The 17 hour markup, which included over 90 amendments, was described as “record-breaking” by Chairman John Mica (R-FL), who also “praised the committee for persevering and passing the bill, which he said would create jobs and keep the transportation system solvent for several more years,” E&E news reports.

Emotions were running high on this particular markup. Secretary of Transportation Ray LaHood has called the bill “the worst transportation bill” he has seen in decades, a sentiment echoed by T&I committee member, Rep. Corrine Brown (D-FL) who also added that the markup itself was “the worst day of [her] life.” Not all conservatives are pleased either; the conservative Club for Growth issued a Key Vote Alert to vote “no” on the legislation due to lack of spending cuts.  Representative Steve LaTourette (R-OH) described the bill as containing “divisive” provisions such as anti-labor provisions, and ending the Transportation Enhancement program which supports infrastructure development for bikers and pedestrians.

General P.X. Kelley of SAFE’s Energy Security Leadership council urged members to incorporate language into the bill based on SAFE’s February 2011 report, Transportation Policies for America’s Future. The amendment, offered by Representative Steve Cohen (D-TN), which was voted down, would have required the Secretary of Transportation to:

• Use the reduction of transportation related oil consumption as a criterion  for selecting projects to be included in the national transportation strategy;
• Encourage states and metropolitan planning organizations to prioritize oil reduction projects in transportation improvement programs in order to enhance our national and economic security by reducing our dependence on petroleum; and
• Encourage metropolitan planning organizations to develop a strategic oil savings plan that includes a target for reduction of surface transportation related oil consumption.

It is disappointing that the committee failed to take this opportunity to include bipartisan oil-saving metrics. Representative Cohen will seek to pass the amendment on the house floor. The full bill is set to see floor action the week of February 13^th.

The major news this week has been President Obama’s “all of the above” energy strategy, one which encompasses renewables and alternatives as well as expanded production of oil and gas. The most notable part of the President’s plan is a strong emphasis for natural gas as a transportation fuel, supported by tax credits to offset part of the cost of upgrading medium and heavy duty trucks to run on natural gas, federal help to spur creation of natural gas corridors on heavy duty trucking routes, and incentives for conversion of city bus and truck fleets. A 2009 report from the Massachusetts Institute of Technology indicated that an optimal application of natural gas in transportation could be to replace diesel as the primary fuel for heavy-duty vehicles.

In the Senate, Jeff Merkley (D-OR) announced on Thursday at the Washington Auto Show that he will be introducing a bill to encourage fleet purchases of electric vehicles. So far, it is understood that the bill will include incentives for public and private purchases, creating a larger market for EVs enabling automakers to produce the cars less expensively.  We will be staying tuned for news about this important legislation.

Additionally, both chambers are preparing for the renewal of the nation’s surface transportation bill, which expires in March. Senate Environment and Public Works Chairman Barbara Boxer (D-CA) and top Republican Jim Inhofe (R-OK) have developed a bipartisan, 2-year bill which was voted out of committee 18-0. Politico reports Transportation Secretary Ray LaHood has praised “extraordinary leadership” of the committee, and described the unanimous committee vote as “unheard of in the halls of congress.” The House Transportation and Infrastructure Committee is also working on a less bipartisan bill, partially paid for through opening the Arctic National Wildlife Refuge (ANWR) to oil exploration. This provision is a non-starter for Obama and most Democrats. Nonetheless, we are optimistic for longer-term, surface transportation legislation with the essential fuel savings provisions necessary to improve energy security and reduce fuel waste. Some ideas can be found in SAFE’s report, Congestion in America: A growing Challenge to U.S. Energy Security, released earlier this week.

The legislative and executive branches are off to a running start this year, but actions speak louder than words, and we are eager for some legislative achievements. As SAFE President and CEO Robbie Diamond was quoted in the Wall Street Journal earlier this week, “Now that President Obama and Republicans say they are on the same page with an all of the above energy strategy, let’s get something done.”

Energy has played a prominent role in politics during the Obama presidency, and as notable as what he mentioned is what he omitted: Keystone and Solyndra. Conservatives have already responded with criticisms of Obama’s record on oil and gas drilling, continuing to push for the Keystone XL Pipeline, and it is safe to assume these issues will remain forefront as the race for the White House continues. Today is the perfect opportunity to look back at the major energy stories of Obama’s Presidency, and what some of their implications might be for his reelection campaign.

