign to reach millions on the Internet and mobilize hundreds of thousands of people. He argued, “I’m not doing this to make money. My entire estate will go to charity when I go. We are now importing almost 70 percent of our oil. It’s too much. We’re not talking about my generation—we can make it to the finish line.”

Pope explained what Newt Gingrich and other conservatives are really trying to do with their drill-drill-drill agenda, when they know that lifting the offshore drilling moratorium won’t deliver new oil to this country.

What is it about? It’s about distracting us from the conversation we ought to be having. As long as we’re talking about drill drill drill, it distracts Americans from the fact there’s a chasm between the two candidates. It’s a huge headfake by Karl Rove.

At the end of the conversation, Podesta and Pickens talked about their political differences. Pickens – who helped sponsor the Big Tent – admitted he is inclined to defend oil companies, who work for their shareholders and are run by his friends. When challenged by Podesta for having given significant contributions to “the gang on Capitol Hill who have been blocking the renewable production tax credit,” Pickens, with resignation apparent in his face, said, “I grind on them . . . I don’t have the time.” He argued that he is now trying to act on behalf of the American people, to avoid being partisan, to move past the old politics—the politics that he has spent millions to sustain.

Originally posted at the Think Progress Wonk Room.

In October of last year, the administration of Kansas Gov. Kathleen Sebelius (D) denied permits for two new coal-fired plants in her state because the greenhouse gases such coal plants would emit constitute a threat to the environment and public health. Last Friday, she vetoed a legislative attempt to allow the plants to be built. Opponents of the veto claimed “the decision is costing the state jobs and economic investment” and warned of “higher electric bills for Western Kansas,” where the plants were proposed.

But a landmark report released yesterday by an esteemed financial research firm finds that, in fact, Sebelius has been acting in her state’s best economic interests.

Innovest Strategic Value Advisors finds that Sunflower Electric Power Corporation, the company whose proposal was denied, failed to account for the effects of the likely regulation of carbon dioxide on the cost of coal-fired electricity when it sought to build two 700 MW coal plants in Holcomb, Kansas:

Innovest examined the economics of the transaction and determined that under the most plausible regulatory scenarios the decision to build new coal generating capacity will put Sunflower Electric’s ratepayers – who in this particular case are the actual owners – at significant risk. The report concludes that Sunflower’s management has not adequately addressed the competitive and financial risks associated with climate change in deciding to pursue the expansion of its Holcomb Station power plant.

Sunflower was remiss in not considering that federal legislation that places a price on carbon emissions is extremely likely, considering the bipartisan support and strong international pressure for such action.

The report compares the economics of coal plants versus natural gas plants, which have a considerably smaller carbon footprint, and concludes:

In general, this analysis demonstrate that gas is the more financially sound choice for the construction of baseload generating capacity in all scenarios except 100% free allocation [to power companies] of carbon allowances.

It is thus unsurprising that the coal lobby attacked the natural gas industry when the decision was made.

The report also notes that western Kansas has “among the nation’s most abundant wind resources” and that the cost of wind power has plummeted 80% in the last 20 years.

Originally posted at the Think Progress Wonk Room.

Last October, the Kansas Department of Health denied air quality permits to a proposed coal plant expansion near Holcomb, KS, because of the danger greenhouse gas emissions pose to the climate.

Today, Sebelius issued a long-expected veto of the legislature’s plan to not only approve the plant but also strip the Department of Health of its regulatory capacity. From her veto statement:

This decision not only preserves Kansans’ health and upholds our moral obligation to be good stewards of this beautiful land, but will also enhance our prospects for strong and sustainable economic growth throughout our state. Instead of building two new coal plants, which would produce 11 million new tons of carbon dioxide each year, I support pursuing other, more promising energy and economic development alternatives.

Industry opposition to the Sebelius administration has been intense. Following the air permit denial, Peabody Energy, one of the largest coal companies in the world, funded newspaper ads attacking the natural gas industry. Sunflower Electric Power Corporation, the rate-payer-owned company making the bid for the new plants – offered a quid pro quo to Kansas State University, promising millions of dollars to fund energy research if the coal plants were approved.

Representatives of the coal, oil, and gas lobby met yesterday at the United States Energy Association’s “State of the Energy Industry” conference at the National Press Club in Washington. They agreed that Lieberman-Warner may be the best legislation they can hope for, especially if issues like polar bear habitat set the standard for legislation.

Katherine Ling reports for E&E Daily that David Parker, president and CEO of the American Gas Association, said “Who would you rather have writing a bill in the Senate? I might guess it may set a tone for business to fully work with the Senate this year.” He continued that “the polar bear habitat is going to really drive this [climate change] debate. We all have a big education job to do and I think we need to do it collectively.”

Bill Scher has further commentary at Blog for Our Future.

In response to the Kansas state’s decision to deny permits for two new Sunflower Electric coal plants, a group funded by Sunflower Electric placed a newspaper ad arguing that

without new, next-generation coal-fueled plants, Kansans will be captive to high-priced natural gas, allowing hostile foreign countries to control the energy policy of Kansas and America. We are already held hostage to some of these same countries for oil.

The text of the ad runs below full-color photographs of Vladimir Putin, Hugo Chavez, and Mahmoud Ahmadinejad.

The Natural Gas Supply Association and Kansas Gas Service have not yet responded.

From CQ:

After negotiations with key Republicans, Senate Majority Leader Harry Reid said Friday he was prepared to seek a conference with the House on energy policy legislation.

“The Speaker wants to go to conference. I want to go to conference,” Reid, D-Nev., said on the floor Friday. “We know we can’t do a bill unless we include the Republicans in it.”

The unanimous consent to move to conference was blocked on a procedural basis by John Cornyn, R-Texas, Friday afternoon because many senators were traveling, but no objections were expected this week.

That said, the battle over CAFE standards remains strong, with the auto industry lobbying hard for the weaker Hill-Terry language (HR 2927). Last week GM Chairman and CEO Rick Wagoner met with Al Hubbard, director of the National Economic Council, Nicole Nason, the administrator of the National Highway Traffic Safety Administration, and EPA officials, and Ford CEO Alan Mulally is expected in DC this week.

Meanwhile, the natural gas industry is calling for expanded drilling:

The American Petroleum Institute, Independent Petroleum Association of America, and seven other trade associations representing natural gas producers, pipelines, and consumers jointly expressed strong concern Oct. 19 about US House energy legislation that they believe would reduce instead of increase domestic gas supplies. . . . The 2005 Energy Policy Act contains several provisions to encourage production in frontier areas, including ultradeep water, ultradeep gas, and offshore Alaska, which HR 3221 seeks to repeal, they said.

The Natural Gas Council will hold a news conference to discuss a new study that projects the impact of proposed greenhouse gas reduction policies on future natural gas demand and energy markets.

Contact: Jeff Eshelman at 202-857-4722

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