New groups get in ring as energy bill nears vote

Joining other businesses that have embraced environmentally friendly practices, retail giant Best Buy is installing solar panels on 27 of its stores, with plans to do much more.

“We believe sustainability and efficient energy use is an extremely important aspect of our corporate responsibility,” the company vice president for public affairs, Paula Prahl, wrote lawmakers last week.

{mosads}But that do-gooder promise comes with a critical caveat: Expansion of the program is reliant on an extension of a 30 percent investment tax credit lawmakers are contemplating as part of a broad energy package.

Best Buy’s plans to “greatly expand” its program “require” extension of the credit this year, the letter said.

The fate of that tax break, valued at $850 million over 10 years in the original House energy tax bill, was unclear yesterday, as congressional Democrats worked to piece together a complex bill that could be one of their most significant legislative victories this year.

As the Best Buy letter illustrates, the package has the potential to affect a variety of businesses that normally have not been big players in energy debates. Drafts circulating Monday included 13 titles, although members and lobbyists described the negotiations as ongoing and fluid.

The energy bill has inspired oddball ad-hoc coalitions. Oil and gas companies, for example, have joined forces with beef and chicken producers to protest higher corn-based ethanol targets.

Meanwhile, Wall Street investment houses like Goldman Sachs have lobbied in support of the new ethanol targets, having financed an ethanol boom in the Midwest, as have corn growers and ethanol makers.

Thanks to a deal worked out between House Speaker Nancy Pelosi (D-Calif.) and Energy and Commerce Committee Chairman John Dingell (D-Mich.), the bill will likely raise fuel efficiency standards for the first time in two decades, a significant win for both the Speaker and environmental groups that have failed for years to overcome the auto lobby’s clout on Capitol Hill.

In what environmental groups hailed as a first significant down payment on addressing global warming, Democrats would raise the fleet average from 25 miles per gallon to 35 miles per gallon by 2020.

“It looks like a very good bill,” said Nathanael Greene, a senior policy analyst at the Natural Resources Defense Council, which has played a key role in the negotiations.

Auto companies had lobbied hard for a more modest increase, but now seemed resigned to the bill after winning changes to keep a key credit for so-called flex-fuel vehicle production and greater flexibility in meeting the new standards.

Dave McCurdy, the president and CEO of the Alliance of Automobile Manufacturers, said of the deal on Corporate Average Fuel Economy (CAFE): “We believe this tough, national fuel economy bill will be good for both consumers and energy security. We support its passage.”

Elsewhere, though, some lobbyists said Pelosi and Democrats were in danger of overreach by insisting on big increases in the use of renewable fuels to power cars and produce electricity.

The renewable electricity standard (RES) could be particularly problematic. The Edison Electric Institute, which represents private-sector utilities, was lobbying hard against the bill, as were utilities based in the Southeast that argue they would have a hard time complying with the new standard.

Sources said the language is similar to what the House passed in its bill. It would require only privately owned utilities, leaving out public power and co-ops, to produce 11 percent of their power through renewables like wind, solar and biomass sources. Utilities could use energy-efficiency gains to cut use of fossil fuels to make electricity by another 4 percent.

Executives from solar and wind companies were expected in town this week to lobby in support of the RES, and the American Wind Energy Association announced a last-minute advertising campaign in support of the measure.

It faces a tough road, however. The White House continued to object to the language. Allan Hubbard, assistant to the president for economic policy, said in a letter to Congress on Monday that an RES that “is unfair in its application, is overly prescriptive in its definition by excluding many low-carbon technologies, and does not allow states to opt out, would hurt consumers and undercut state decisions.”

Hubbard also warned against raising taxes on oil and gas companies and Davis-Bacon wage requirements.

“It appears Congress may intend to produce a bill the president cannot sign,” Hubbard said.

Rep. Edward Markey (D-Mass.), a key participant in the negotiations, said House Democratic leaders were “still battling” for an RES. Markey said the provision could account for 40 percent of the necessary cuts in greenhouse gas emissions that scientists say are needed to avoid a climate calamity.