5) Cap and Trade

On Obama’s election night, he famously said “this was the moment when the rise of the oceans began to slow and our planet began to heal,” raising environmentalists’ hopes that a domestic cap and trade policy would be passed. In 2010, with Democrats holding the executive branch as well as both chambers of Congress, proponents of the environmental policy hoped the carbon mitigation mechanism they had been promoting for  more than a decade would finally come to fruition. However, with the growth of the Tea Party movement, worries about excessive government spending, sluggish economic growth in the wake of the financial crisis, strong industry opposition and the complexity of the policy mechanism itself, cap and trade slowly died.

Campaign liability: Very low. Environmental economists disagree about the best implementation of cap and trade, not to mention inconclusive levels of public support for government action to reduce carbon emissions in general.

4) The Macondo Well Explosion

The catastrophic oil spill which lasted from April through July of 2010 was the worst open-water oil spill in American history, and devastated the Gulf coast region in addition to killing a number of oil field workers. The spill was a huge wake-up call to the potentially devastating consequences of reckless drilling practices, and caused a temporary moratorium on drilling in the Gulf.

Campaign liability: Low. The Obama Administration took a number of steps to restore confidence that the cleanup was effective, most notably by Obama himself taking a dip on the Florida coast with his daughter Malia. Although the spill caused a temporary moratorium on drilling in the Gulf, the White House claims overall oil and gas production has increased during Obama’s presidency. That said, oil and gas leasing on federal land is likely to be subject of extensive debate.

3) CAFE Standards

In summer of 2011, the Obama Administration announced it was increasing the fuel economy standards announced by the Bush Administration in the Energy Independence and Security Act of 2007. By 2025, cars and (for the first time) light duty trucks will have to reach an average of 54.4 miles per gallon (mpg). The rules will account for 90 percent of all vehicles sold within the United States, and was a substantial increase over the 35 mpg by 2020 established by Bush.

Campaign liability: Negligible. The New York Times reported this week that the proposed rules are a win across virtually all stakeholders, as they “create jobs, reduce oil consumption, create cleaner air and save drivers money, all while helping automakers increase their profits.”

2) Keystone XL

Obama rejected TransCanada’s application to build the Keystone XL pipeline earlier this week. The long-awaited decision was a divisive one: protests waged outside the White House for weeks, Congressional Republicans forced Obama to expedite his decision with language attached to the tax bill at the end of 2011, and the American Petroleum Institute (API) launched a national ad campaign in support of the pipeline earlier this month, just to name a few events from the drawn out pipeline battle (which, according to some sources, is far from over).

Campaign liability: Unclear. The Keystone issue is a touchy one, as it has been perceived as a polarizing decision between jobs and the environment. For some, the decision was in direct conflict with the recommendations of the Presidential Jobs Council, and Republicans are unified in opposition against rejecting the opportunity to create domestic construction jobs. However, in the words of one expert, “No one who was planning on voting against the president would have been won over simply because of the approval of Keystone.”

1) Solyndra

Solyndra, the solar panel manufacturer and recipient of a $500 million Department of Energy loan, went bankrupt in fall of 2011. Occurring in the immediate wake of the last-minute debt ceiling negotiations, when government spending was front and center, what was at first a source of pride for the Obama Administration has become a PR nightmare, as well as sparking a debate over the legitimacy of the Department of Energy’s entire Loan Guarantee Program.

Campaign liability: Potentially high. The first Obama 2012 ad released by the reelection campaign has focused on green energy, and some are speculating it’s a preemptive strike against Solyndra-based attacks. Critics have argued that DOE’s loans are an example of “government playing venture capitalist,” while others argue it’s important for the federal government to encourage technologies in support of the public good. We fully expect this issue to be used as a symbol for Republican’s opposition to the Obama “Green Jobs” agenda, and it will remain on the opposition’s talking points throughout the campaign cycle.

Congestion in America highlights inefficiency in the surface transportation system, and particularly the challenge of urban congestion, as a growing cause of wasted time and fuel. Total fuel wasted from urban congestion has fallen between 100,000 and 150,000 barrels of oil per day over the past ten years, and in 2010 alone drivers in U.S. metropolitan areas wasted over 1.9 billion gallons of fuel. Furthermore, in 20 of the nation’s largest cities, annual costs of congestion exceed $1 billion. In the absence of substantial policy intervention, estimates suggest that these costs in fuel waste and travel delays will increase by 30 percent by 2015 and 65 percent by 2030.

