Published Jun 13 2009 by Energy Bulletin
Archived Jun 13 2009

United States - June 13

by Staff

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Marathon Man: Henry Waxman and the cap-and-trade bill

Charles Homans, Washington Monthly
Henry Waxman’s climate change bill won’t make it into law this year. That’s why he’s the right guy for the job.
... Waxman’s major accomplishments are often like this. His legislative campaigns unfold over spans of time beyond the patience of most lawmakers, and sometimes defy political gravity—in the 1980s, when anything smacking of Great Society liberalism was on the chopping block, Waxman managed to expand the Medicaid program twenty-four times. It is not unusual for him to spend a decade or longer advancing a single policy goal in tiny pieces, forging unusual alliances as he needs them, or simply outlasting his opponents. "It’s the Ho Chi Minh approach," a despairing Republican staffer on Waxman’s committee once told National Review. "If [victory’s] not in the first year, it’s in the fifth."

This year, at age sixty-nine, Waxman has the wind fully at his back for the first time since his early days in Congress a third of a century ago. In November, he won a secret-ballot election for the chairmanship of the House Energy and Commerce Committee, narrowly unseating Michigan Representative John Dingell, the eighty-two-year-old lion of the House who had held the post in every Democratic Congress since 1981.

... Because support from Republicans will be almost nonexistent, Waxman’s success will hinge even more than it did in 1990 on his ability to win over reluctant Democrats: House colleagues and senators from places like West Virginia and Michigan with regional concerns about things like utility bills and auto manufacturers—and, in many cases, a nervous eye on the 2010 elections. The fine print of Waxman’s legislation is intended to placate such worries. It is heavily influenced by the U.S. Climate Action Partnership, a coalition of environmental groups and corporations that in January put out a blueprint for climate change legislation, including a cap-and-trade framework. The plan’s signatories—who include not just the Natural Resources Defense Council but also Ford, Duke Energy, and the mining conglomerate Rio Tinto—are calculating that those who are on board early have the best chance of influencing the shape of laws to come.

The industrial players in USCAP wanted "some certainty as they start to make investments," Waxman says. "And I think that is going to be very, very helpful, when you look at what USCAP has done in preparing the way for a lot of industries who in the 1980s would’ve joined together to fight anything." Waxman has borrowed his negotiating tools from USCAP, leaving open the question of how exactly the emissions allowances will be allocated—how many will be auctioned off, and how many will be given away. The proposal would also include a system of emissions offsets, which would allow federal regulators to count carbon-absorbing resources like forests against the pollution limits.

While such flexibility is the greatest strength of Waxman’s plan, however, it’s also its greatest weakness. The bill’s wiggle room improves its chances of passing Waxman’s committee and later the Senate—but, if abused, could also gut the bill of its effectiveness. "The [draft] bill includes two billion tons of offsets, which is far too many," Greenpeace’s Steven Biel says. "You could meet the requirements under this cap with no emissions reductions at all for twenty years or more." There is also the cautionary tale of Europe, where a poorly conceived emissions-trading system did little to reduce actual emissions in its first several years while saddling industries with copious red tape.

Ultimately, the biggest obstacle to Waxman’s goals is the fact that climate change is exactly the kind of problem that Congress is least well calibrated to confront: a threat of existential scale but unclear contours, where all short-term incentives point in the wrong direction.
(May/June 2009)

FutureGen ‘Clean Coal’ Plant Gets Federal Backing

Daniel Whitten, Bloomberg
The stalled FutureGen “clean coal” project in Mattoon, Illinois, won the tentative backing of the Obama administration, setting the stage for engineers to begin designing a near zero-emission coal-fired power plant.

The U.S. Energy Department reached a provisional agreement for the government to provide $1.1 billion in funding, and industry sources to contribute as much as $600 million. The project must still clear cost and design reviews as well as fundraising goals before construction could start, according to a department statement today outlining a project timetable.

FutureGen, which could start construction as early as 2010, would create a coal-fired plant that would capture and bury its own carbon dioxide emissions, gases that have been blamed by scientists for global warming. The Bush administration, which crafted the idea as a flagship project for the clean use of coal for electricity, canceled it after costs exceeded estimates.
(12 June 2009)

Jon Wellinghoff, Obama’s energy futurist

Mark Clayton, Christian Science Monitor
The chairman of the Federal Energy Regulatory Commission is committed to renewable energy.
When giving his slide presentation on America’s new energy direction, Jon Wellinghoff sometimes sneaks in a picture of himself seated in a midnight blue, all-electric Tesla sports car.

It often wins a laugh, but makes a key point: The United States is accelerating in a new energy direction under President Obama’s newly appointed chairman of the Federal Energy Regulatory Commission (FERC). At the same time, FERC’s key role in the nation’s energy future is becoming more apparent.

Energy and climate legislation now pending in Congress would put in FERC’s hands a sweeping market-based cap-and-trade system intended to lower industrial greenhouse-gas emissions.

Besides its role granting permits for new offshore wind power, the agency is also overseeing planning for transmission lines that could one day link Dakota wind farms to East Coast cities, and solar power in the Southwest to the West Coast.