“We have the votes in the House. It’s mostly a Senate issue at this point,” Markey told reporters.

In the upper chamber, Sen. Pete Domenici (R-N.M.), the ranking member on the Energy and Natural Resources Committee, was trying to rally Republican opposition to the RES. He said an RES would make the bill “untenable” in the Senate.

Supporters, who would need as many as 10 Republicans to survive a Senate vote, were targeting efforts on centrist Republicans like Sens. Olympia Snowe and Susan Collins, both from Maine, and those from rural states who may be reluctant to pass up the new mandate for ethanol production, said one lobbyist for a utility that supports the RES.

A working theory on K Street held that Pelosi may push a broad bill through the House floor on Thursday, knowing that some sections could be difficult to pass in the Senate. Ultimately, remaining pieces like CAFE and energy-efficient language could be added to an omnibus at the end of the year.

But Senate Majority Leader Harry Reid (D-Nev.) predicted he had the votes to pass an RES, which is also called a renewable portfolio standard. He acknowledged, however, that the mandate failed to pass during Senate deliberations on energy earlier this year.

New taxes on oil and gas companies to pay for renewable energy development were not one of the 13 titles, although members and lobbyists said a tax package was still in the mix.

A conservation fee on oil and gas producers operating in the Gulf of Mexico may be used to make up for lost revenues from a gas tax caused by the higher fuel economy standards. Under CAFE, drivers would use less gas. That would leave around a $2 billion hole in highway trust fund, financed through gas taxes. Pay-as-you-go budgetary rules require Democrats to find some other revenue source to make up for the loss.

Under that scenario, tax breaks for wind and solar and other renewable energy production would be left out. Best Buy’s green program could be limited. The House bill would have extended energy-efficiency tax breaks for commercial businesses for eight years and for residences for six years.

Also apparently out of the mix is a controversial section authored by Rep. Nick Rahall (D-W.Va.), the chairman of the House Natural Resources Committee, that oil and gas producers said would restrict domestic production, and language that would make price-gouging at the gas pump a federal crime. Oil companies argued the price-gouging provision would have the perverse effect of restricting supplies in times of a fuel crisis, which would further raise prices.

Energy-efficiency proponents expected to lose a key provision: a new building code standard to increase efficiency of homes and businesses. The language, which home builders lobbied against, would be the equivalent of removing 35 million cars from the road in terms of greenhouse gas avoidance, said Lowell Unger, senior policy analyst at the Alliance to Save Energy.

Still, a slew of other appliance efficiency targets, along with a higher CAFE standard, makes the bill “a major step in the right direction,” Unger said.

The renewable fuels standard (RFS) was also still under discussion. But lobbyists said it is likely to require 36 billion gallons of ethanol and other biofuels to be produced and added to the fuel mix by 2022. Of the 36 billion gallon target, not more than 15 billion gallons could come from corn-based ethanol. The rest would be from cellulosic ethanol or other low-carbon fuels that oil lobbyists said are unlikely to be available in the time frame the bill now prescribes.

They want additional language that would impose certain “on-ramps” whereby the technology would have to be proven to be viable before new mandates go into effect.

Refiners objected to a 25 cent per gallon fee that would be imposed on refiners that don’t meet the production target.

That amounted to a gas tax, said one lobbyist.

“We would have to pay for fuel someone else didn’t produce,” the lobbyist said.

Livestock and food groups said they were alerting members to complain about an RFS to their lawmakers. They say the 7.5 billion gallon ethanol mandate now in effect has already raised grain prices.

“Our view is that directing corn ethanol mandates … won’t do anything to reduce our dependence on foreign oil but it will certainly raise the price of foods,” said Scott Farber, lobbyist for the Grocery Manufacturers Association.

Environmental groups, which also objected to an earlier RFS, said they supported the new measure because it now would include the requirements that the new fuels would have to emit significantly fewer greenhouse gases.