Disagreement on renewable energy complicates bill passage

There is a Jenga-like quality to the delicate work of constructing national energy policy, where votes fall along regional lines as much as party affiliation.

As Democratic leaders worked Thursday to build support for one of their top priorities before heading into the August recess, there was evidence of growing divisions within the caucus over efforts to promote renewable energy.

{mosads}Mandates for the production of renewable fuels for transportation and electricity generation enjoy significant support among Democrats and environmental groups, a key party constituency.

But several key members oppose one or both efforts. During a caucus meeting on Thursday, for example, House Majority Whip James Clyburn (D-S.C.) argued against a provision that would require utilities to produce 15 percent of their electricity from renewable energy sources.

Earlier, Rep. Gene Green (D-Texas), who has helmed the discussions that led to a compromise on the natural resources section of the bill, told The Hill that the attachment of either the renewable fuels standard or renewable portfolio standard (RPS) could cost his support for the broader bill. That potentially could cost the support of a majority of Blue Dog members, making passage of the bill much more precarious.

Green said both measures would likely raise energy costs for his constituents.

“Why would I support that?” he said.

Clyburn is also concerned an RPS would raise rates for his constituents, spokeswoman Kristie Greco said. She said negotiations to find a compromise were continuing.

The Rules Committee was scheduled Thursday afternoon to review more than 100 amendments. The committee was meeting at press time.

Rep. Stephanie Herseth Sandlin (D-S.D.) planned to introduce the amendment that would require the production of 36 billion gallons of biofuels like ethanol by 2022. The measure mirrors language that the Senate passed as part of its energy bill.

Reps. Tom Udall (D-N.M.) and Todd Platts (R-Pa.), meanwhile, are pushing an amendment to require that utilities produce 15 percent of their power from sources like wind, solar or biomass by 2022. Udall and Platts originally had set a target of 20 percent, but lowered it in hopes of winning more floor support.

Both measures have constituencies lobbying in their favor.

Farm state lawmakers and agriculture interests want the biofuels mandate to continue a rural economic boom sparked by a much less aggressive ethanol mandate passed as part of the Energy Policy Act of 2005. That measure set a target of 7.5 billion gallons of ethanol to be produced annually by 2012, a figure ethanol producers are already approaching.

A broad coalition, meanwhile, kept the pressure on members Thursday to support the RPS.

“This is a very big deal for the environmental community,” said Kate Johnson, who lobbies on energy issues for the United States Public Interest Research Group (USPIRG).

USPIRG was one of 19 groups that sent a letter to lawmakers Thursday stating that the RPS would “reduce global warming pollution, protect our environment and make our economy more secure.” The Sierra Club, National Wildlife Federation, Union of Concerned Scientists and United Steelworkers also signed on.

But each proposal also faces stiff resistance from the business community.

By keeping the fuels standard out of the House bill, oil and gas lobbyists would be in a much stronger position to mitigate the Senate measure through certain milestones that must be met for production to increase. But they concede it probably can’t be killed, given its broad support both on Capitol Hill and within the administration.

Even without the fuels standard, the bulk of the oil and gas lobby is opposing the bill, as are other business groups that argue the measure could curtail domestic production.

The lobbying effort has particularly focused on people like Green and other Blue Dogs, who often work as the main point of contact between the business lobby and more liberal elements of the Democratic Caucus.

The American Chemistry Council, for instance, was running advertisements pointing out the specific differences between a separate energy agenda supported by Blue Dogs and the one to be voted on on the House floor Friday. The group opposes other sections of the bill that it says could reduce production of natural gas, which chemical companies rely on as a feedstock for their products.

Green and fellow Texas Democratic Rep. Charles Gonzalez reached a deal with House leaders last weekend that reworked parts of the bill. The changes didn’t convince all the Blue Dogs, but Green and Gonzalez said they would support the bill. Several energy lobbyists said they thought most of the conservative caucus would follow their lead.

If the renewable energy provisions jeopardize that support, Democratic leaders may still be able to draw sufficient support from Republican members to pass the bill. Thirty-six Republicans voted for an energy tax package passed as part of the “Six in ’06” kick-start to the new Democratic majority.

Importantly, the deal struck on the energy policy committee did not extend to another tax package written by the Ways and Means Committee.

That measure now has a score of $20 billion when coupled with provisions passed in an early package, Green said. That’s too much, he said.

Most of the money would come from blocking oil and gas producers from claiming a manufacturing tax credit known as Section 199. The tax break was part of a larger corporate tax package Republicans pushed through two years ago.

Rescinding eligibility from the credit would raise over $11 billion.

But Green said the discussions were focusing on a smaller change that affects how foreign oil operations are taxed. That change would raise $4 billion. It was not part of the earlier tax package passed in the House, which oil and gas companies believed would be the limit of how much they would be asked to pay for the new majority’s domestic priorities.

Green said he instead supports efforts to raise the tax rates on private equity funds. A number of Democrats have proposed that change, but party leaders seemed to be backing away in recent weeks.

Green said he met with House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) Thursday morning to talk about the tax package.

“There’s bound to be some equity folks from New York who could come up with $4 billion,” Green said.

“I told Charlie, ‘Tax those guys all you want.’”