Dark Waters Could Mean Rough Sailing

Industrial disasters and politics as usual create Clean Tech obstacles and opportunities

May 14, 2010
The energy industry has seen two major disasters in recent months, but the Massey mine explosion in West Virginia and the Horizon oil spill in the Gulf of Mexico were unwelcome additions to the political maneuvering that was already threatening the future of greenhouse gas and energy legislation.

The proposal late last month for the Senate to tackle immigration reform – a historically contentious topic – ahead of essentially ready-to-go energy and environmental policy legislation raised hackles and undermined key bipartisan support for the latter measure. And this was before the prospect of thousands of barrels of oil spilling into the Gulf of Mexico each day stoked public ire against the Obama administration’s recent proposal to increase drilling in the region, an overture many view as a compromise key to passing environmental legislation.

Meanwhile, efforts to move financial reform forward, as well as the at-least-temporary unseating of House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.), seem to have derailed or substantially delayed anticipated good news for the renewable energy and clean technology sectors. The promised “clean energy jobs tax package” – which would have expanded tax incentives to those sectors – has failed to materialize over the past eight weeks. Two key alternative energy credits also remain expired.

With many of these balls still in the air, the ultimate outcomes – particularly on the energy side – remain in question. Advocates for the greenhouse gas bill claim to be on track for June consideration by the Senate after the Environmental Protection Agency completes a cost/benefit review. But that timetable discounts potential fallout from the Horizon incident souring the deal. Even speedy cleanup of the Horizon situation may not be enough to clear the political air surrounding the offshore oil industry in time to help the leaner “ energy only” fallback proposal that includes a renewable electricity standard.

Even if the broader energy agenda stalls, however, the oil spill may yet be good news for biofuels development. The Obama administration has been planning to move forward over the coming months with a loan guarantee program for advanced biofuels and regulatory action that could increase the volume of ethanol in the nation’s gasoline supply. These initiatives were already in development, but we believe they could be accelerated in response to the Gulf situation.
Christine TezakChristine Tezak, Senior Energy & Environmental Policy Analyst, provides advice on the investment impact of federal legislation, regulation and politics on publicly traded equities in the electric, natural gas, independent power, alternative energy and clean/green technology sectors. Christi previously headed the Electricity, Natural Gas and Environmental Policy Research effort at Stanford Group. Prior to that, she was a principal of the Schwab Soundview Washington Research Group.