... Mr. Wellinghoff and three fellow commissioners share an affinity for efficiency and renewable energy that’s not just skin-deep, Mr. Cavanagh and others say.

Wellinghoff started his energy career as a consumer advocate for utility customers in Nevada before being appointed by President Bush in 2005 as a FERC commissioner. He was a key author of “renewable portfolio standards” that require Nevada’s utilities to incorporate more renewable power in their energy mix. Now he’s the nation’s top energy regulator.
(8 June 2009)

The Penal State in an Age of Crisis

Hanna Holleman, Robert W. McChesney, John Bellamy Foster, and R. Jamil Jonna; Monthly Review
As a rule, crime and social protest rise in periods of economic crisis in capitalist society. During times of economic and social instability, the well-to-do become increasingly fearful of the general population, more disposed to adopt harsh measures to safeguard their positions at the apex of the social pyramid. The slowdown in the economic growth rate of U.S. capitalism beginning in the late 1960s and early 1970s — converging with the emergence of radical social protest around the same period — was accompanied by a rapid rise in public safety spending as a share of civilian government expenditures. So significant was this shift that we can speak of a crowding out of welfare state spending (health, education, social services) by penal state spending (law enforcement, courts, and prisons) in the United States during the last third of a century.1

With the U.S. economy now experiencing economic depression/stagnation on a scale not witnessed since the 1930s, the vicious circle of slow growth/expanding inequality on the one hand, and increasing state repression of the working population on the other, which has characterized the neoliberal era, is bound to worsen — barring a major change in social relations. The role of penal state spending is therefore crucial to understanding the developing crisis of U.S. class society.
(June 2009)
Long article from a left perspective. US spending on prisons, etc. has risen dramatically since the mid 60s, and the US leads the world in incarceration rates (more than three times the rates in Mexico, Iran and the UK). Can the US continue to build and maintain prisons in deteriorating economic conditions?

Does Federal Regulation of Hydraulic Fracturing Make Sense?

Gail Tverberg, The Oil Drum
A few days ago, Federal Legislation was introduced to regulate Hydraulic Fracturing. Dow Jones Newswire reported: ...

Arguments Against Federal Regulation

The industry arguments against stopping the current practice include:

1. The practice is already regulated by the states. Federal legislation would be duplicative, cause delays, and be expensive.

2. The practice has been used for more than 50 years, and seems to be safe.

3. The chemicals that are injected are injected thousands of feet below the water table. There is generally rock that acts as a barrier to keep the chemicals where they are re-injected. It would be very difficult for them to get back up to the water table again.

Arguments for Federal Regulation

The sponsors of the new legislation are concerned because drilling is being proposed near major urban areas, such as New York City. A small problem could be catastrophic. According to Senator Bob Casey (D-PA), who is one of the sponsors of the legislation: ...
(12 June 2009)

US Needs New Industrial Policy

Jesse Jackson, The Chicago Sun Times
'The fight for American manufacturing is the fight for America's future," President Barack Obama declared as he pledged billions to help save and reorganize Chrysler and General Motors. Yet, he also says he doesn't want to manage the car companies.

"The sooner we can get out of that business, the better off we're going to be." But that sentiment -- widely praised by editorials across the country -- contradicts the commitment needed to revive American manufacturing.

Clearly, the future of an America that makes things will center on what happens to America's automotive industry. The auto industry still accounts for one-fourth of U.S. manufacturing output and provides jobs for about one of every 10 manufacturing workers. It is, in the words of AFL-CIO economist Ron Blackwell, "the spine of the country's manufacturing capacity."

The auto companies are battered by massive overcapacity in the industry across the globe and burdened with pensions and health care promised to retirees while competitors are free of such costs. Auto companies in Korea, Japan, France and Germany get significant government protection and subsidies. The U.S. companies have suffered without that help.

Obama has boldly pointed to a new American economy, one where finance is the servant of the real economy, not the master. In this economy, America builds the future -- making fuel-efficient cars, windmills and batteries and solar panels vital to the next economy. The skilled workers and high technology of the Midwest will produce the products that will dominate the global green markets of the future.

That transition will require planning, an industrial policy and government commitment. If Obama simply lends money to Chrysler and GM, forces their bankruptcy and downsizing and then walks away, the result is likely to be failure. We've seen plans by Chrysler and GM to expand production abroad while eliminating U.S. plants at home.

We did not provide taxpayer money to save the brand General Motors. We provided it to save highly skilled U.S. jobs and U.S. manufacturing capacity.

Last week, I attended a Senate hearing on Chrysler and GM's bankruptcies. Not once did I hear anybody speak about health insurance, credit, trade policy or the price of oil and gas or about the need to link the bank bailout to stemming the tide of home foreclosures and stimulating jobs and business.

We need an industrial plan that helps forge new industry and new markets. Public investment in mass transit -- buses, subways, fast rail -- and subsidies for fuel-efficient cars help generate the market.
(10 June 2009)
Expect more calls from a across the political spectrum for an industrial policy. -BA