WASHINGTON, DC—When Senator Harry Reid refused to call a vote on the long debated climate bill in July, flabbergasted losers around the world declared it dead, dead, dead, as if all progress stopped at that very moment, and would never start again.
But, of course, policy advocates never stop: Their voices simply waft and wane, according to political winds.
One such advocate is James Connaughton, a VP with Constellation Energy Group Inc.
Connaughton supported the push for energy legislation earlier this year, including cap and trade. His company is one of the lowest carbon emitters in the sector. Nuclear represents 60% of its $15.6 billion portfolio, and Constellation would gain a competitive advantage in a cap and trade system that forces polluters to pay.
“Trillions of dollars in private capital investment would be unleashed if the government acted on clean energy legislation,” said Connaughton this week.
“There is a huge opportunity in unleashing the flow of capital again,” he added.
Industry needs a durable energy policy that can be counted on in order to justify large up-front investments, said Connaughton.
In the absence of the right signals, you make minimalist decisions, conservative choices, and when it comes to growth and expansion, you do it overseas, he added.
Proof to the point, Constellation this month canceled plans for a nuclear reactor plant in Maryland due to the large risks associated with obtaining government loan guarantees. The company will build in France instead.
Connaughton says his company is doing a lot of renewables in the U.S., but when the stimulus incentives run out, they will stop.
Jeffrey Holzschuh, Vice Chairman, Institutional Securities Group and Chairman, Morgan Stanley Global Power and Utility Group, agrees with the problem raised by Connaughton.
“I think there is tremendous uncertainty in the capital market as to what will backfill the tax incentives or the cash grants,” he said.
Connaughton and Holzschuh were speaking at a Green Intelligence Forum, organized by Atlantic Magazine, this week. The forum brings today climate policy supporters from policy side, government, environment and business.
In terms of the overall policy outlook for the next couple of years, a number of panelists expressed little hope in congress getting anything substantive passed in the next two years.
“The dominant political theme in my mind going forward, and I hope that it is painfully obvious, is that framing these issues squarely within the kind of traditional clean, climate, renewables agenda is not likely to get a lot of traction over the next couple of years,” said Jason Grumet, President, Bipartisan Policy Center.
In the absence of congressional action, Grumet, as well as Eileen Claussen, President of a Pew Center climate change program, pointed to new air quality requirements under the EPA set to take effect January 16, that will result in a reduction of carbon.
In the days prior to the Copenhagan Energy Summit, Obama resurrected a Supreme Court decision from 2007 that found carbon dioxide and five other gases, including methane pollutants under the Clean Air Act.
Sometimes referred to as Plan B, it gets the job of reducing carbon done, while avoiding congress and the contentious climate change debate.
The details of the new requirements and its overall cost to industry and consumers are still unknown. But by some estimates, enforcement of EPA rules could shut down up to 1/3 of the existing coal plants.
“EPA is going to do this in an intelligently, I think deliberately and pretty aggressive fashion, and I think that there are going to be carbon benefits depending on how they structure their regulations. And I think that is a good opportunity,” said Claussen.
Other forms of progress in carbon reduction efforts are being made by the U.S. Department of the Interior.
David Hayes, deputy secretary of the department, said they have spent the last 18 months identifying 24 areas of public land that have good conditions for renewable energy, fast-tracking environmental assessments, and connecting the sites to investors.
Hayes and his team are also focused on wind power generation along the Atlantic ocean, as well as solar planning. The first solar generating plant, based in the Mojave Desert of California, will power a minimum of 300,000 homes.
It is also very likely that business will migrate to natural gas, due to recently developed technologies that enable gas previously trapped in fissures in rock deep underground, to be extracted. David Lawrence, a VP with Shell Upstream Americas, said that there was likely a 100 year supply of the low carbon emitting energy source.
“We think that there is going to be a long term, growing demand for energy,” said Lawrence.
“New incentives in short term are helpful, but I think that what we need more are stability of regulations, knowing what the path forward is going to be,” he added.
Just this month, Obama, in an interview with Rolling Stone magazine, pledged to continue working on energy and climate change policies, though he plans to take it “in chunks.”
“I am committed to making sure that we get an energy policy that makes sense for the country and that helps us grow at the same time as it deals with climate change in a serious way,” said Obama.