With conflicting versions of the Energy Bill currently in conference committee, the Legislative Branch is embroiled in a debate that will define the regulatory climate for energy production for years to come in the United States. Long one of Congress' most sustainable-thinking members, Rep. Earl Blumenauer spoke with VerdeXchange News about the differences between the House and Senate versions of the Energy Bill and his hopes for the legislation that could finally make the United States government relevant in the global fight against climate change.
The House and the Senate recently passed separate and differing versions of the Energy Bill, and they are currently working on a compromise version of the bill. What are the significant differences between the two versions of the bill?
The House and Senate bills had fairly significant differences; the most notable is that the House bill includes a requirement that electric utilities generate 15 percent of their energy from renewables and efficiency by 2020, while the Senate bill has no such requirement. But the House bill was silent on improving theCAFE standards, the fuel efficiency rating for automobiles. I am hopeful that the final bill will include the best of both bills. Right now there are some problems; the Senate has had a difficult time moving forward on things ranging from the war in Iraq to the Farm Bill. I hope the Energy Bill doesn't get caught up in this dynamic.
What provisions of the Energy Bill do you have the most hope for as it works its way through conference?
I think the most important element is the inclusion of the renewable portfolio standard, since it would hasten the development of alternative energy. California has been a leader on this issue; my state of Oregon has also set an ambitious standard, requiring its largest utilities to produce 25 percent of their power from renewable sources by 2025. About half the states are now moving in that direction. But we still need a national standard to build support for alternatives— solar, wind, tidal, and biofuels. This is a terrific opportunity to establish a national policy so that these emerging technologies can be cost-effective. If we are able to enact this, I am convinced that the federal government will go beyond it in the next five years. But getting it established now is the key for providing a foundation for generating alternative energy sources.
The Energy Bill that the House passed includes what some have called "radical provisions": efficiency provisions that will reduce carbon dioxide emissions by as much as 10.4 billion tons through 2030, provisions that the U.S. will lead a global effort on a binding global warming agreement, and a repeal of $23 billion in tax subsidies for big oil companies. Can these provisions get through the conference committee?
I think the energy efficiency provisions are actually some of the least controversial. There are a number of provisions in the House bill, including an amendment of mine that passed on the House Floor dealing with natural gas efficiency, that have a great deal of bipartisan support and I am pretty confident will end up in the final version. The energy tax provisions are probably going to be the most difficult, since significant influence from the oil industry is going to come into play. This is one of the reasons that the president has threatened to veto the bill. But the American public understands that this is an area where we are devoting too many resources to special interests that don't need the help. Oil companies are the most profitable businesses in our history, anywhere in the world.
Also, during the Clinton Administration, the Department of the Interior mistakenly offered oil companies highly profitable leases in 1998 and 1999. The Bush Administration never took action to correct them, and we had real trouble trying to get any corrections through a Republicancontrolled Congress. No one argues that the taxpayers are owed this money. These companies are making lavish profits; we should at least recover some of what was due taxpayers in the first place. Our climate is changing dramatically and global warming has significantly altered the playing field. As oil prices continue to creep up and as instability continues in the Middle East, the public is pressuring us to cut through some of the politics. The business community, the environmental community, and the people who care about national security—all seem to be moving in a direction that is compatible with actions we've taken in the House.
We last interviewed you about the Farm Bill, which was very important legislation to your agenda. The House Farm Bill passed—how did it turn out and what provisions are you most proud of?
I was very pleased that we were able to insert provisions for the so-called "specialty crops"—vegetables, fruits, nuts, berries, and vineyards—in the House-passed Farm Bill. For the first time, we were able to insert some serious money to help the majority of farmers in Oregon, California, and around the country who produce our food. We were also able to make it a little easier for farmers to market their produce directly to local schools, hospitals, and prisons, and include some limits on commodity payments. I was a co-sponsor of an unsuccessful alternative in the House, the Fairness in Farm and Food Policy Amendment, which would have reduced the huge commodity payments that go to just a few farmers in a few states. At the moment, 54 percent of farm payments go to just 20 congressional districts. This focus on corn, rice, and cotton distorts the market dramatically and causes trouble with international trade. It is long past time that we put some limitations on these crops so that we can focus on other areas, such as nutrition, direct marketing, and environmental protections.
The Farm Bill that passed the House is still a work in progress, and I am hopeful that we'll get some help from the Senate. Senator Harkin, chair of the Senate Ag Committee, is deeply concerned about nutrition, about protecting the family farm, and about strengthening environmental provisions. The Farm Bill can and should improve upon these provisions. We still have a long way to go, but I am cautiously optimistic that we are going to make further progress this session of Congress. I think we've turned the corner in our approach to the Farm Bill; conservatives, liberals, environmentalists, and people who grow specialty crops are coming together, realizing we can do a lot better for the taxpayer, the environment, and, most important, for America's farmers and ranchers.
A recent story from New Energy Finance reads, "E.On's plans to acquire Irish wind developer's Airtricity's North American assets for $1.4 billion American topped the news in the Americas last week. The portfolio consists of nearly 1.1 gigawatts of commissioned, permitted, and almost permitted projects, along with about 66 gigawatts of earlier stage projects. E. On had good reason to pay top dollar, the company is well-positioned with the U.S. Federal Production tax credit, thanks to cash flows generated by its U.S. holdings: two utilities in Kentucky, and Airtricity has a ready supply of 1.3 gigawatts lined up for the U.S.
