Canadians get nervous about oil sands and U.S. law

Greenwire is reporting that Canada is lobbying the White House not to interpret a provision in the 2007 energy bill in a way that would be unfavorable to continued U.S. purchase of crude and refined petroleum that originally sources from Alberta’s oil sands fields. Section 526 of the Energy and Security Act of 2007 forbids Federal agencies from procuring alternative or synthetic fuels unless the lifecycle GHG emissions of the fuel is lower than the equivalent conventional fuel.

Apparently Canada is worried that since their oil is immediately mixed with the general supply, a ban on Federal procurement of carbon-intense fuel means effectively a ban on all Canadian carbon-intense fuel. Unfortunately for the Canadians, most of their fuel is extremely carbon-intensive. They can come to grips with their reality now or later, but within the next few years both Federal and state regulations in the U.S. will severely limit imports of Canadian oil derived from oil sands. The unfortunate reality for the Canadians is that going forward

a- there will be low-carbon fuel standards in place across the U.S. following California’s lead;

b- a national cap-and-trade will put oil sands-derived products at a big economic disadvantage; and

c- even if the Canadians do deal with the high carbon costs of oil sands by capturing and storing CO2 during refining, it will likely drive the costs of their product so high as to be uncompetitive.

Gov. Richardson uses his first post-run speech on climate and energy policy

New Mexico Gov. Richardson, fresh off the campaign trail after dropping out of the Dem race in January, gave a speech at the Pew Center yesterday (video). Where upon dropping out of the race John Edwards had used his position as a prominent candidate to push the remaining Dems to press on poverty as a major campaign issue, Gov. Richardson’s speech yesterday is doing the same for energy and climate policy.

Gov. Richardson started right off the bat by relating his conversation with EPA Administrator Johnson over the Clean Air Act waiver denial (see this post), then called the 35 mpg CAFE standard in the latest energy bill “totally inadequate,” saying that it should go to 50 mpg. He went on to call the failure of a national RPS to pass “shameful.” Later in the speech he said that the state of the climate cannot just be a top-10 priority for the next President, but must be a “State of the Union priority.”

Our take: these are not just strong words from a former presidential candidate, they are shot-across-the-bow words, and an indication that Gov. Richardson will be spending no small amount of his political capital to force the prominence of energy and climate policy in the upcoming election.

Still not an election issue…

And climate won’t become an election issue any time soon. Even if the voting public cared about climate policy (and they don’t), the three remaining candidates are not far enough differentiated on climate policy to run on distinctions between them. This will remain so through November as voters continue to tell pollsters that climate and environmental matters rank well down on their priority lists, and pundits continue to realize that McCain v. Obama or McCain v. Clinton on climate policy is a non-debate.

So why even bother making this point?  Because what public disengagement means is that since a vast majority of the voting public will not turn their vote on this issue, the details of the issue are left to the interests to hash them out in relative obscurity. In terms of this election what will be interesting to track is not how much detail the candidates give, but which groups push climate as an election issue, how aggressively they do so, and how their opponents respond.

Rep. Dingell as roadblock?

Rep. John Dingell (D-MI-15) is the longest-serving member of Congress and currently Chair of House Energy and Commerce. Although Senate action on climate has been limited to passing S.2191 out of the Environment and Public Works committee, House action has been even more limited due in no small part of Dingell’s apparent lack of desire to see carbon regulation on the books (some would say because he represents Detroit). However, despite being what most consider a roadblock to climate regulation, Dingell’s committee released a 25-page white paper on Feb 25th that is well worth reading and gives deep details on policy considerations of a regulatory market (see also). Curiously, the Executive Summary of the white paper includes this passage:

Addressing climate change will require employing a variety of tools. The primary tool at the Federal level will be a national, economy-wide cap-and-trade program that reduces greenhouse gas emissions by 60 to 80 percent by 2050.

As has become somewhat commonplace, there are mixed signals here from Rep. Dingell as he has been considered an opponent of carbon regulation (his public statements on the topic have not been terribly nuanced). At the same time, a section of his website is devoted to carbon tax legislation, and other statements over the past year have him simultaneously supporting and opposing climate regulation. So at this point we have numerous statements from Rep. Dingell that thinly veil opposition to climate regulations, a stated position from him seeking a carbon tax regime, and now a new white paper that both states that there will be a cap-and-trade regime, and calls for Federal preempting of state climate laws.

Our suspicion is that Rep. Dingell has not found within any major changes in heart about carbon regulation, and will seek out poison pills and delaying tactics wherever he can find them. He is genuinely opposed to climate legislation, but as a prominent Democratic member of Congress and Chair of a key House committee is bearing a mountain of pressure to move forward on climate.

Transmission siting

A little-discussed provision in the 109^th Congress’ Energy Policy Act (PL 109-058, a.k.a. H.R. 6) granted eminent domain powers to construct transmission lines wherever DoE declares a “national interest electric transmission corridor.” (See Sec. 1221 of the final PL 109-058 conference report, starting on page 1096 of this pdf.) This provision largely escaped the notice of property-rights crusaders (they must have been focused on ESA reform, but some people have noticed), but the program created by Sec. 1221 has already ramped up in the west and you can expect eminent domain takings within the next few years. Ostensibly the provision is to benefit the grid in general, but wind will be the biggest winner here.

Carbon regulation policy as of Feb 08

Chances continue to hold somewhere between slim and none for passage of any greenhouse gas mitigation legislation before February 2009, and more likely November 2009.

Despite great optimism from the enviro community about the potential for GHG regulations after the Democrat sweep in the 2006 Congressional elections, it was always quite clear that as long as the Bush Administration still occupies the White House there will be no movement on carbon emissions. That understanding was cemented two days ago when it was revealed that EPA Administrator Johnson denied California’s Clean Air Act waiver request (20-Dec story) over the objections of most of his senior staff. (Administrator Johnson was not installed in his position because he would be willing to stray from White House wishes on major policy questions.)

Is passage of anything during the 110th Congress (ending this December) likely? Our guess is no.Congress will flee the D.C. heat in July, and for the most part stay away for the campaigns through early-November (they usually return to business after Labor Day), leaving little time to get anything done this year. Considering that only one carbon bill has even seen committee markup (S.2191 was passed out of EPW in the Senate; Rep. Dingell continues to be a roadblock to House movement), chances are slim that a bill could see final passage. Final passage means committee hearings and markups in both chambers (at least two committees in the Senate and four in the House will have different pieces of the bills), floor debate and passage in both chambers, a Conference Committee process to reconcile the differences between the House and Senate bills, then approval of the Conference Committee’s compromise bill by both chambers.

Although leadership in both chambers is unlikely to change after November’s elections, Congress is unlikely to plow through this process with a new President and a new Congress seated in January 2009.