COLUMN-Murkowski's energy report shows scope for compromise: Kemp

Wed Feb 6, 2013 8:44am EST

(John Kemp is a Reuters market analyst. The views expressed are his own)

By John Kemp

LONDON Feb 6 (Reuters) - Abundant, affordable, clean, diverse and secure energy is in the U.S. national interest.

So finds a report on the future of the country's energy system published on Monday by Senator Lisa Murkowski, the highest-ranking Republican on the Senate Energy and Natural Resources Committee.

"Energy 20/20: A Vision for America's Energy Future" is a thoughtful attempt to discuss some of the energy choices and opportunities the United States will face by the end of the decade.

Murkowski's report starts from the premise "energy is good" and the consumption of energy is and will remain the basis for rising living standards. It is positive towards the development of fossil fuels like oil, gas and coal -- natural for a Republican from the hydrocarbon-producing state of Alaska.

Murkowski devotes only 31 pages out of 122 to fossil fuels. There are also intelligent sections dealing with renewables, nuclear, investment in gas and electricity transmission infrastructure, efficiency and links with water use as well as the need for regulatory reform (bit.ly/Energy2020Doc).

The report has been condemned by environmentalists. "Senator Murkowski's energy blueprint for the future reads more like a cut-and-paste job from the fossil fuel industry's playbook of the past," the Natural Resources Defense Council said in an emailed memo.

"It relies extensively on policies and incentives for increased oil and gas drilling, while ruling out many of the policy tools most likely to reduce carbon pollution and bring cleaner energy technologies into the market," according to NRDC. "We need a plan that moves us forward to the 21st century, not one that keeps us wedded to the past."

MANICHEAN STRUGGLE

NRDC's response was predictable. Extremists on both sides -- the climate deniers and drill-baby-drillers, as much as the windmills and woolly sweater lovers -- remain trapped in a Manichean world where only total victory over the other side will bring satisfaction.

Environmental groups continue to mount a ferocious last-ditch campaign to block construction of the Keystone XL pipeline for symbolic reasons out of all proportion to its practical impact.

On the other side, much of the oil and gas industry moved into outright opposition to President Barack Obama and the Democratic Party during the 2012 election cycle, and ended up jeopardising its remaining influence with the administration and Congress by backing the losers.

Energy has become one of the most polarising issues in American politics. And as usual extreme polarisation encourages partisans on both sides to reject any attempt at finding middle ground and compromise.

However, the impassioned rhetoric conceals an emerging consensus behind a mixed strategy that seeks to curb greenhouse-causing emissions while also boosting oil and gas production at home to ensure energy remains affordable and less exposed to international turmoil and is keen on new technologies like carbon capture and storage (CCS) and greater energy efficiency.

EMERGING COMPROMISE

Murkowski's energy blueprint is not so very different from the president's call for an "all of the above" approach in his 2012 state of the union address.

Murkowski is much friendlier towards fossil fuels and emphasises the need for clean energy to wean itself off subsidies but accepts that clean energy must play a significant role in future. Obama is far keener on wind, solar and geothermal but has acknowledged the continuing role of oil and gas, and positive transformation wrought by horizontal drilling and hydraulic fracturing.

The difference is arguably one of emphasis.

Partisans continue to highlight the differences. But lobbyists build lucrative careers on partisanship, stoking fear and offering legislative, regulatory and legal solutions to threats, both real and imagined. Look behind the rhetoric and a more complicated picture emerges, characterised by a surprising degree of consensus.

The reality is that the United States energy outlook has already been transformed in the last five years.

Consumption of liquid transport fuels has peaked and is expected to continue falling in the next decade. Crude imports are down and domestic petroleum production is up. Wind and solar power provide a significant proportion of the power used in homes, factories and offices. For the first time in decades, private companies are investing in long-distance transmission capacity for gas and electricity.

The changes are the result of a complex interaction between market forces (high oil prices, low gas prices), technology (fracking) and regulation (vehicle mileage standards, biofuels blending mandates, emissions regulations for industrial boilers and new power plants, as well as quotas for wind and solar generation) enacted by administrations and Congresses controlled by both parties.

SCOPE FOR AGREEMENT

Following the president's re-election, and the obvious disarray among his Republican opponents in the House of Representatives, there is tremendous pressure from environmentalists, who have been among his most steadfast supporters, and the rest of the liberal-left to take an uncompromising line on energy issues.

The president himself outlined an ambitious commitment to bold policies in his second inaugural address. Obama promised to respond to the "threat of climate change" and the "devastating impact of raging fires and crippling drought and more powerful storms" even if the "path towards sustainable energy sources will be long and sometimes difficult."

The president undertook to ensure the United States remains a leader in developing new sustainable energy technologies.

Having backed the losing candidate in the 2012 presidential election, and identified themselves strongly with the Republican Party, in what proved to be a strategic blunder, oil and gas producers cannot blame the president and the Democratic majority in the Senate if they do not show much consideration now. Politics is a rough game.

Ultras in his own party will urge the president to seize this moment to cement the transition from fossil fuels to clean energy with a raft of ambitious new regulations that burden oil, gas and coal industries to tilt the playing field in favour of zero-carbon technologies. Why compromise, they will say, if the other side is uninterested in reaching agreement.

But that would be a mistake. If the policymaking machinery in Washington is to be made to work and rescued from gridlock, both parties will have to show greater willingness to compromise on issues that matter to them (climate, taxes, energy, immigration, spending and entitlements). Zero compromise on energy issues will only encourage the president's opponents to block other parts of his agenda.

Murkowski's report shows there is room to strike some creative compromises on energy between the administration and at least some congressional Republicans.

The administration will not agree with all elements of the blueprint. Nonetheless it contains some useful ideas and deserves to be taken seriously as part of the wider conversation about America's energy future, not dismissed out of hand.

If the administration is serious about an "all of the above" energy policy, Obama's officials should grasp the opportunity offered by Murkowski's report to work with Congress, rather than against it. (Editing by Keiron Henderson)