Source: Texas Transportation Institute

Source: Texas Transportation Institute

SAFE urges a comprehensive and balanced approach to increasing traveler mobility and reducing congestion related fuel waste. The report outlines the range of options available to policymakers to alleviate the costs of congestion, grouped into the following categories:

• Pricing and other flow management techniques to reduce or eliminate recurring congestion
• Accident/Incident management for mitigating the likelihood and effect of non-recurring congestion
• Improved public transit service and other alternatives to single-occupancy vehicle travel
• Strengthened long-term urban planning and development initiatives

Current federal surface transportation legislation, funding over $50 billion annually in highway and transit programs, expires on March 31 of this year. The policies outlined in Congestion in America present market-based mechanisms to cut oil consumption and increase the efficiency of surface transportation infrastructure while improving energy security. As Congress seeks to pass long-term transportation legislation, it is imperative that these instruments are incorporated, and energy security remains forefront as a key policy priority.

Click Here to Read the Full Report

First things first.  In a fairly stunning piece, even to jaded DC insiders, former Congressman William Delahunt (D-MA) is reported to be working for the small coastal town of Hull, on Massachusetts Bay “for help in developing a wind energy project.”

The catch?  “While in Congress, he personally earmarked $1.7 million for the same energy project.”  And it gets worse, as “80 percent” of the funds his firm will receive will be “from the pot of money he created through a pair of Energy Department grants in his final term of office, records and interviews show.”

Now most former members of Congress who end up in law and lobbying firms claim they aren’t actually lobbyists but instead are “strategists.”  And the former Congressman released a statement quoted by the NYT saying:  “I have no federal lobbying relationship with any past or current client.”  That may be news to the town of Hull, who’s town manager is quoted a few paragraphs later using a textbook definition of access-lobbying:

“Obviously he’s got connections into the federal government that we don’t have . . . . We’re hoping he can open doors at the federal level that we could never open.”

So the Hull wind energy project will soon join Solyndra as grist for the argument that the federal government should not be providing incentives for clean energy technology deployment because those incentives are inevitably transformed into “crony capitalism.”  But just as Solyndra was evidence of the misuse of an innovative technology loan guarantee program for economic stimulus rather than evidence of a problem with government incentives; so too is the Hull project actually a fair indictment of earmarking rather than a fatal flaw in the concept of deployment incentives.  The solution?  Programs that provide funding only where the merits of various projects can be clearly compared using  objective metrics rather than “awarded” through either the legislative process or via an opaque administrative ”negotiation.”  Reverse auctions — where bidders commit to delivering X units of energy at Y cost to the taxpayer and only the best deals are then funded — are particularly suitable for such an objective process.

The second piece begins with the type of human interest angle that can obscure rather than teach, as (again, Massachusetts) a hilltop homeowner laments that the local utility wouldn’t run a natural gas line out to his place and he must instead rely on expensive home heating oil.  The real story, as we soon learn, is that home heating oil users are spending between double and triple what their natural gas-using counteparts do.  Some are out of luck due to location; others because they can’t afford the cost of conversion — even though savings due to lower monthly bills may pay for the investment in just a few years.

What’s the current federal policy response to this problem?  It is a well-intentioned effort to help low-income homeowners stay warm in the winter through the much-maligned Low Income Heating Assistance Program, or LIHEAP, whereby taxpayers subsidize the heating bills of qualified consumers.  Unfortunately, that neither fixes the problem nor encourages conservation, but instead simply transfers wealth to homeowners (and ultimately heating oil providers) “trapped in a cycle of spending more and more for heat . . . .”

Is there a better way?  For some, it could be the hugely popular state and local program called PACE — Property Assessed Clean Energy Bonds (see www.pacenow.org).  Designed to let homeowners invest in energy efficiency retrofits in an affordable way, at no cost to taxpayers, this program has been literally sweeping the nation during the last few years.  And if it doesn’t include switching from heating oil to natural gas as an eligible activity, it should.  That would be an obvious energy market intervention worth making.  No earmarks required.

The Jobs Council Report should be praised for its scope in addressing the importance of both energy progress and pragmatism. An emphasis on green energy and renewable sources could have been anticipated, but the report also stresses the importance of increased fossil fuels development for the foreseeable future, stating,

“While we believe the United States, as well as the rest of the world, needs to move deliberately and cost-effectively towards greater proportions of renewable and low carbon forms of energy, we recognize that this will be a long term transition and that traditional forms of fossil energy will continue to be important to our economy as we transition.”

With regard to alternative fuel vehicles, the report discusses the importance of the government’s role in scaling up fully electric vehicles and hybrids, by increasing purchases from state and federal government agencies (including the military), as well as research to support advancements in battery technologies.  The tremendous upside: “widespread adoption of vehicles powered by electricity, natural gas, and alternative fuels could hasten and make permanent our return to being a net exporter of petroleum.”

