Pivotal Week for Energy Policy in the US

December 2, 2015

pic-energy-powerThe week of Nov. 30 is proving to be pivotal for energy policy in the U.S. In the House a key energy bill comes to the floor, while President Barack Obama participates in a global climate change conference in Paris and the Environmental Protection Agency (EPA) releases final volume requirements for the Renewable Fuel Standard (RFS).

Energy Bill Considered in the House

This week, the House is planning on taking up the North American Energy Security and Infrastructure Act of 2015 (H.R. 8). The legislation was introduced by House Energy and Commerce Chair Fred Upton (R-Mich.) and was approved by the Energy and Commerce Committee on Sep. 30. Broadly, the legislation is intended to funnel resources to upgrade the electric grid, increase energy efficiency, and speed approval process for liquefied natural gas export projects. The legislation would also expand Federal Energy Regulatory Commission authority to impose deadlines on other agencies reviewing the environmental impacts of expanding natural gas pipelines. The White House has indicated that President Barack Obama is concerned about the expansion of this authority and may veto the legislation if it reaches his desk.

After significant bipartisan negotiations earlier this year, the legislation ultimately lost Democratic support over climate policy among other concerns. In the end, the legislation garnered just three Democratic votes in committee. The legislation will be considered by the House Rules Committee early in the week as it attempts to sort through a host of amendments before it is ultimately considered by the House later this week. Among those amendments are provisions introduced by Rep. Joe Barton (R-Texas) to lift the crude oil export ban and another by Rep. Ron DeSantis (R-Fla.) that would repeal the RFS. Rep. Barton’s amendment does have bipartisan support while repealing the RFS continues to garner opposition from House Democrats.

Paris Climate Change Summit

In Paris this week, President Obama is meeting with other world leaders in attempt to come to an agreement on global emission reductions. Any agreement reached in Paris would have to be unanimous among the almost 200 countries in attendance. Furthermore, while there will likely be reporting requirements built into an agreement reached at the conference, commitments made there will not be legally binding.

More than 125 countries approach this conference having already submitted emissions-cutting commitments that will form the basis of the agreement emerging from the talks. The U.S. has committed to cut emissions to 28 percent of 2005 levels of emissions by 2025. Much of this would be accomplished through the EPA and its Clean Power Plan, designed to cut emissions from power plants. In that regard, the emissions commitments made by the U.S. are already set to take place. Any agreement however, is anticipated to set a precedent and lead to the creation of mechanisms to measure countries’ progress and institutions pushing for continued global collaboration in coming years.

The U.S. is in a precarious position because the Senate has already committed that it will not support a climate change agreement, and Congress as a whole is threatening to withhold funds which President Obama committed to help developing countries curb carbon emissions. In all, it is clear that any agreement reached will not be a legally binding treaty for the U.S. and will be premised upon emission reductions made from regulatory action rather than new legislation.

Renewable Fuel Standards Released

The RFS volume requirements for 2016 were released on Nov. 30, which requires that a certain amount of renewable fuel, mostly ethanol, be blended with transportation fuel in the U.S. The enacting legislation envisioned 36 billion gallons of renewable fuel being blended by 2022. Each year, EPA sets targets to keep the U.S. on track to meet that goal. However, the final volume requirements released by the EPA are higher than those proposed in May by 860 million barrels, however still fall more than four billion gallons short the schedule established in the enacting legislation.

The RFS provoked Congressional ire as legislation has been introduced in both the House and the Senate to repeal the requirement in the face of studies suggesting that that the RFS actually results in greater emissions and has significantly higher costs than conventional gasoline. Sen. Bill Cassidy (R-La.) introduced the Renewable Fuel Standard Repeal Act (S. 1584) in June and Rep. Bob Goodlatte (R-Va.) introduced the Renewable Fuel Standard Elimination Act (H.R. 703) in February, both aimed at removing the RFS. However, legislation to repeal the RFS has not garnered bipartisan support and is unlikely to move in the near future.

Decisions made regarding all of the above issues will have significant impacts on the cost and availability of energy in the U.S. in coming years. A stable energy market is crucial for economic growth in the U.S. Ensuring a low-cost and stable energy supply continues to be a concern for small businesses in the U.S. NSBA looks forward to working with both the public and private sectors to ensure that small businesses have access to affordable energy so they can continue to grow and add jobs to the economy.