Jay Tannon and Catherine Campbell, DLA Piper LLP
February 09, 2009 | 20 Comments
Changing the direction of the country's energy policy is central to the agenda of the nation's 44th President, and supporting renewable energy development and deployment lies at the heart of President Obama's plan. Most notably, President Obama has called on Congress to pass legislation that would invest US $150 billion in a "clean energy economy" over 10 years potentially creating as many as 5 million green jobs.
Given severe economic conditions, some have expressed concern over the President's ability to deliver on his pledge to promote renewable energy. However, a suite of renewable energy policies will be integral to an aggressive economic stimulus package designed simultaneously to revive the American economy and accelerate the country's transition to cleaner energy. Beyond the stimulus package, President Obama will take further steps to advance a clean energy agenda.
For companies that have experience in renewable energy and those new to the field, the Obama Administration's plan presents promising opportunities for growth.
Form and Substance: What Will the Obama renewable Energy Plan Contain?
President Obama introduced his ambitious renewable energy plan in a speech on January 8th, in which he articulated the details of his economic recovery and reinvestment package. The Obama plan would double the production of renewable energy in the United States within three years and establish a national goal of 25% renewable energy power generation by 2025. While Congress has expressed reservations over the details of the President's proposal, the groundwork has been laid for a dramatic shift in the country's energy portfolio. The President's key energy goals include the following elements:
Invest immediately and substantially in renewable energy so as to double renewable energy power generation in the next three years.
Increase the country's energy efficiency by modernizing greater than 75% of federal buildings and improving the energy efficiency of two million American homes.
Create five million green jobs and invest $150 billion in a "clean energy economy" over 10 years, including the investment in advanced biofuels and plug-in hybrids, development of commercial-scale renewable energy (e.g., solar and wind power) and construction of low-emission coal plants.
Build a new electricity "smart grid," thereby saving money, protecting U.S. power sources and delivering clean, renewable forms of energy to all areas of the country.
Mandate an increase in the use of renewable energy by implementing a federal Renewable Portfolio Standard that requires 10% of the nation's electricity consumption to come from renewable energy sources by 2012, and 25% by 2025.
Reduce by 2020 the use of carbon fuels by 10% and require 60 billion gallons of advanced biofuels to be incorporated into the American fuel supply by 2030.
Develop and deploy clean coal technology through carbon capture and sequestration technologies and the development of clean coal technology.
Establish national building efficiency goals that include making all new buildings carbon neutral or zero-emissions by 2030 and improving the energy efficiency of both new and existing buildings in the next ten years.
At this writing, it is unclear which elements of President Obama's renewable energy agenda will be included as policy proposals in a an economic stimulus package, and which elements will be marked for later inclusion in separate energy or environment bills.
With respect to the stimulus legislation, President Obama and members of Congress are actively debating package details. The House Committee on Energy and Commerce recently approved the energy provisions of the House economic recovery package, including several energy efficiency and renewable energy components. The full House of Representatives has yet to vote on that legislation, and the Senate is still developing its approach to a stimulus plan.
Several Democratic Congressional leaders, including Senator Kent Conrad (D-ND) and Senator Ron Wyden (D-OR), have expressed concern that the President's plan does not sufficiently promote "clean energy" or renewable energy investments. Although details of the stimulus plan's energy provisions remain under negotiation, the package may ultimately include, among other policies: revolving loan funds for energy efficiency projects, extension of renewable energy tax credits, federally guaranteed loans to biofuels projects, and expanded tax benefits for purchases of plug-in hybrids and energy efficient retrofits in private homes. Given the breadth of Congressional negotiations, the legislation may not be ready for President Obama's signature until mid-to-late February.
President Obama's Energy and Environment Team
The energy and environment team that the President announced in mid-December reflects the incoming Administration's commitment to accelerating the country's transition to more renewable energy: Steven Chu as Secretary of Energy; Lisa Jackson as Environmental Protection Agency (EPA) Administrator; Nancy Sutley as Chair of the White House Council on Environmental Quality (CEQ); and Carol Browner as Assistant to the President for Energy and Climate Change.
In particular, Steven Chu is a strong proponent of "carbon-neutral" energy technology. For Mr. Chu, solving the nation's energy needs involves a two-step process: (1) "maximiz[ing] energy efficiency and decreas[ing] energy use;" and (2) "develop[ing] new sources of carbon-neutral technology." The carbon-neutral technology that Mr. Chu envisions includes photovoltaic cells, cellulosic ethanol from switchgrass and carbon storage and sequestration. Prior to his nomination, Mr. Chu called for tax and fiscal policies that will encourage investment in renewable energy. If confirmed, Mr. Chu will be responsible distributing $38.5 billion in loan guarantees for new nuclear and other power plants that would cut greenhouse gas emissions; researching renewable energy sources such as biofuels, solar power and energy efficiency; and implementing many of the Congressional programs contained in the economic stimulus package and energy legislation.
Finally, President Obama's creation of the new White House "Energy Czar" post signifies that the incoming Administration recognizes the complexity of the country's energy needs and is committed to achieving the goals articulated during the campaign and the transition. President Obama has appointed Carol Browner, the former EPA Administrator under President Clinton, to fill this new position. As the Assistant to the President for Energy and Climate Change, Ms. Browner will coordinate the Administration's energy and climate policy. In part because this is a new position, Ms. Browner faces a significant challenge in the coordination of several very independent federal agencies with different mandates.
Challenges notwithstanding, the announced plan and personnel of the new Administration suggest pushing for dramatic growth in renewable energy will be a cornerstone of the Obama presidency.
Jay Tannon is a partner in law firm DLA Piper's Corporate and Finance practice and concentrates his practice on international and domestic business acquisitions, direct investment projects and other strategic transactions. He counsels U.S., Canadian, Asian and European private equity funds and other businesses, both public and private, on acquisitions, joint ventures, direct investments, capital formation, and other commercial arrangements. Mr. Tannon has developed a focus on renewable energy. He is counsel to two private equity funds active in the sector and recently helped organize the US-India Renewable Energy Summit. He now serves on DLA's energy practice steering committee.
Catherine Campbell is an Associate in law firm DLA Piper's Regulatory and Government Affairs practice and works on a wide range of regulatory compliance obligations under the Clean Air Act and other federal environmental statutes and their state counterparts. Ms. Campbell previously worked in the Office of Policy, Economics and Innovation at the U.S. Environmental Protection Agency, where she collaborated with outside parties on regulatory and innovative initiatives relating to air emissions, among other areas.