May 13 news: Upton won’t rule out debt ceiling as vehicle to thwart climate rules; Environmental regulations may spur power market recovery
"May 13 news: Upton won’t rule out debt ceiling as vehicle to thwart climate rules; Environmental regulations may spur power market recovery"
House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) isn’t ruling out the prospect of using debt-ceiling legislation as a vehicle for provisions that would limit federal climate change rules.
“Those discussions are ongoing,” Upton said when asked whether energy and Environmental Protection Agency-related provisions could be in the mix in the looming debt-ceiling debate.
“There is no way a clean debt-ceiling [increase] would pass in the Congress,” Upton said. He spoke Thursday at a Capitol Hill forum on energy security hosted by The Hill and the American Association of Blacks in Energy.
Upton also used the event to discuss his upcoming legislative agenda in the committee, which includes bills to mandate new interagency study of the combined economic impacts of various EPA rules, and a bill to streamline air permitting for oil drilling projects off Alaska’s coast.
Upton’s bill to scuttle EPA’s power to regulate greenhouse-gas emissions passed the House in April with 19 Democrats joining Republicans.
Environmental Regulations May Spur Power Market Recovery [WSJ, subs. req'd]
New U.S. environmental regulations could prove far more expensive for power companies than the government projected, but the changes also may speed up a recovery for the whole industry.
The Obama administration proposed a rule in March to cut toxic air emissions by 91% at coal-fired power plants in 2015 as a way to improve the environment and reduce health-care costs. It could arguably be the most cumbersome of the upcoming environmental rules because companies may be required buy costly new equipment for plants or shut them down, industry executives have said.
Federal regulators are also expected to layer on other air and water restrictions next year.
Altogether, these rules are the “most demanding in the last decade” and could fuel a recovery in an oversupplied market, said UBS Investment Research analyst Julien Dumoulin-Smith. “This is the golden goose.”
Demand for electricity fell sharply with the housing crisis and economic downturn and is recovering slowly. Power producers have been reluctant to cut supply, even as electricity prices have fallen. The regulations would force the producers to close outdated plants, reducing supply and driving the cost of electricity higher.
In total, the new Environmental Protection Agency regulations could take 30 to 70 gigawatts off the market, which is 10% to 22% of the nation’s coal plants, power executives and analysts say.
The EPA estimated the toxic-air rule alone would cost the industry $11 billion and cause 3% of U.S. coal generation to go offline, yielding $140 billion in annual health-care savings by reducing Americans’ exposure to mercury and acid gases that contribute to heart disease and cancer.
Senate Democrats used a Thursday hearing to pit Big Oil against American consumers, the deficit, and even patriotism itself. And Republicans used it to paint Democrats as out of touch on energy policy and American competitiveness.
Top executives of America’s biggest multinational companies remained mostly stoical throughout the three-hour hearing. They tried to not sound like elitist corporate types reaping billions of dollars in profits amid a weak economy while simultaneously refusing to concede that their industry doesn’t need tax deductions that they say are vital to ensure they continue investing in America.
“Right now we have a huge deficit. And that budget deficit, even though we don’t like it, it says we should cut aid to students who need to go to college,” Sen. Charles Schumer, D-N.Y., told the oil executives. “And it boils down to priorities as we have to get the deficit to a certain level. Sitting in our shoes, Mr. Mulva, do you think that your subsidy is more important than the financial aid we give to students who go to college?”
Speaker John Boehner (R-Ohio) sought to clarify his stance on ending subsidies for oil companies, saying the change should be considered only as part of a broader effort to reduce the corporate tax rate.
The Speaker last month signaled he was open to eliminating certain oil tax breaks, but his office walked that statement back, and on Thursday he criticized a bill offered by Senate Democrats to scrap the subsidies and use the revenue for deficit reduction.
“We all know that going after oil companies is easy politics, but we also know that if this bill were to pass, it wouldn’t lower gas prices one penny,” Boehner said at his weekly news conference. “And I believe that as we get in to looking at the fundamental reform of the corporate tax code, this and every other issues ought to be considered.”
Oil companies save $4.4 billion every year through the industry’s tax breaks, according to an Associated Press report.
As motorists are paying nearly an average of $4 ($3.98) per gallon for self-service, unleaded regular gasoline, many find it alarming to see the oil industry bringing home about $200 billion in pretax profits this year.
The result? The Obama administration and Democrats in both chambers of Congress are once again calling to eliminate these tax breaks and put the money toward the national debt and perhaps clean-energy alternatives.
At the same time, oil executives and industry advocates, who are testifing in front of the Senate Finance Committee this morning, say doing so would be counterproductive.
Motorists are paying nearly $4 for a gallon of gasoline as the oil industry reaps pre-tax profits that could hit $200 billion this year.
