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Energy/Climate Policy: What Now?

So Washington is speculating what comes next for energy policy. And of course, the hot topic is the location (if it exists) of common ground between President Obama and a Congress now controlled on the House side by Republicans and with increased seats in the Senate.

Will deals be made around natural gas development, domestic production of electric cars, and nuclear power, topics that President Obama threw out in his post-drubbing news conference?

What about energy efficiency in buildings and appliances?

What about subsidies for renewables or a national renewable electricity or portfolio standard (RES or RPS)?

In this climate, it’s safe to say we won’t be seeing a return of cap-and-trade legislation to raise the price and so lower the amount of carbon emissions in the next two years, as Obama acknowledged in his remarks to reporters. And of course, many progressive commentators such as Joe Romm are extremely pessimistic about the possibilities for meaningful progress of any kind, let alone on any sort of comprehensive carbon pricing or emissions reduction scheme. Over at Grist, for example, Chris Mims assesses the prospects pretty succinctly as “zero action on anything substantial.”

For my part, I’m pretty pessimistic too--at least in the short run of this Congress--but not entirely so. It’s true that Senate Republican Leader Mitch McConnell (R-KY) does not seem real eager to collaborate on clean energy topics. And for that matter, the massive GOP freshman class coming into the next Congress is dominated by legislators who, according to areport by the Center for American Progress’ ThinkProgress, either deny the existence of climate change or are opposed to any climate change legislation that increases government revenue.

Likewise, Politico this morning suggests that at least 56 senators are likely to support efforts next year to block the Environmental Protection Agency’s plans to regulate greenhouse gas emissions.

However, the fact remains that there is no shortage of possible convergence points for the next Congress should the GOP choose the path of cooperation in the coming months.

CAP’s Daniel Weiss has laid out one expansive menu of incremental to-dos that are all deficit-neutral and have enjoyed bipartisan and business support. Along these lines Weiss calls out as possible such items as tax credits for the purchase of natural-gas-fueled vehicles, piloting electric car changing infrastructure, tax incentives for home and business energy retrofits, and oil spill response and accountability. Weiss even mentions RES/RPS which some might say would move beyond the incremental, yet which had four GOP co-sponsors in the 111th Congress.

Meanwhile, I recently helped frame another potential road map for keeping things moving on climate and energy by focusing on cleantech innovation. Worked out in a dialogue with colleagues at the American Enterprise Institute and the Breakthrough Institute, our proposed cooperation agenda goes beyond the incremental to suggest a fairly deep-going push to put some $25 billion a year into intensified and reinvented research supporting new energy technologies, paid for by a modest tax on carbon, increased oil and gas royalties, or other energy-sector revenue-raisers. Central to the plan is the rationale for an energy research step change and the programmatic detail for making sure it’s carried out in new ways offered by the Brookings proposal for the development of energy discovery-innovation institutes.

While no substitute for more comprehensive action, I do think this architecture furnishes one important piece of the now-necessary era of making progress not by comprehensive grand strokes but in “chunks.” To make real progress on our economic, energy, climate problems the nation absolutely must rev up its technology development efforts and I do think our suite of steps has bipartisan appeal. However, while I would hope progress will be made in the next three or four years along the lines we’ve outlined I am not holding my breath unless world economic recovery pushes gas prices over $4 a gallon, at which point I think all of this and more will be done. Part of the problem, of course, is the likelihood of rank partisanship owning the day. But the more operational problem is of course that of financing the needed investments. Twenty-five billion a year for energy R&D is obviously a tall order for bipartisan compromise any time soon given the depressing failure of the last Congress to deliver the modest sums requested by the Obama administration to launch a network of energy innovation hubs similar to Brookings discovery institutes.

And yet, even then, hope springs eternal, and is somewhat encouraged by something called the American Energy Act, the 2009 energy plan introduced by House Republicans last year under the leadership of Rep. John Boehner, soon to be the new speaker of the House.  At the center of that plan was a proposed bargain that would have paired expanded oil and gas drilling and nuclear development with new investments in renewable and alternative energy. To fund the latter the bill proposed putting hundreds of billions of the anticipated new oil and gas royalties into a trust fund to accelerate clean energy innovation. Sound familiar? The bargain has something of the architecture of cleantech innovation push I’ve been talking about.

And here’s the kicker: It took the Deepwater Horizon catastrophe in the Gulf to fully scotch such a deal last spring. Now, one wonders if the Democrats current “deep water” will bring such a deal back, along with other deals. No, none of it’s ideal, or by any means assured, but perhaps it’s possible.