In wake of the Gulf oil spill, Democratic leaders have pivoted on energy and climate legislation and it is now expected Sen. Bingaman’s (D-NM) ACELA bill will be brought to the floor by next month. The renewed push for a Federal RPS will likely be accompanied with efforts to raise liability caps and increase penalties for regulatory violations – in part to fund alternative and renewable energy technologies. Today’s GR Insight looks at how lawmakers are moving forward with energy legislation amidst increased pressure to add oversight to conventional energy sources.

For the majority of 2010, conventional wisdom was that election year politics would make it too difficult to pass an energy bill this year.  However, the events of the past month have significantly altered that calculus and pushed Sen. Jeff Bingaman 's  (D-NM) energy bill back to the fore, making it likely that July could see a Senate floor vote on the measure.  The centerpiece of the upcoming legislation will be not cap-and-trade or emissions controls, but a federal Renewable Portfolio Standard (RPS), as well as raised liability caps on oil companies, and increased penalties for regulatory violations, using the funds derived from the shift to promote alternative or renewable energy technologies.  Indeed, carbon pricing seems as remote a possibility as it has been since the beginning of President Obama's term: Advocates for cap-and-trade have failed to shake off the associations with Wall Street gaming , given the currently unpopularity of anything related to trading at the moment.  Moreover, in addition to the Obama Administration’s emphasis on using energy legislation to protect the environment and create jobs, is a new debate over liability for energy companies in the case of accidents.

What’s Driving the Flurry of Activity, Where Are Things Headed

There is little doubt that the Gulf spill has transformed energy politics in Washington and given a renewed urgency to the issue.  Democrats are fearful of being blamed for the spill and taking the political flack, so they are scrambling to pass measures perceived as “tough” on traditional energy companies and signaling a transition away from an oil-based transport sector.  However, if anything, the politics are moving away from any chance of seeing acarbon cap this year, because offshore drilling was one of the key political concessions that the Democrats were prepared to make in order to move a bill with cap-and trade forward.  With Kerry-Lieberman now appearing to be a long-shot at best to even see a vote, the focus has shifted to a few different tracks: the Murkowski Amendment (which as this went to press failed by a very close vote of 47-53), the Democratic proposals to expand BP’s liability for the fallout from the spill, the Bingaman bill, and the newly introduced Lugar bill.  Together, these will be the centerpieces of the American debate on energy policy for the remainder of this year. If all goes well from the Administration’s perspective, it is possible that the President could see an energy-only bill, perhaps passed by Congress in the lame-duck session and sent to Obama at the end of the year.

Schumer/Reid Move the Debate Back to ACELA

In the past week, the course of energy policy in the near- to mid-term has taken an abrupt turn, away from Kerry-Lieberman and back to the Bingaman ACELA proposal which was passed out of the Senate Energy and Natural Resources Committee last year. Majority Leader Sen. Harry Reid (D-NV) announced last Friday that he would have an energy bill introduced by July 4, asking the chairs of eight separate committees to provide ideas and input. 

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