This makes another big number hard to take: $4.4 billion. That’s how much the industry saves every year through special tax breaks intended to promote domestic drilling.
President Barack Obama is increasing pressure on Congress to eliminate these tax breaks “” including one that is nearly a century old “” at a time of record budget deficits. The President and congressional Democrats say eliminating the tax breaks will also lower gas prices by making alternative energy sources more competitive.
Oil industry advocates, a group that includes most Republicans in Congress, argue just the opposite. They say oil companies reinvest tax breaks into exploration and production, which ultimately generates more tax dollars and increases the supply of oil. They say eliminating tax breaks will raise the cost of doing business and lead to higher gas prices.
U.S. addiction to foreign oil subsidizes terrorism and is one of the greatest threats to the country’s economic wealth, financial magnate T. Boone Pickens said.
Pickens is advocating a clean-energy future through the expanded domestic use of renewable resources such as wind and solar power. He proposes natural gas, meanwhile, as an alternative fuel for the transportation sector.
He says based on the latest figures from the federal government, the United States imported 61 percent of its oil in April to the tune of $42.5 billion.
“April’s oil import numbers are the highest we have ever seen and the implications are disturbing. This is a national security threat of the highest order,” said Pickens. “Our addiction to OPEC oil is so severe that it constitutes the greatest transfer of wealth in history.”
Michael Bromwich, the Interior Department’s top offshore drilling regulator, is warning that a GOP-led bill to speed up Gulf of Mexico oil-and-gas lease sales is a recipe for a legal mess.
The House has passed a trio of bills over the last week aimed at speeding up offshore drilling permits, accelerating delayed Gulf of Mexico lease sales and opening big swaths of the Atlantic and Pacific coasts to drilling.
In an exclusive interview Thursday with The Hill, Bromwich “” who leads Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement “” had this to say about the bill that sets deadlines for Gulf sales:
“The one to accelerate lease sales … would be, I think, struck down by the courts because the [bill] mandates us to rely on pre-Deepwater Horizon NEPA,” he said in reference to National Environmental Policy Act analyses conducted before the BP oil spill.
California’s quest to create the world’s first clean energy economy was again under fire this week when the Sierra Club urged Gov. Jerry Brown to drastically alter key elements of the much criticized climate protection law.
The state’s largest environmental group urged the governor in a May 9 letter to re-evaluate and revise proposed “cap-and-trade” business incentives, particularly the rules that would allow companies to offset their pollution by purchasing credits from clean businesses outside the state and country.
“Curbing global warming will require a fundamental transformation of our energy economy, a task that cannot be outsourced to other countries,” wrote Bill Magavern, the director of Sierra Club California. “If polluters are allowed to outsource their emission reductions to other sectors and jurisdictions, the clean-energy revolution will be delayed.”
Republican lawmakers and state regulators blasted the Environmental Protection Agency’s plans to broadly study the controversial hydraulic fracturing process that is essential to unlocking natural gas from shale formations across the U.S.
Rep. Ralph Hall, R-Rockwall, the chairman of the House Science, Space and Technology Committee that was studying the issue today, questioned EPA’s objectivity in launching the probe.
“Its draft study plan is yet another example of this administration’s desire to stop domestic energy development through regulation,” Hall said. “The study intends to identify the potential impacts of hydraulic fracturing on drinking water without ever taking into consideration the probability that such an effect may occur.”
Jon Huntsman is backing away from his support for a cap-and-trade system for Western states that he once championed as Utah governor.
“It hasn’t worked,” the potential GOP presidential candidate told Time Magazine in his first extended interview since leaving his post as U.S. ambassador to China. “And our economy’s in a different place than five years ago.”
Until the economy recovers, Huntsman added, “this isn’t the moment” to implement it.
While in Salt Lake City, Huntsman took plenty of heat from Utah GOP lawmakers when he partnered with seven other Western states and four Canadian providences to form the Western Climate Initiative, which calls for a 15 percent greenhouse gas emissions reduction from 2005 levels by 2020.
On the final day of the legislative session Wednesday, Colorado’s conservation community praised state lawmakers for staving off a slew of bills aimed at turning back the clock on the Ritter administration’s “New Energy Economy” and also for passing a handful of bills that actually advance the state’s reputation as a leader in clean energy policies.
“This session has been a success for protecting Colorado jobs, Colorado air and water and Colorado public health and safety,” Elise Jones, executive director of the Colorado Environmental Coalition, said in a release.
“While some lawmakers pledged to move us backwards at the beginning of this session, the haze implementation plan approved this session is an historic step towards improving our air quality, and Colorado’s commitment to clean energy and conservation remains as strong as ever.”