This goal is urgent and essential, and the jobs report delivers in addressing a full spectrum of goals, many of which are advocated by SAFE. However, many more specific details about the various recommendations are needed to secure sustained energy-industry growth. Furthermore, since the release of the report, the Administration’s first major energy move has been to reject the Keystone XL Pipeline. Of course, those following the controversial pipeline’s lengthy approval process know Obama’s rejection only applies to TransCanada’s proposed route through the Nebraska Sandhills, and the company can re-apply upon development of an alternative route (industry officials are expecting TransCanada to submit a new version within two weeks). Still, as Keystone has emerged as such a powerful symbol of shovel-ready, energy producing jobs; it’s a bold move and arguably a direct contradiction to “all-in.”

But that’s history, and the annual two-week negotiations over addressing global climate change did end on Sunday with what the WaPo called “a last-minute deal.”  The deal?  An agreement to potentially reach an agreement that would apply something called “an agreed outcome with legal force” to developing nations.  This is arguably an advance on the Kyoto Protocol, which did not require developing nations to commit to reduce their greenhouse gas emissions.   And that’s important because some “developing nations” — namely China and India — are leading the globe in aggregate emissions.  To be fair, their per capita emissions are far lower than developed nations, but that shouldn’t give them a free pass.  The key negotiating issue since the US pointed out the fundamental unworkability of the Kyoto Protocol has been  how to account for developing nations’ exploding emissions without unfairly impeding their economic growth — after all, the developed nations built their economies on cheap fossil fuels and only subsequently has the world (well, most of it) realized that there will be highly negative consequences because of it.

It remains to be seen whether this year’s climate confab really moved the ball on this point.  Host South African foreign Minister Maite Nkoana-Mashabane certainly thinks so, as the WaPo quotes him saying, “We have indeed saved tomorrow today.“  Veteran climate watcher Alden Meyer, of the Union of Concerned Scientists, had a different view, noting failure to achieve agreement on reducing the gap between expected emissions and those most scientists believe are the maximum that the climate can endure without expensive and life-threatening damage:  “There’s nothing [in the agreement] that’s going to get the world to lift its game and close that gap.”

Maybe more important news this weekend came from the Nuclear Regulatory Commission, where dysfunction apparently reigns.  Both the WaPo and the WSJ reported Saturday on four NRC Commissioners, two Democrats and two Republicans, writing to the White House accusing Chairman Greg Jaczko of  ”actions and behaviors [that] are causing serious damage to this institution.”  That quote is from the WSJ, which runs an unfortunate lead sentence (“Four of the five members . . .”) — if you didn’t already know that there are only four commissioners and a chairman, you don’t find that out until the end of the piece, so casual readers may have thought there was a hold-out.  The fact is that all four of these highly respected professionals, Democrat and Republican alike, took the trouble of airing their concerns about the NRC’s leadership to the White House.  House Oversight and Government Reform Committee Chairman Darrell Issa, not the fuming four, released the letter to the media.

The bipartisan nature of the criticism made Senator Harry Reid’s (D-NV) otherwise laudable defense of his former staffer ring a bit hollow.  As reported in the WaPo on Sunday, he called the complaints “a politically motivated witch hunt.”  We’re guessing Senator Reid meant that Chairman Issa was hunting witches, not labelling the letter such.  But since loyalty in Washington is often in short supply, we’ll give him a pass either way.  Not so the NRC as a whole, an organization too critical to our energy future to have it’s oversight confined to the weekend papers.  Oversight hearings, anyone?

As Michael Levi astutely points out, this redrawing of the energy map which was unthinkable a few months ago is now bordering on conventional wisdom.  And petroleum isn’t the only resource in question: Despite the fuss the press is making over the Department of Energy’s loan guarantee program, the wind and solar industries are very much alive.  According to Politico, “Solar and wind power are predicting banner years of industry growth as green technology’s prices continue to drop and manufacturing and installation jobs swell by the thousands.”  Although the wind energy production credit expires at the end of 2012, and it is unclear if Congress will renew it, the industry says it will soon be competitive without it, and progress will continue regardless in states with renewable portfolio standards or tax credits.  Are renewable forms of energy generation the solution to the nation’s energy security issues?  Far from it, but they strengthen and diversify our national energy portfolio.

