Obama's Latest Energy Blueprint: Will Congress Go Along?

Thu Jan 26, 2012 4:30am EST

The president used his State of the Union address to set three energy goals. The challenge, though, will be navigating a bitterly divided Congress.

By Elizabeth McGowan, InsideClimate News

WASHINGTON—President Obama talked for one hour, four minutes and 15 seconds Tuesday night when he delivered his third State of the Union address. He devoted seven of those minutes to how Congress and his administration could and should press forward on energy and environmental issues.

Obama highlighted three issues as ready for immediate action: slashing oil subsidies, crafting a clean energy standard and requiring companies that drill on federal land to disclose the chemicals they pump underground.

Here, InsideClimate News summarizes where each of these topics stands today with Congress or the appropriate regulatory agency.

Oil Subsidies

"We've subsidized oil companies for a century. That's long enough. It's time to end the taxpayer giveaways to an industry that rarely has been more profitable, and doubledown on a clean energy industry that never has been more promising. Pass clean energy tax credits. Create these jobs."

Every budget President Obama has submitted to Congress since 2009 has called for chopping subsidies for oil and other fossil fuels in the neighborhood of $4 billion. Each time, it has gone nowhere. The response from the Senate and the House isn't expected to change after Obama presents his newest budget in early February. Once again, it will likely die on Capitol Hill.

Watchdogs from organizations that comb through budget numbers estimate that the fossil fuel subsidies tucked into various nooks and crannies of the federal government are upward of $12 billion annually. And cutting away what watchdog groups consider fat is an unappetizing thought for politicians who count on money from Big Oil as a meal ticket to re-election.

The anti-subsidy movement gained a bit of traction last spring. That's when Democratic Sen. Robert Menendez of New Jersey spearheaded an effort to slice subsidies that amount to about $2 billion each year for 10 years from the five largest and most profitable oil companies—BP, Exxon Mobil, Shell, Chevron and Conoco Phillips. That measure failed to advance through either chamber.  

During an election year, it's doubtful Republicans or Democrats in the House or Senate will have the stomach to put policy above politics. Meanwhile, it’s estimated that profits for the top five oil companies over the last decade added up to close to $1 trillion.

Clean Energy Standard

"We can also spur energy innovation with new incentives.  The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. But there's no reason why Congress shouldn't at least set a clean energy standard that creates a market for innovation.  So far, you haven't acted.  Well, tonight, I will.  I’m directing my administration to allow the development of clean energy on enough public land to power 3 million homes.  And I'm proud to announce that the Department of Defense, working with us, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history—with the Navy purchasing enough capacity to power a quarter of a million homes a year."

In early February, Democratic Sen. Jeff Bingaman of New Mexico will try to answer Obama's plea by unveiling a bill that defines a federal clean energy standard.

Capitol Hill insiders expect it to reflect what the president asked for in last year's State of the Union address—steering the United States toward producing 80 percent of its electricity from clean energy sources by 2035. The rub is in what qualifies as "clean" and which power companies should be required to participate. Should electric utilities operating with natural gas, nuclear energy or deploying carbon capture and sequestration technology for coal be rewarded in the same way as energy companies that have switched to solar, wind and other renewables?  

Legislatures in the District of Columbia and 30 states have passed their own varying versions of clean energy standards. For the most part, those laws have been successful in helping states reduce emissions of heat-trapping gases and determine which clean energies qualify in their geographical region.

But federal legislators have been less enthusiastic about adopting standards. Over the last decade, they've introduced at least a dozen iterations of bills calling for power companies to incrementally increase the amount of power they generate from traditional renewables such as solar and wind. But none has advanced much beyond the idea stage. Renewable energy standards fell out of favor more than a year ago when Republicans made it clear that the energy mix would have to be expanded to include natural gas, nuclear power, "cleaner coal" and other fuels.

A handful of legislators—including Republican Sens. Lindsey Graham of South Carolina and Richard Lugar of Indiana—have floated bills for clean energy standards that have gone nowhere.

