What Killed Obama’s Energy Bill Plans?

When Senate Majority Leader Harry Reid announced last week that he didn’t even have the votes to pass scaled-back legislation tied to the oil spill, it encapsulated how frustration and futility have replaced the hopes of some for completing a landmark deal on climate change during President Obama’s first term.

With the midterm election closing in, environmentalists, companies and politicians are asking two big questions: In the end, what brought down energy legislation? And what will happen instead?

A Postmortem

Proponents of major legislation agree that there is no single reason that a deal collapsed. But there are plenty of candidates:

A weak economy inching its way out of a recession made it too difficult. The president didn’t exercise enough leadership. The president chose health reform instead. The Senate filibuster did it in. Republican opposition was united. Coal-state Democrats weren’t willing to force business interests to pay more to stop polluting. Other Democrats were not ready to take another tough vote. The industry undermined it. Skeptics of global warming and the media undercut public support and a need for urgency. The media took the skeptics too seriously.

And that’s just a partial list.

Eric Pooley, a deputy editor at Bloomberg BusinessWeek who chronicles what went on behind the scenes in his new book, “The Climate War,” says economic conditions were a pivotal problem at a moment when a deal would have likely included a so-called cap-and-trade system for dealing with carbon. That would have led to new criticism and worries about fees, taxes and diminishing growth.

“If you backtrack it, clearly the crash of 2008 and the Great Recession made it much harder to do anything that imposed short-term costs and kill some jobs,” he said. “Even if long-term end of the equation (of a bill) would have lead to job creation, the Senate could never get over the hump of anything that might harm jobs.”

Even so, Pooley and many others lay a significant share of the blame at President Obama’s feet. After all, the House narrowly passed a significant climate change bill last summer when the economy was even worse.

“From the start, Obama has led from behind on climate change,” Tim Dickinson wrote in Rolling Stone.

The administration, he writes, “refused to lay out its own plan … and most galling of all, it has failed to use the gravest environmental disaster in the nation’s history to push through a climate bill.”

Pooley agrees.

“Obama just hung back,” he told us. “He had meetings. Sure, he would go to a solar factory and give a speech about the need for clean energy. But he didn’t give us a road map. He didn’t commit to a specific policy. The whole intensive public messaging that needed to come from the White House didn’t.”

After the House passed a broad bill that included cap-and-trade, “everyone chose to punt. Harry Reid was begging for guidance from the White House, saying I will bring a bill to the floor if the president tells me to. And he never got that signal,” Pooley says. “It’s not to say it would have been a slam-dunk but it might have been possible.”

For its part, the administration says it fought hard both behind the scenes and publicly for a deal.

Carol Browner, assistant to the president on energy and climate change, told the NewsHour last week that she agreed it “was a big disappointment” that no energy bill passed, but said the president worked with House Speaker Nancy Pelosi and others before the House passed its bill — one that never survived the Senate.

Browner says Republicans were not willing to cooperate.

“We worked hard,” she said. “Unfortunately there wasn’t bipartisan support and in the end, that was disappointing.”

There also were splits among manufacturers, utilities and other companies. While there were notable CEOs who were working toward a deal, many remained concerned about the costs of retrofitting plants generating greenhouse gases and the economic impact.

“Certainly, there were serious concerns over legislation that was deemed as too difficult or too hard to meet, especially for some regionally based utilities, others are stuck in areas where they use more coal or there are less renewables,” says Frank Maisano, an energy specialist at Bracewell and Giuliani, a lobbying firm that represents utilities, refiners and wind energy producers. “It would be hard for them to get out of that situation.”

Others say the health reform battle had a major impact.

“The single biggest thing was the Obama administration spent most of its political capital on health care,” says Frank O’Donnell, president of Clean Air Watch, an environmental advocacy group. “I think they made a choice of moving forward with health care or energy. After that was done, they found out they didn’t have enough political juice to pull off a double.”

Other Big Problems

David Roberts writes in Grist of more Democrat dissent than there was over health reform and the difficulty of getting past a filibuster.

Maisano agrees — albeit from a very different perspective.

“In the end, it’s going to have to have more political reality. The legislation until now didn’t account for the differences between the regions and the impact they felt,” Maisano said. “I think that’s why a third of the Democratic caucus wasn’t interested in moving ahead with a cap-and trade bill or a limit or carbon.”

And then there was the oil leak in the Gulf.