In a perfect political climate, or even a slightly more functional one, Congress would spring into action, crafting bipartisan policies to maximize benefits from these developments, turning the United States into a powerhouse of secure domestic energy supplies, and an exporter of products and technologies.  Naturally, each participant in the political gridlock will happily point blame at the others.  A recent story in Politico elaborates on the dilemma, wherein House Republicans paint the Obama administration as stubborn and the EPA as overbearing, while House Democrats  argue the legislation produced by the house is too regressive to pass the Senate.  To its credit, the Senate Energy and Natural Resources Committee has cleared 61 bills this year, dozens more than most other panels, but of these only 15 minor public works bills and one medical isotopes bill have passed the full Senate, according to E&E.  Presumably, the usual suspects are to blame: partisanship, filibusters, debt uncertainty, and budget restrictions are all playing a role.  Committee Chairman Jeff Bingaman (D-NM) argues the Senate schedule has been too full, while ranking member Senator Lisa Murkowski (R-AK) argued the majority has not prioritized energy policy.  Still, in a year of booming domestic production, a nuclear crisis in Japan, and soaring energy prices, the need for effective energy policies is greater than ever.

 The bill is being pushed by Senator Richard Lugar (R-IN), the Ranking Republican on the Senate Foreign Relations Committee and a long-time energy security hawk.

Lugar believes that  we must break the dominance of those regimes around the world that use wealth for nefarious ends and move rapidly to stop putting American military and civilian personnel into harm’s way because of oil.   Senator Lugar’s first priority for energy policy is reducing our dangerous overdependence on foreign oil; but it also matters from where we import our oil.  Canada is a reliable and secure supplier and is allowng the investments necessary to meet demand.  We don’t worry about a war with Canada.  We do worry about wars elsewhere.

 The second reason Lugar is introducing this bill is the nation’s need for jobs.  Keystone XL is the largest infrastructure project available for construction right away.  Tens of thousands of people will be employed by this pipeline directly and many more will have brighter job prospects at the thousands of businesses across the United States that supply materials and services for the pipelines.  Allowing seven billion dollars of private economic activity should be a no-brainer. The bottom line is that Lugar’s Keystone bill will bring jobs quickly, avoiding the “after the election” wait that the Administration has embraced.

 This legislation will make Keystone XL happen, but it is no free pass.  TransCanada needs to fully respect landowner’s rights, and it is in everyone’s interest to continuously boost environmentally-sound practices and technologies in the oil sands.  Lugar’s bill codifies that the permit will require Keystone XL to meet the stringent environmental standards enumerated in the State Department’s environmental review – standards that will make it the most heavily regulated pipeline in the United States.  The bill also ensures that the Nebraska route will be changed to take care of the specific concerns in the Sand Hills.

 Within the Senate Foreign Relations Committee, Senator Lugar has advocated in favor of Keystone XL for some time.  He also felt that State Department should be allowed to conduct a thorough review.  It did so (even though it was frustratingly slow), and the Lugar bill will allow for the next logical step:  building the pipeline and creating jobs.

As the committee was scrutinizing tax policy, federal subsidies, and loan guarantees, it is obvious that there are strong, but ambiguous, implications for energy policy.  The Hill reports that Democrats were seeking to end tax subsidies for oil companies.  The American Petroleum Institute pushed back strongly against this proposal, arguing that doing so would increase energy costs and eliminate jobs.  However, drilling advocates were hoping that supercommittee negotiations could open a path towards wider oil-and-gas leasing, thus the panel’s demise also holds disappointment for the industry.  Subsidies for renewable energy sources including ethanol, wind, and solar, as well as the Department of Energy’s loan guarantee program, could also be threatened in future budget negotiations.  We will be watching closely for any major energy-policy outcomes.

In other news, the Los Angeles Times published a thought provoking article detailing the process through which the new fuel economy standards were established.  The article describes a deal which was three years in the making, with the involvement of environmentalists, state regulators, auto manufacturers, and other government and industry leaders.  The outcome is quoted as the “single biggest environmental achievement in a generation, akin to the landmark 1970 clean air act.” While this may indeed be true, and it is undeniably a strong accomplishment from an environmental perspective, the article failed to describe the standards as a foreign policy and national defense achievement, of even greater importance to our long-term energy security.

An interview with SAFE President and CEO Robbie Diamond in Newxmax properly illustrates oil dependence as the security threat it is, and discusses forward-thinking solutions.  Speaking about the partisan divide between Republicans who are pro-drilling and Democrats who exclusively wish to pursue renewables, Diamond advocates an aggressive pursuit of both, as well as the electrification of ground transportation, noting that “electricity is the best way to solve American’s energy problem because of the diversity of fuel sources used to produce it — including coal, natural gas, nuclear, wind, and solar.”  Linking this solution to increased fuel economy standards, NPR published a piece yesterday about how electric vehicles can help bridge the gap between today’s engines and the proposed 54.5 miles per gallon by 2025.  Let’s hope any and all future examinations of the Department of Energy’s budget keep this solution, and the 2025 goals, in mind.