Blue Congress, Green Energy

What a Democratic Congress means for Energy and the Environment
President Bush has acknowledged the political "thumping" that has been inflicted on his Republican Party the day after Tuesdays mid-term elections as the Democratic Party seized power in both houses of Congress. He has extended an invitation to the Democrats to work with him for the final two years of his presidency. and the Democrats have accepted that invitation for a new phase of bipartisonship. Environmental and clean energy causes are a very likely beneficiary of this new pact. New York Senator Chuck Schumer, credited as the architect of the Dem takeover of Congress, identified energy as an avenue of cooperation (Wall Street Journal):

"There are some of us who are willing to entertain -- I think 12 or 13 Democrats were willing to drill in a portion of the East Gulf. I think in exchange there should be an increase in [automotive fuel efficiency] standards. In other words, on energy, the right says increase supply, the left says decrease demand. They aren't mutually exclusive and there is room for a real compromise to do both. There are intrinsic forces on each side to block it, but together you could retain a critical majority to do it."

Senator Schumer's measured response reflects the delicate balance of power that prevails despite the convincing Democratic victory; with only a 51-49 Dems to Republicans advantage in the Senate and a 229-196 (with 10 seats still undetermined) in the House, margins are relatively thin, and the space to make sweeping changes remains limited.

The Re-Arrival of John Dingell
Representative John Dingell's (Dem-Mich.) return to the chairmanship of the House's Energy and Commerce Committee (he lost the position in 1994) has been highly anticipated by greens. The Washington Post reports that "Dingell said he would back measures to promote new energy technologies, diesel fuel and cars, electric vehicles, and conservation in buildings." But as a Michigan man who has to look after his constituents, Dingell is known as a the automobile industry's protector against CAFE (Corporate Average Fuel Efficiency) standards. According to USA Today:

" Dingell is not eager to force automakers to improve fuel economy by boosting what's known as CAFE, for corporate average fuel economy. In an interview, he said, "The committee only has so much time," and noted that the CAFE standards recently were boosted. Fuel economy standards, he said, "can be addressed very well, automobile or light trucks, within the framework of existing law," which "gives an awful lot of freedom to the administration" to adjust the standards to keep up with improving technology."If you're talking about straight CAFE, you can't regard the arrival of John Dingell in that position as good news," said Therese Langer, transportation program director for the American Council for an Energy-Efficient Economy."

Climate Change
Dingell does care about Climate Change, though. The Wall Street Journal reports that "Dingell warned the utility industry that legislation on climate change will be one of his high-priority items and his committee aides say they plan a series of hearings to help Congress determine which approaches toward regulation of "greenhouse gases" may be the most cost-effective." Indeed, a number of climate change bills have been floating in Congress the past few years may just start to gain traction, but experts believe that it will take a new President for anything solid to pass.

Biofuels
Perhaps the one energy issue that both sides can find most common ground on is the development of biofuels and ethanol. A Democrat Congress means that "Corn Belt Democrats" will replace southern Republicans at the helm of the powerful agricultural committees of Congress. Representative Collin Peterson (Dem-Minn) and Senator Tom Harkin (Dem-Iowa) will take the chairmanships of the House and Senate agriculture Committees, respectively. Harkin was the architect of the environmentally friendly Conservation Security Program that was part of the 2002 farm bill. Says Mark McMinimy of the Stanford Washington Research Group:

"You're putting people in key positions who would be supportive of the ethanol industry's agenda. Put it this way, even more supportive than in the 109th Congress -- and that was relatively supportive ... A good situation gets better for ethanol is the way I see it."

Big Oil is a Target
One of the other things John Dingell is interested in is repealing some of the lavish tax subsidies that the Republican Congress gifted the oil and gas industry under the Energy Policy Act of 2005. As this piece explains, there is much suspicion behind the way Vice President's Energy Task Force operated and how it dealt with oil and gas companies, and during the oil price peaks of the past two summers, there have been noise made by members of both parties that the market practices of Big Oil companies should be investigated for any evidence of price gouging. Expect some Congressional hearings on this front.

California Dreaming
The Democratic takeover puts California, a state considered the last bastion of liberalism and which has been marginalized in the Republican era through reduced federal funding . But with its Democractic base is gaining new access to Washington:

• the new speaker of the House will be California's Nancy Pelosi (Dem-Calif), who has promised to tackle energy issues in her first 100 hours of office;
  
• Senator Barbara Boxer (Dem-Calif), a believer in aggressive climate change policies, will replace Senator James Inhofe (Rep-Okl), a climate change skeptic, on the Senate's Environmental Committee;
  
• Senator Richard Pombo (Rep-Calif), long time attacker of the Endangered Species Act and advocate of aggressive oil drilling in the Gulf region, was handily defeated by newcomer, Jerry McNerney , a wind energy entrepreneur.

California a long-time national leader in environmental politics. California Governor Arnold Schwarzenegger, who should be dubbed the 'Green Governator', recently signed into state law mandatory caps on carbon emissions, linked up its climate change initiatives with the efforts of the northeast states (RGGI), and signed an agreement with Tony Blair and the UK to collaborate on clean tech research.

Outside of the policy arena, California is also important because of the Silicon Valley and the new wave of clean technology investment fever that has swept the biggest names in the VC industry. The ability of the private sector to influence clean energy policy should not be underestimated; the narrowly defeated Proposition 87 in California is a testament of how effectively the heavy hitters of the investment community can raise awareness of clean energy issues (See also this commentary on Prop. 87 in Red Herring).

As such, California will have a new influence in national green politics, reports the New York Times (Nov 13, 2006):

"We will have a voice again on environmental oversight," said Art Torres, chairman of the California Democratic Party. "Over the last six years, funding has stopped for enforcement of environmental laws, and those issues are important to California."