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US Congress braces for energy policy gridlock in 2019

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US Congress braces for energy policy gridlock in 2019

SNL Image

Rep. Frank Pallone Jr., D-N.J. will play a key role in House Democrats' efforts to address climate change in the 116th Congress that convenes Jan. 3.

Source: Associated Press

Democrats' hopes to address climate change and cut the country's dependence on fossil fuels the 116th U.S. Congress will hit likely resistance from Republicans, but they may still be able to provide more support for renewable energy.

After winning control of the U.S. House of Representatives, Democrats want to make climate change and its impacts on the economy a major focus of the new Congress that begins Jan. 3.

Democrats proposed to reestablish a select committee on climate change, and a group of House lawmakers introduced a proposal to create a fee on carbon dioxide emissions, with the proceeds largely going back to taxpayers in the form of a dividend. Furthermore, incoming Rep. Alexandria Ocasio-Cortez, D-N.Y., and other progressive lawmakers are promoting a Green New Deal that calls for the country to get 100% of its electricity from renewable resources within 10 years.

"There's going to be a bunch of [climate] bills dropped in the next couple months," a Democratic Senate committee aide said. "Everybody's going to be dropping bills."

House Democrats also want to conduct vigorous oversight of the Trump administration's efforts to undue major climate regulations. Rep. Frank Pallone Jr., D-N.J., who will chair the House Energy and Commerce Committee in the new Congress, announced plans to hold several climate-related hearings in early 2019 and has sought information from the EPA on its proposed repeal of several climate regulations, including the Clean Power Plan and rules to limit methane emissions from oil and gas production sites.

The House Natural Resources Committee will meanwhile probe the administration's efforts to open up more federal areas to energy production. Under Democratic leadership, the committee will look at the U.S. Department of Interior's five-year offshore drilling plan, the environmental impacts from onshore oil and gas drilling, and mountaintop mining, said Adam Sarvana, a spokesperson for committee Democrats.

Despite the lofty ambitions, a continued GOP majority in the Senate and President Donald Trump's efforts to undo many existing climate regulations make aggressive new laws on the issue unlikely.

Sen. John Barrasso, R-Wyo., chairman of the Senate Committee on Environment and Public Works, wrote in a Dec. 18, 2018, opinion piece for The New York Times saying that "we, collectively, have a responsibility to do something" on climate change. But he said taxes and "punishing global agreements" such as the Paris Agreement on climate change were not the solution, indicating Senate Republicans' probable rejection of legislation to price carbon emissions.

"People across the world are rejecting the idea that carbon taxes and raising the cost of energy is the answer to lowering emissions," Barrasso said, pointing to recent protests in France against a planned fuel tax increase that eventually caused the French government to suspend the policy.

Clean energy progress still possible

Even if Democrats cannot achieve their loftiest climate goals, they may be able to get extra support for renewable energy development.

Lawmakers were unable to pass legislation in late 2018 to extend certain tax credits, including for several smaller-scale renewable power technologies. Congress could give the legislation another try in 2019, offering the renewable industry a chance to push for new incentives and longer extensions to some credits.

"We're going to be looking for tax breaks for wind and solar and batteries and electric vehicles," Sen. Ed Markey, D-Mass., a clean energy advocate who sits on the Senate Environment and Public Works Committee, told S&P Global Market Intelligence.

Former President Barack Obama signed a bill into law in late 2015 that extended the federal wind energy production tax credit to projects that begin construction by the start of 2020 and phased out and extended an investment tax credit for solar energy facilities. Although the renewable industry was pleased with the agreement and has not made a big push for further extensions, Markey said developers will be open to more support. Additional or extended tax credits may be particularly helpful for the solar industry as uncertainty over the Trump administration's new tariffs on most imported solar cells and panels depress U.S. solar capacity installations.

"They'll want [more tax support]," Markey said. "You don't have to ask."

Both Democrats and Republicans are interested in pursuing infrastructure legislation in the new Congress, with the former hoping to attach funding and tax credits for clean energy projects to that bill. But paying for an infrastructure package will be difficult, a hurdle that hindered progress on infrastructure legislation in the 115th Congress.

"I'm still really dubious of an infrastructure package," said Sarah Ladislaw, director of the Center for Strategic and International Studies' energy and national security program. "And I think an infrastructure package is the closest place that you get to getting some deliverables on [energy] infrastructure."

Where bipartisan work could happen

Despite the partisan divide over how to tackle climate change, energy leaders in Congress see areas where the Democrat-controlled House and GOP-held Senate can work together.

"We'll work through how we can pair up with an energy team on the House side that's going to be coming at it from a different view," Senate Energy and Natural Resources Committee Chairman Lisa Murkowski, R-Alaska, said in an interview. "But I think we've got a lot of room to work."

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Senate Energy and Natural Resources Committee Chairman Lisa Murkowski, R-Alaska.

Source: Associated Press

Among other areas, Murkowski said both parties could collaborate on measures to improve energy efficiency, research and development funding, and grid cybersecurity and modernization. "There's no shortage of good issues to be working on," she said. "I think we've got a lot of space in the energy sector to be working jointly with a mixed Congress."

Electric cooperatives also hope to address what they said were unintended consequences of the 2017 tax law, fixes that could likely get bipartisan support.

The 2017 tax bill considered government grants, including from the U.S. Department of Agriculture's Rural Utilities Service, to be outside revenue for purposes of determining what cooperatives or public power entities are tax-exempt. To maintain their tax-exempt status, rural utilities must get at least 85% of their revenue from members, a share that could be harder to achieve if government grants are counted as income, said Kirk Johnson, senior vice president of government relations for the National Rural Electric Cooperative Association.

Excluding rural utilities from the new requirement will be a big priority for NRECA in 2019. "For several of our members, it's a big darn deal," Johnson said.