The acquisition also serves to diversify E.On's coal-heavy power generation in the U.S. ahead of a possible national renewable portfolio standard and/or carbon cap-and-trade scheme." From your perch in Congress, involved in the budget and ways and means issues, what are you seeing in the way of investment in deals being spurred by federal regulatory policies and tax incentives?
We are slow to catch up to the boom that's occurring in wind energy, a starkly different approach that is gaining momentum around the world. It's frustrating to me that so much of this technology has been developed in this country, yet the real leaders are found in the international arena. However, the good news is that they are coming over here to manufacture and set up sites. Portland, Oregon is the headquarters of the Danish firm Vestas, which is an international leader in wind energy. I am hopeful that the extension of the renewable energy production tax credit included in the House version of the Energy Bill will make it into the final legislation. In the area of biofuels, we have been focused much too narrowly on corn-based ethanol. This is a long-term loser; it is not clear that the amount of energy required to produce corn-based ethanol is a netenergy gain. When you consider all of the petroleum that is used in the planting, harvesting, and fertilizing of the corn crop, I don't believe that's where we should be investing massive amounts of money.
We are also finding that people have invested in corn-based ethanol without enough forethought and may get burned. This huge interest is creating great instability in corn prices and that affects other agricultural products. If you are in the poultry or the cattle business, for example, you're watching with alarm as the demand for ethanol drives corn prices up. In the long run we're going to have to find more sustainable sources for biofuels. Switch grass has garnered a lot of attention; in the West, forest thinning could be used to provide biomass while making communities in wooded areas safer from fire. But corn-based ethanol makes me nervous; it's not sustainable over time, and it has some pretty serious ecological blowback that is going to force us to change strategy sooner rather than later.
There is another report in New Energy Finance estimating that over $262 billion in venture capital and private equity has funded clean energy deals to be completed between now and 2013. That would represent an average annual compound growth of approximately 17 percent. What can the federal government do to encourage and channel that private equity and investment into productive renewable energy for this country?
The most important thing the federal government can do is to provide a level playing field to help all of the emerging renewable energy technologies move forward. We shouldn't be picking between geothermal, wave, wind, or thin-film solar. Instead, we should provide a basic, underlying level of support for all of the alternatives. A national renewable portfolio standard, as included in the House energy bill, will be an important step forward in this regard. The federal government should also establish a floor for energy costs. For instance, if we were able to assure investors that oil prices would not go below $65 per barrel, proceeds that were generated as the price dropped would go into our energy future. And if people knew what these alternatives would be, they would be able to invest accordingly. A predictable, consistent approach with uniform application would help the private sector move forward. People certainly understand that there is money to be made in alternative energy; there is an amazing array of entrepreneurs who have ideas of how we can stretch our energy dollars. I'm hopeful that the federal government will recognize that it has a significant role to play by helping with the research and having a floor for energy costs—not by picking winners and losers, but by helping them all get established.
In last month's VerdeXchange News, Michelle Wyman, the executive director of the U.S. office for the International Council for Local Environmental Initiatives (ICLEI), said, "Local action moves the world." What local actions in your home state of Oregon and city of Portland are driving the agenda on climate change, carbon emissions, and renewable energy?
Portland was the first city in America with a comprehensive energy policy back in 1979. When I was a member of the Portland City Council in 1993 and did some work with ICLEI, we made the decision that the city would be Kyoto compliant. Instituting a combination of land use, transportation, and energy policies for the city of Portland has made a huge difference; I think we are the only city that is Kyoto compliant. We've seen per-capita carbon dioxide emissions decline for four consecutive years; today, they're about where they were in 1990, despite a 17 percent increase in population. Whether it is bicycle transportation, green roofs, or more energy-efficient construction standards, a comprehensive local approach has made a significant difference. Portlanders drive, on average, four miles a day less than the typical American commuter. Providing our residents with more transportation choices so they don't have to drive for every trip has saved Portlanders over a billion dollars in outof- pocket gasoline costs every year. The policies we've put in place over the last 30 years have made a significant difference, not just in performance but in our mindset.
Today, Portland has more LEED-certified buildings per capita than any place in the country; seven times more bicycle commuting than any other American city; the highest per-capita voluntary purchase of green electrical power; and the greatest per-capita registration of hybrid vehicles. These are self-reinforcing things that any city can do.
You are participating in the GreenXchange Global Marketplace Conference in December in L.A. How does a buyer or seller of green technology, an investor, regulator, or environmental steward, intelligently navigate through this burgeoning green world, as you have done for 30 years?
I'm excited about your conference because it will help people realize that they are not in this on their own. No one has to start from ground zero. There are so many people who are not only concerned but active. There are so many products coming forward; this is a great opportunity to bring people of like minds together to share information, to challenge and inform one another. Building new alliances in both the political and business arenas will be the key.
Ultimately, changing our course is all about the billions of decisions that Americans make every day about what they eat, where they shop, how they live, and how they move around their communities and their region. The sooner we're able to provide people with more choices and empower them to make better decisions, the quicker we are going to harness the tremendous forces that are building for conservation and change. I am enthusiastic about people coming to your conference, rolling up their sleeves, looking very carefully at what's happening in other communities, and taking this information exchange to a new level. Your conference is certainly a model of what needs to happen in communities all around the country to achieve these goals.