To view Part 1 in the series, please click here.

On October 28, 2009, the Senate Environment and Public Works (EPW) Committee held a hearing on S. 1733, the Clean Energy Jobs and American Power Act.  The Committee heard testimony from three panels of witnesses: a panel on Clean Energy Jobs, a panel on National Security and a panel on Utilities Policy.

The Clean Energy Jobs panel consisted of Peter Brehm, Vice President of Business Development and Government Relations at Infinia Corporation; Dan Reicher, Director of Climate and Energy Initiatives for Google; Dave Foster, Executive Director for the Blue Green Alliance; Philadelphia Mayor Michael Nutter; Kate Gordon, Senior Policy Advisor for the Apollo Alliance; Bill Klesse, Chairman and Chief Executive Officer, Valero Energy Group, testifying on behalf of the National Petrochemical and Refiners Association; and Brett Vassey, President and Chief Executive Officer, Virginia Manufacturers Association. 

• Mr. Brehm stated that the significant growth over the past year in solar and other renewables technologies presents very significant potential for economic growth. He argued that, by putting a price on carbon, the proposed legislation will spur demand for renewable energy technologies and result in the creation of good, high paying energy jobs throughout the country.
• Mr. Reicher agreed that addressing climate change presents an opportunity to build an energy system and to build millions of new jobs. He argued, however, that putting a price on carbon was not, by itself, sufficient to address the problem. He urged the committee to increase public financing of advanced research for clean energy technology, such as advanced smart grid technologies, and the establishment of national standards to promote renewable energy.
• Mr. Foster said the legislative package must be comprehensive and warned against passing “one piece of the puzzle without the rest.” He also argued that the bill must include provisions for strengthening domestic manufacturing and provide sufficient free allowances for energy intensive industries. He also advocated a longer term border adjustment to prevent “carbon leakage.”
• Mayor Nutter gave his “full support” for the legislation, saying that cities can play a key role in addressing climate change. He noted Philadelphia’s use of Energy Efficiency and Conservation Block Grants to install more efficient stop lights and providing loans to businesses for retrofit and efficiency programs.
• Ms. Gordon testified that renewable energy industries will not grow to scale until the government commits to a low carbon future.
• Mr. Klesse described the legislation as “anti-competitive” and warned that the results would be “devastating,” placing American refiners at a competitive disadvantage, moving the refining business overseas, and burdening American consumers with higher costs. He predicted that the bill would impose new costs on consumers, explaining that even with a carbon price at $20 per ton, the annual industry-wide costs for domestic refiners at $4.1 billion and the cost of consumer emissions at $63 billion.
• Mr. Vassey objected to the proposals for allocating emissions allowances, characterizing them as political leaders are picking winners and losers under the climate bill. He expressed concerns that the legislation would cause a “leakage” of manufacturing from the U.S. to manufacturing worldwide.

The National Security consisted of Sen. John Warner (R-VA, retired); Kathleen Hicks, Deputy Undersecretary of Defense for Strategy, Plans and Forces; Vice Admiral Dennis McGinn (retired), Member of the Center for Naval Analyses Military Advisory Committee; Drew Sloan, Fellow, Truman National Security Project; Major General Robert Scales (retired); and Lt. Col. James Carafano, Deputy Director, Heritage Foundation’s Kathryn and Shelby Cullom Davis Institute for International Studies.

• Senator Warner led a panel of military experts that warned that climate change poses a threat to U.S. national security. He predicted that climate change would increase instability in the fragile regions of the world, threatening energy, food and water supply, resulting in social instability and undermining the economy. Ms. Hicks, Vice Admiral McGinn and Mr. Sloan supported Senator Warner’s testimony.
• Major General Scales (retired) disagreed with those conclusions, arguing that it is unlikely that mass migrations triggered by climate change would result in aggression. He warned that the bill to mitigate the impact of climate change might reduce American influence and retard the country’s ability to deter and fight in future conflicts. Lt. Col. Carafano similarly testified that the costs of the bill on the economy will have a deleterious impact on the national security, through a loss of productivity and jobs, and the continuing devaluing of the dollar.

The panel on Utilities Policy consisted of David Crane, President and Chief Executive Officer, NGR Energy; Ralph Izzo, Chairman, Chief Executive Officer and President, Public Service Enterprise Group Incorporated (PSEG); Nathaniel Keohane, Director of Economic Policy and Analysis, Environmental Defense Fund; Joel Bluestein, Senior Vice President, ICF International; Barry Hart, Chief Executive Officer, Association of Missouri Electric Cooperatives; and Dustin Johnson, Chairman, South Dakota Public Utilities Commission. 

• Mr. Crane urged Congress to adopt provisions that would speed the deployment of nuclear power, stating that nuclear, combined with renewable energy and carbon sequestration, could transform the U.S. power sector from high carbon to low carbon in the next 40 years. His other recommendations included: providing additional emission allowances to the utility industry; preventing EPA from regulating greenhouse gas emissions under the Clean Air Act; furthering the early deployment of carbon sequestration; and increasing the availability of offsets.
• Mr. Izzo echoed the call for swift action on the bill to establish a cap-and-trade system to set a price for carbon. He endorsed provisions of the bill that would impose a collar on carbon prices and allocation of the bulk of emission allowances to utilities.
• Mr. Law offered strong support for the bill and summarized his company’s efforts to deploy solar and wind facilities, reduce peak demand, lower consumer bills and avoid building a new power plant.
• Mr. Keohane recommended that the committee rely on three principles to guide the legislation: provide incentives to accelerate the deployment and development of new technologies; prevent carbon leakage; and protect consumers in the course of allocating allowances.
• Mr. Bluestein cautioned that adopting climate change legislation will not cause “a dash to gas.” He predicted that ultimately there would be a diverse mix of clean technologies, including gas, coal with carbon capture and sequestration, nuclear and increased energy efficiency.
• Mr. Hart warned about the price increases he expected for his customers and argued that regional disparities in allocation allowances would unfairly penalize electric cooperatives. He recommended that allowance be awarded based on the carbon content of generators’ fuel mix.
• Mr. Johnson echoed Mr. Hart’s testimony, stating that Midwestern consumers would see substantial increases in their utility bills under the proposed legislation. He argued further that providing a soft collar with a minimum ceiling price at $28, increasing thereafter, coupled with a reserve fund would be insufficient to protect consumers from cost increases.

To view Part 3 in the series, please click here.

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