Prospects Fading for U.S. Climate Legislation in 2010

With health care, the economy and the upcoming mid-term elections dominating the political agenda in Washington, most onlookers now believe that an energy bill will be broken up into smaller pieces in order to make progress on key issues this year.

“It looks less and less likely that Congress will pass a broad climate bill. Lawmakers are now talking about individual bills focused just on one issue,” says Chris Stimpson, Executive Campaigner for Solar Nation, a grassroots lobbying organization run by the American Solar Energy Society.

Much has changed since the beginning of 2009, when the clean energy community was banking on President Obama's election promises to swiftly pass a climate bill that would put a price on carbon and create strong national targets for renewable energy.

The prospects for such a program looked good last July when the Waxman-Markey bill passed the House of Representatives. That piece of legislation created a cap and trade program, a 20 percent renewable energy target by 2020, a program to upgrade the electric grid and stronger energy efficiency standards. Although the cap and trade portion was criticized by some as being too lenient on polluters, the bill was a major step for renewables: It would have finally provided the national target that the industry has been seeking for years.

But then the climate bill quickly stalled in the Senate, where lawmakers have been sidetracked by the contentious health care debate. A number of politicians, including Democratic Senators John Kerry and Barbara Boxer, have introduced their own pieces of legislation; however, it is unlikely that the Senate will vote on either bill until March of this year. House lawmakers are now urging Senators to act soon, as the bills will expire at the end of this year when the Congressional session ends.

Because this is a Congressional election year, the make-up of the House and Senate may be different when the new session begins. That could mean that Democrats — who have been much more supportive of climate and clean energy legislation — will have less power to pass a strong bill next year. And if members of Congress are worrying about getting re-elected, they may not give as much attention to climate and energy issues this year.

“[Congress] may not have the energy, ironically enough, to work on an energy bill,” says Stimpson. “If it doesn't happen by Memorial day, this being an election year, it's generally understood here [in Washington] that you can forget it — nothing else will happen until after the election.”

The chance that individual, renewable-energy specific programs will get passed is much more realistic, says Stimpson. Some analysts believe that Congress will individually support more manufacturing tax credits for renewable energy companies, a renewable energy standard and increased funding for an overhaul of the electric grid, rather than an overarching climate bill.

Many advocates who see renewables as only one part of a broader carbon-reduction strategy are disappointed by this approach. Assuming the political landscape in Washington will be different in the next session of Congress, they see 2010 as a “make-or-break” year for climate change legislation.

“To say that we'll pass some parts this year and save other parts for other years, I think risks dealing with the bargaining in Congress that needs to take place,” says Jim Rubens with the advocacy group Clean Energy Works. “If we can't get them in this year, they're just going to be tougher to get later.”

To make matters more complicated, there is increasing backlash in Washington against an economy-wide cap and trade program. Many Senators have proposed more straightforward carbon taxes or “cap and dividend” programs, which would tax carbon at the source and then send the money back to taxpayers in different ways.

Most observers believe that cap and trade will be the policy of choice, but they agree that the debate could be delayed further as concerns over a complex trading program are worked out.

“I do believe [cap and trade] is on the train right now. But I do think there's going to be lots of compromise and lots of horse trading. And you never know what's going to end up in the sausage until the votes are taken,” says Analyst Scott Sklar, president of the Washington, DC-based consulting firm Stella Group Ltd.

In the meantime, the Environmental Protection Agency is gearing up to start regulating greenhouse gases under the Clean Air Act. This top-down “command and control” approach, which is much less flexible than a trading program, has many in the energy business worried. The Obama administration is using this option as a way to get Congress moving on a climate bill this year. It doesn't appear to be working, however.

Even though the passage of a comprehensive climate bill is becoming less likely each day, analysts are still positive about the prospects for renewables in 2010. After all, the Obama administration has given more support for clean energy in the last year than had been given in the last decade, says Sklar.

Sklar points to last year's stimulus package, increased government spending on R&D and the billions of private dollars that have poured into the industry as tell-tale signs of how strong the industry is today — even if Congress doesn't pass a bill that advocates were hoping for.

“Sometimes you have to separate the climate issues and the renewables issues...They are both extremely important...but I sometimes have to pinch myself when I see where [the renewable energy industry] has come. It's on a trajectory that I don't think can be stopped.”