Many environmentalists have written of how the president missed a moment to capture the country’s attention and use it as an opportunity to chart a specific path on how America might reduce its foreign oil dependence.

But many folks also forget that the spill may have made a bipartisan (or “tripartisan) deal on energy all but impossible. In fact, just before the disaster began, Sens. John Kerry, D-Mass., Joseph Lieberman, I -Conn., and Lindsey Graham, R-S.C., reportedly were on the verge of agreeing on a major bill. It was not as comprehensive (or what some would choose to describe as overbearing) as the House bill.The deal was more focused on expanding renewable energy and targeting carbon emissions from the power and utility industries, but a big change nonetheless.

While there was no guarantee of 60 votes, there was hope that all three senators could bring along just enough votes to make a deal possible. Some prominent players from the utility world seemed to hold back their fire. CEOs from major companies were reportedly set to fly in for a news conference announcing a deal.

But the deal included expanded offshore drilling to bring along pivotal Republican votes. And once the Macondo well began gushing oil in the Gulf, the idea of passing a bill with more offshore drilling died quickly.

For his part, O’Donnell said his community didn’t focus enough on what was happening away from the White House and Capitol Hill.

“Environmental groups failed to build a genuine outside-the-Beltway support for it,” O’Donnell said. “Too much of it was inside-the-Beltway lobbying that didn’t translate. I don’t know that the public outside the Beltway was sufficiently engaged.”

Whatever set of circumstances one takes into account, the bigger question is:

What Happens Now?

Regulation and litigation are likely to be a big part of that answer. Some states such as California and regions like New England will try to work on laws and caps to lower respective emissions in their areas.

But much of the center of action will lie with the Environmental Protection Agency, which in the view of many environmental groups has taken a more aggressive approach and in the view of some businesses an overly aggressive stance.

Back in 2007, the Supreme Court ruled that the EPA has the authority to regulate greenhouse gases that could be harmful to human health. The Bush administration was loathe to use that power, but that’s a different story under EPA administrator Lisa Jackson.

Until the possibility of a deal fell apart, the official position from Jackson and others in the administration was that to some extent the EPA was hoping Congress would write legislation instead of putting the EPA in the position of creating regulations.

But that is bound to change — and that will likely mean more lawsuits and litigation.

“For the near-term, the action is going to be at the EPA, ” O’Donnell said. “In some areas, the EPA is already trying to move forward. I think they will try to work on major sources like power plants and they would try to promote more efficient plants and new plants. We’ll see incremental gains there.

“Will that be the big sweeping emission reductions that we envisioned, which called for 80 percent reduction by 2050? No. It will be more nibbling at the problem in the near-term until we see Congress Act.”

Pooley sees lots of litigation on the horizon. “The EPA has to regulate power plants on a case-by-case basis. Each one will turn into a lawsuit.”

Toward that end, one of the utility industry’s leading lobbyists fired off a warning shot along those lines this week.

Scott Segal is an energy lawyer at Bracewell and Giuliani, and executive director of the Electric Reliability Coordinating Council.

“Congress must not miss the opportunity to address the coming regulatory train wreck,” he wrote last week. “Issues like how EPA will address regulation of greenhouse gases, new air transport rules, more stringent standards for smog, soot, and mercury, and even the regulation of ash and waste water, are all coming together in the next several years. The combined impact will be devastating if Congress doesn’t establish rational energy and environmental policy, and soon.”

A few senators also are planning to try to delay or stop the EPA from taking action.

Sens. Jay Rockefeller, D-W.Va., and Lisa Murkowski, R-Alaska, who are both from big energy-producing states, are talking of introducing new amendments this fall to delay the onset of EPA regulations. Others may try to create bills to strip the EPA of that power altogether.

But Browner — who says the administration will continue to work on clean energy legislation after the midterm elections — pledges the EPA will remain active in its approach.

“I’m quite confident that EPA will be working in partnership with all of the affected parties to figure out the most common-sense, cost-effective ways to achieve very important reductions of the dangerous pollutants that contribute to climate change,” she said.

And on that point, Pooley and others give the administration credit.

“Obama has been very engaged in trying to fight off these attempts to strip the EPA’s power,” Pooley said. “As much as I blame for not doing more to pass a cap or a renewable-energy standard, I give him credit for driving ahead with the EPA process on energy efficiency, clean energy funding and regulation.”

This story was updated to correct a word in a quote from Frank Maisano.