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Outlook: Is 2010 the Year for Climate Change/Energy Legislation?

Despite some optimistic talk in early 2009, Capital Hill lawmakers were never able to bring energy and climate change legislation to a final vote, and the bill -- or bills -- may not make it to the finish line again this year.

While Senate Majority Leader Harry Reid (D-NV) is ready to put the legislation up for debate this spring, no one is sure when a vote could come.

"We definitely know that health care remains front stage center," Bill Wicker, a spokesman for the Senate Energy and Natural Resources Committee, told NGI. "There's a jobs bill; there's a financial services sector reform bill; there's renewing the Patriot Act -- there's all kinds of legislation that remain in the pipeline ahead of an energy/climate bill. The latest thinking, in terms of a timeline, could shift. It could change, and no one's going to know that until the men and women with the election certificates come back to town."

Climate change legislation cleared the Senate Environment and Public Works Committee in early November, while the House passed a climate change measure in June (see NGI, Nov. 9, 2009; June 29, 2009).

While some senators have indicated that they'd like to see climate change and energy policy addressed in separate bills, "that is not the legislative approach" preferred by Reid, Wicker said.

"He would like to see the two bills bundled together as a single piece of legislation," Wicker said.

The natural gas industry may have been absent from the negotiating table when the House drafted its landmark climate change legislation, but it and its supporters have made a sustained effort to be heard since senators began crafting companion legislation last fall.

"We want to play a significant, specific and constructive role as our nation's policymakers look toward solutions -- from our environment to the economy," Tom Amontree, executive vice president of America's Natural Gas Alliance (ANGA), told NGI. "What we are experiencing today is a permanent shift...We need to take advantage of this opportunity for our economy, our environment and our energy security.

"It's an election year and much of what happens in Washington will be driven by that reality. It's pretty clear that jobs and the economy will be issue No. 1 at kitchen tables across America. And we have a good story to tell there."

ANGA, which was formed in early 2009 to "help define the new politics of natural gas," opposes the Waxman-Markey climate bill approved by the House last year, which it says would deliver "a huge cost" without any real impact on carbon (see NGI, Sept. 21, 2009; March 2, 2009). ANGA has instead promoted House and Senate legislation known as the New Alternative to Give Americans Solutions Act of 2009, or the Nat Gas Act (HB 1835, S 1408) (see NGI, Sept. 7, 2009; Aug. 31, 2009). The legislation would modify tax incentives to encourage the purchase of natural gas vehicles and construction of refueling infrastructure, encourage federal agencies to use alternative-fueled vehicles and provide grants to light and heavy-duty engine manufacturers for research and development of better natural gas engines.

The American Gas Association (AGA) has said it also expects to take a prominent seat as climate change legislation is debated (see NGI, Dec. 7, 2009). The association is preparing a "full court press" for the discussions, according to AGA Chairman Bob Skaggs.

"The devil will be in the details," said Skaggs, who is CEO of NiSource Inc. "We're looking at some very complex legislation and a lot will depend on how the legislation will turn out." In addition to addressing greenhouse gas (GHG) emissions and the industry's siting and permitting concerns, Skaggs said the legislation should include language opening offshore areas to energy development.

"We believe supply is ample, but we believe that there continues to be a need for thorough and thoughtful development of a diverse source of gas supplies. We certainly believe offshore is a part of that," Skaggs said.

Last month a blueprint for a climate change and energy bill that sponsors hope will gain the 60 votes necessary to pass the Senate this year was released by three lawmakers. The proposal is a broad outline that was sent to President Obama as he departed for the United Nations Framework Convention on Climate Change last month in Copenhagen, Denmark (see NGI, Dec. 14, 2009a).

Negotiations in Copenhagen produced a nonbinding agreement that could cost the United States and other developed countries $100 billion in coming years but, according to some critics, will do little to affect global climate change (see Daily GPI, Dec. 24, 2009). But Copenhagen's outcome might nudge some legislators towards support of more stringent emissions regulations, according to Aaron Severn, director of federal legislative affairs for the American Wind Energy Association (AWEA). "I think that prior to Copenhagen the expectations began to be ratcheted down," Severn told NGI. "I think there's a recognition that a greater signal needs to emerge from Congress in order to increase our bargaining power at future negotiations. If anything, it probably makes it clear that more needs to be done, and more quickly."

AWEA's top priority in any climate change/energy bill will be a strong renewable electricity standard and a cap-and-trade program, Severn said.

"There still seems to be an appetite to get things done...given that this is still a very important issue to the American people, we're in a good position to get at least some sort of comprehensive energy bill. I think the main question is how does it address greenhouse gas regulation and exactly how broad it will be, as opposed to if we'll have it at all. It's almost impossible to predict how things are going to shape up in this town, and there is a crowded schedule this year, but I think we're encouraged that we're still seeing a lot of accord from the administration and congressional leadership to get the energy bill done this year, and we're operating under the assumption that something will get done."

The Environmental Protection Agency (EPA) earlier this month proposed the strictest ever standards for ground-level ozone, which can form when emissions from power plants, industrial facilities, landfills and motor vehicles react to sunlight (see Power Market Today, Jan. 8). EPA's proposal came one month after the Obama administration formally declared that carbon dioxide and other GHG emissions pose a danger to the public's health and welfare, which laid the groundwork for EPA to more stringently regulate emissions from power plants, refineries, factories and vehicles -- even if Congress fails to enact climate change legislation (see NGI, Dec. 14, 2009b). Top House and Senate Republicans have said they will seek action on "disapproval resolutions" that are aimed at blocking EPA from regulating GHG emissions under the Clean Air Act.

The Senate is scheduled to reconvene on Tuesday (Jan. 19).

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