Energy Independence

Action on Solar Investment Tax Credit Delayed

The failure of the Senate to obtain cloture today on the Solar Investment Tax Credit, coming on the heels of the collapse of Climate Change legislation last Friday should send a wake up call to the environmental and clean technology communities that a new more forceful strategy is needed to make progress on climate change and energy independence.

At a moment when the US economy is suffering from the effects of a full blown oil shock, when the United States is fighting a hot war in the Middle East in part to protect access to oil in a volatile region and when much of the domestic news consists of extreme weather reports--from floods in the mid-west to school closings in the east due to dangerous temperatures though it is not yet summer--it is hard to fathom the lack of leadership on energy issues coming out of Washington.

On top of our other challenges, America is facing soaring electricity prices over the next 18 months as the prices of natural gas and even coal continue to rise and slack capacity evaporates.  Renewable energy such as solar is currently the only energy category whose cost is declining.  However, to bring the cost of renewables below that of legacy technologies, it is critical that solar be allowed to scale.

The delay in renewing the ITC has already caused American solar companies to lay off workers and postpone or cancel projects.  The Senate and House have both passed versions of the Solar ITC but as Rhone Resch of the SEIA has remarked, need to find a version that both can support.  In coming weeks, NDN will be releasing a paper on the solar industry and we are going to be working to create a policy environment supportive of this key piece of America's future.

Climate Change Legislation Fails Cloture Vote

Perhaps the arrival of a 100+ degree heat wave in New York where I am typing this post is a good moment to reflect on the defeat of climate change legislation yesterday.  There is no point in sugarcoating the result: sponsors could get only 48 Senators to vote for cloture and the fact that six indicated they would have voted in favor had they been in Washington is scant consolation. Nor was the debate particularly helpful.  By consuming an entire day in reading the bill, opponents largely blocked serious debate. 

Yet while the legislation did not advance yesterday, the devotion of almost a week of Senate floor time to consideration of climate change is nonetheless a milestone.  As I wrote in an earlier post, floor time served to draw out opposing arguments.  It has put opponents on the spot.  And the cause of climate change is seriously ahead of where it would have been had the bill not gone to the floor.

Next year, there will be a new President who supports climate change, probably a lot more Democratic Senators and a new era will have begun in Washington. Last week's debate thus accomplished something important.  It set the stage for serious consideration and hopefully passage of climate change legislation next year.

Another Oil Shock

How bad is a one day $11 dollar jump in oil prices? In concert with some bad job news from the government, enough to cause the Dow to drop 400 points, wiping out trillions of dollars in wealth. Friday's oil surge was the greatest in the history of the New York Mercantile Exchange.The next question is why did oil take this sudden leap?

Earlier this week, Fed Chairman Ben Bernanke took the unusual step of signaling the Fed's desire to staunch the dollar's decline. When the Central Bank in concert with Treasury starts talking up the dollar that's usually a good sign that it will rise as indeed it has. This would ordinarly suggest easing oil prices but instead we got the reverse.

Did supplies tighten enough to drive a one day 8% rise in the commodity's price? No, not literally. The immediate cause of the spike was a Morgan Stanely report by an analyst arguing that supplies are tight enough that oil prices may go up to $150. But normally one report does not drive a record spike. Indeed, there has never been a spike like that on Friday. The sharp jump may be evidence that computer trading by hedge funds is driving extreme volatility. But it clearly testifies to just how jittery the market is as demand in Asia soars and supplies stay pat. The fact is this sort of volatility is likely to continue.

Longer term, oil prices at this level threaten huge changes in our economy. At NDN we have begun thinking about the long term consequences of sky high oil. SUV sales are said to be down 30%, GM is threatening to put its Hummer brand on the block and home sales in the energy dependent southwestern exurbs have plummeted.

At prices like these, the old America is rapidly receding.

See You Next Year

After several days of no real substantive discussion of climate change on the Senate floor but a great deal of posturing by opponents, Senate Leader, Harry Reid has scheduled a vote this morning to cut off debate before Senators return to their states for the weekend. It is unlikely that supporters will get the 60 votes required to end debate but, for symbolic purposes, they are hoping to get at least 50. Among the disinformation advanced this week by opponents is the charge that climate change legislation would raise gas prices. Most climate change proposals including Lieberman Warner, by placing a cap on carbon emissions, would increase the price of power from dirty coal plants and goods from dirty factories. However, the caps are placed only on industrial facilities, not on consumers or on tailpie emissions so gas prices would increase nominally if at all.

While the debate covered little substance, it did serve the purpose of drawing out opposition arguments and highlighting key issues that must be addressed next year for the legislation to pass. In particular, the block of Senators from coal states, Democrats as well as Republicans not only from large producers such as as West Virginia and Kentucky but also from Ohio and even North Dakota will seek support for clean coal to ease the impact on their economies. This relief would mostly take the form of money for carbon sequestration technologies or economic assistance to coal regions to help with a transition towards cleaner, renewable power.

The other result of this year's floortime will be to get Senators on record regarding climate change. Polls show that people are ahead of legislators on the climate issue and those Senators who vote against the legislation may well hear about it in their districts.

Climate Change Shenanigans

If you're wondering what the Senate is doing on climate change, since taking up the bill earlier this week, the answer is not much thanks to the bill's opposition. Senator Mitch McConnell (R, Ky) arranged for the reading of the entire bill which continued through about 10PM last night. Meanwhile, Republicans have been running through their talking points on how the bill is not about saving our climate but about restributing wealth. Senator McCain, a supporter of climate change, has been conveniently absent during this charade since his views are in opposition to that of his party.

While this may seem to be all bad news, in fact getting Republicans on the record about climate change and, even drawing out reservations from Democrats such as Jay Rockefeller and Robert Byrd from the coal-rich state of West Virginia is the point of bringing it to the floor. For this or similar legislation designed to put a price on carbon to pass, it is critical that opposing arguments be flushed out so that they can be addressed either through arguments or changes to the bill. That's what this process is about.

Thus, while it may not make for good viewing on C-Span, debating climate change on the floor of the Senate is a necessary part of developing legislation as cross cutting with regard to the economy as this. Legislation this transformative with the ability to help build the new, clean post carbon economy and dismantle the old dirty one, can't be passed overnight. Still let's hope the debate gets a bit more substantive soon.

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