Bingaman, chair of the Senate Energy and Natural Resources Committee, answered Obama's call last year by circulating a white paper that sought detailed proposals from think tanks and energy experts. The White House provided little input other than "get it done."

Boosters fear that the GOP is so allergic to the word "standard" these days that Bingaman’s own committee—made up of 12 Democrats and 10 Republicans—might not be able to agree on a viable bill. So far, Sen. Lisa Murkowski of Alaska, the ranking Republican on Bingaman’s committee, has been reluctant to support establishing a clean energy standard. Prospects in the House are much grimmer. House Republicans aren't expected to introduce a companion measure.

Hydraulic Fracturing

"And I'm requiring all companies that drill for gas on public lands to disclose the chemicals they use. Because America will develop this resource without putting the health and safety of our citizens at risk."

The Interior Department is expected to issue a draft rule targeting hydraulic fracturing sometime in the next several months. It would require companies that drill on federal lands to disclose the chemicals they use to extract natural gas from deep beneath the Earth’s surface.

Authorities at Interior started discussing the possibility of issuing such a rule about 18 months ago. Experts tracking the process say the new rule would take into account the fact that states such as Wyoming—with bountiful public lands—already enforce disclosure.

In addition, Interior's regulations could set standards for how well casings are designed and how water used in the "fracking" process is disposed of and treated.

 More Fracking Action

Though Obama referred only to hydraulic fracturing on public lands, the Interior Department isn't the only government agency active on the fracking front.

For instance, Democratic Reps. Maurice Hinchey of New York and Diana DeGette and Jared Polis, both of Colorado, have collaborated on the "FRAC Act." The Fracturing Responsibility and Awareness of Chemicals Act would give the Environmental Protection Agency jurisdiction over fracking under the Safe Drinking Water Act. Companies are now exempt from that regulation.

Backers of the bill say the public would benefit from its requirement that drilling companies disclose the chemicals they use for hydraulic fracturing. Democratic Sen. Bob Casey of Pennsylvania is leading a similar effort in the upper chamber.

The EPA is also preparing to weigh in on fracking. Congress has mandated that the agency study fracking's potential impact on drinking water sources. The EPA is also beginning to craft a regulation that would require the companies that manufacture the fracking fluids to disclose the chemicals they contain.

It's not clear at this point if those manufacturers would be granted any "trade secret" protection. It's also up in the air if EPA also will require disclosure of chemicals used in the drilling that takes place before the actual shale fracturing begins.

Can Washington Mend in Time to Act?

Some people have dismissed Obama's State of the Union speech as nothing more than an election-year appeal from a president on a soapbox. But results from a focus group of 50 swing voters who watched the speech on television Tuesday night indicate that Obama’s energy message was well received.

The mix of Republicans, Democrats and independents—outfitted with special dial meters that let them ring in their reactions as the president spoke—recorded strongly favorable reactions to his proposals to phase out oil subsidies and to compete with China and Germany on renewable energy, according to an interview in the Los Angeles Times. When Obama wrapped up his speech, the focus group also gave him high marks for trusting him with energy policy.

In fact, his proposal to invest more in wind and solar ranked almost as high as the group's reaction to the most popular part of his speech: the reference to Osama bin Laden's death. The latter clocked in with an average reading of 80 on a scale of zero to 100.

Those same poll participants seemed to accept Obama's assessment that the public believes nothing will be accomplished because "Washington is broken." They gave the president significantly lower scores for his likely ability to overcome gridlock.

Interestingly though, they gave Obama much higher marks when he tried to persuade Congress to end the partisan nastiness.

"None of this can happen unless we also lower the temperature in this town," Obama said. "We need to end the notion that the two parties must be locked in a perpetual campaign of mutual destruction; that politics is about clinging to rigid ideologies instead of building consensus around common-sense ideas."

See Also:  GOP's Keystone XL Gambit Leaves TransCanada, Other Oil Allies in the Lurch Signs of Life in Senate for Obama's 'Clean Energy Standard'