Fossil Fuel Politics

 

 

How the New Congress Might Change the Mix

The 108th Congress will very likely resurrect the comprehensive energy and environmental legislation introduced in the 107th Congress, again raising questions about the effectiveness of market intervention in the area of electric generation.

The comprehensive energy proposals that passed the House (H.R. 4) and Senate (S. 517) in the 107th Congress-both of which contained proposals to extend the alternative fuels production tax credit; ¹ reauthorize the Price-Anderson Act; expand the renewable energy production tax credit to additional fuels; ² and create new tax credits for deploying clean coal technologies, ³ combined heat and power systems, ⁴ and fuel cells ⁵-will serve as starting points in the new Congress, but with Republican majorities in both chambers, the new energy legislation will likely lean toward the House-passed bill from the last Congress.

The House energy bill focused more extensively on the exploration and production of fossil fuels, especially oil and natural gas, than did its Senate counterpart. Of the $35.4 billion of tax incentives proposed over 10 years in the House bill, $17 billion were estimated to benefit fossil fuels. ⁶

The Senate energy bill-which emerged from a Democrat-controlled chamber, making it unlikely to be picked up by the new Congress-would have authorized energy tax incentives of $15.2 billion over the next 10 years. ⁷ The bill also contained unique provisions establishing a federal renewable portfolio standard, granting loan guarantees for an Alaskan natural gas pipeline and addressing global climate change.

Other Federal Initiatives

Other federal legislative and administrative initiatives could affect fuel choices for electric generators in the coming years, including global climate-change policy, multi-pollutant legislation, and the Federal Energy Regulatory Commission's (FERC's) standard market design (SMD) proposal.

Among these, global climate change is the "elephant in the room." While the Bush administration has rejected the Kyoto Protocol, it would be unrealistic to believe that electric generation will not eventually be affected by a greenhouse gas emissions initiative, likely modeled on the SO ₂ trading program under the acid rain provisions of the Clean Air Act.

The multi-pollutant bills introduced in the 107th Congress set the stage and defined the parameters of what is likely to be a more active debate in the 108th Congress. The Clean Air Planning Act of 2002, ⁸ introduced by Sen. Thomas Carper, D-Del., and the Clean Power Act of 2001, ⁹ introduced by Sen. James Jeffords, I-Vt., proposed four pollutant schemes that would have regulated CO ₂ emissions and required additional NO _X, SO ₂, and mercury emissions reductions beyond those required by current law. The Jeffords bill was more stringent than the Carper bill, as it would have required earlier compliance and greater levels of emissions reductions.

The Bush administration's alternative, the Clear Skies initiative, was unveiled in early 2002 and later introduced as legislation. ¹⁰ The initiative sought additional reductions in NO _X, SO ₂, and mercury emissions by 2010 and 2018, and also sought to amend the New Source Review program under the Clean Air Act.