Given that cap-and-trade is dead–yes, dead, dead, dead–what’s next for energy and climate policy in Washington?
Perhaps more than you might think, even though the incoming Congress will likely be more conservative that the outgoing crew.
So, at least, argued some of the Beltway insiders and business executives brought together today at the Atlantic Green Intelligence Forum (streaming live on Oct 26-27). They agreed that comprehensive climate and energy legislation is off the table for at least a couple of years, and likely even longer. The political debate, instead, will evolve around such smaller-scale but significant ideas as renewable energy standards, investment in nuclear power and “clean coal,” and energy efficiency rules, all of which enjoy bipartisan support.
“It’s remarkable, the level of support, for a return to nuclear power,” says James Connaughton, an executive vice president at Constellation Energy. “If you focus, sector by sector, there’s a lot of opportunity for bipartisan agreement. But we have to dedicate ourselves to that.”
Jason Grumet, president of the Bipartisan Policy Center, said a reframing of the current renewable energy standards as a national “clean energy standard” could become a political winner. So-called clean energy standards would provide incentives for nuclear power and natural gas, as well as solar and wind projects that are favored by today’s renewable energy standards.
Still another area to watch is EPA’s pending regulation of toxic pollutants emitted by coal plants. Grumet said: “This is kids and mercury and acid gases. What’s the chance that a majority of Congress will preempt EPA’s ability to protect kids from acid gases? Slim. And there will be carbon benefits.,”
The trouble is, without consistent and long-term energy and climate policy, the capital needed to finance clean energy on a mass scale will likely remain on the sidelines.
The current low prices of natural gas also make it harder to justify investment in cleaner but more expensive energy sources such as solar, wind and nuclear.
“With gas at its current prices, it’s very hard to justify the economics” of nuclear, said Jeffrey Holzschuh, chairman of the Morgan Stanley Global Power and Utility Group.
The same goes for renewable projects, he said: “I do think we will see a material decline in capital put to work in the space…It’s a very difficult environment for a board of directors or a management team, to try to figure out the right answers for shareholders.”
Connaughton, of Constellation, agreed: “You make minimalist decisions. You make conservative choices. What you’re going to see is a lot of small ball.”
Nuclear power, in particular, will languish in a policy vacuum because of the huge capital bets required to build new plants. Constellation has, at least for now, dropped its plans to build a new plant in Maryland because, it says, the cost of obtaining a federal loan guarantee is too high.
As Daniel Weiss, director of climate strategy for the Center for American Progress, put it: “Financing, in my view, is going to be the biggest impediment to advancing any of these technology, particularly nuclear.”
The fact is, it’s difficult for anyone to know what’s going to happen in Washington after next week’s elections. Few of the signs look good. As Ronald Brownstein of the National Journal, has written:
..it is difficult to identify another major political party in any democracy as thoroughly dismissive of climate science as is the GOP here.
It’s no wonder that Eileen Claussen, president of the Pew Center on Global Climate Change, says: “I don’t see Congress doing very much that’s constructive in the next two years.”
Grumet recalled that for a year after the 1994 election, when Republicans captured the House and fiercely opposed President Clinton, not much got done. But by 1996, Clinton and the Gingrich-led Congress worked together on tax reform and welfare reform.
“A divided government, sometimes, actually works pretty well,” he said.
“The alternative is that it’s just a friggin’ food fight. And that’s possible, too.”