Besides who is sitting with whom and on which side of the aisle, the three biggest themes of tonight's State of the Union will likely be jobs, jobs, jobs. And while I'm not expecting the level of focus on clean energy and climate as we've seen from President Obama in the past, there will likely be some discussion of energy policy, especially as it pertains to jobs and economic growth. With that said, what is the state of American energy? Well, at the risk of sounding trite, that depends on who you ask.
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After a relatively sluggish period of growth in 2010, China overtook the U.S. with the most installed wind energy capacity, a title the U.S. will probably never regain. But in many parts of the country, despite lack of strong leadership at the federal level, wind power is cost-competitive with natural gas, according to a new report by the wind energy industry.
“Wind power is a great deal right now in many areas of the country," Denise Bode, CEO of the American Wind Energy Association said yesterday. But the wind industry, hit hard by tightening credit markets would like nothing more than a national renewable energy mandate, something they have been pushing for several years.
Bode said the wind industry "continues to endure a boom-bust cycle because of the lack of long-term, predictable federal policies, in contrast to the permanent entitlements that fossil fuels have enjoyed for 90 years or more."
And while a renewable energy standard may not get hashed out in this congress, the so-called "clean energy standard," an alternative proposal supported by House Republicans would count electricity generated by renewables, nuclear and the elusive "clean coal" towards targets. While this might be a compromise utility-scale generators could live with in the current economic climate, many enviros might see it a little differently.
The solar energy industry, though not suffering as rough a 2010 as the wind industry, is also hoping for some more long-term policy certainty at the federal level, angling for manufacturing tax credits, and extensions of investment/production tax credits. And the industry could get a presidential tip of the cap tonight as First Lady Michelle Obama has invited Robert and Gary Allen of Luma Resources, a Michigan manufacturing company, to be her guests at the State of the Union. Using Recovery Act funding, Luma Resources retooled its manufacturing facility in Michigan to manufacture solar shingles.
Oil and Gas
“I’m glad to say the state of American energy has been strong," said American Petroleum Institute president Jack Gerard in a recent policy speech in Washington, D.C. "But it will remain strong only if policymakers chart a course of opportunity and certainty,” he continued.
In other words, increase access and keep taxes where they are.
Clouded by the disastrous and deadly Deepwater Horizon explosion and BP oil spill in the Gulf of Mexico, the oil and gas industry is hoping for a little better luck in 2011 by positioning itself as a job-creating, tax revenue-generating machine, so inextricably linked to our country's economic prosperity that it should not be burdened by 'job-killing taxes' or 'excessive environmental regulations.'
After Republican wins in the House, the oil and gas industry will likely be given more lenience and support than it would have had Democrats maintained control of the House. And after President Obama alluded to perhaps being able to find common ground with Republicans in the area of natural gas in the postmortem of the election-day 'Republican shellacking' in November, there is reason to believe the industry will get at least some of what it wants.
But there is one area where the oil and gas industry does not have the upper hand. New EPA greenhouse gas emissions standards slowly being applied to new and (expansions of) existing plants and refineries is something the EPA says it must do, because it was essentially instrucrted to regulate GHGs as a pollutant under the Clean Air Act.
The oil and gas industry, and its supporters in the Congress are looking to rein-in the EPA by amending the Clean Air Act to exclude regulating carbon dioxide and other GHGs as a pollutant.
“EPA has overstepped its bounds,” said API's Gerard. “Regulators shouldn’t legislate.”
But all signs point to a continued role for the EPA in regulating carbon dioxide, even in light of recent overtures by President Obama promising to look more closely at the cost of federal regulations on business and economic growth.
While the expansion of nuclear power has gotten support (albeit symbolic and theoretical) from unlikely supporters over the last few years, that support hasn't materialized into any new plant construction to speak of. And with a fleet of aging nuclear power plants nearing the end of their lifetimes, nuclear power proponents argue this is the time to get serious about new nuclear generation.
Many members of Congress who were unwilling to support a renewable energy standard are now throwing their support behind the idea of a "clean energy standard" -- a federal requirement that would allow nuclear power and "clean coal" to be included towards reaching clean electricity generation standards. Even Energy Secretary Steven Chu has said that there are other ways to skin the carbon emissions cat and that the administration would be looking at nuclear power as one alternative.
But not everyone is behind nuclear, or the idea of a "clean energy standard."
Greenpeace's Phil Radford points out that the non-partisan Congressional Budget Office has said that new nuclear loans pose a greater than 50 percent chance of default. Radford writes that in the State of the Union, "President Obama should support his own Federal Energy Regulatory Commission Chief, who says that the U.S. can produce all new electricity without any new nuclear or coal power plants."
As cynical as it is to say, the best thing that probably happened to the coal industry in 2010 was the BP oil spill. Remember the explosion in the Upper Big Branch Mine in West Virginia that killed 25 miners? While reverberations of that accident were still bouncing around the U.S.' public consciousness, the Deepwater Horizon offshore oil rig exploded and sunk to the bottom of the Gulf of Mexico, tipping off the largest oil spill in U.S. history and the third largest in the world. And in one just one day, the Massey Energy-owned Upper Big Branch Coal Mine was no longer the energy related disaster of the year.
With Massey still facing lawsuits and federal investigations, I doubt coal will get too much face-time in tonight's State of the Union, but that certainly doesn't mean the Obama administration plans on abandoning it altogether -- far from it, unfortunately. As long as "clean coal technology" is still talked about like it is ready to go tomorrow, and as long as Congress is entertaining said "clean coal" as part of a "clean energy standard" approach, coal will still play a role in the Obama energy strategy, even as the EPA works on ways to limit emissions from coal-fired power plants.