The Obama Administration’s Clean And Green Agenda

Legislative Efforts Targeted at Limiting Greenhouse Gases, Upgrading Electric Infrastructure

 

By Christine Tezak, Energy Policy Analyst

In addition to health care reform, the Obama administration remains committed to pursuing a cleaner and greener energy policy as part of its efforts to revitalize the nation’s economy and provide better national security. Central to the energy effort is the administration’s support of binding targets for national greenhouse gas emissions, a greater reliance on renewable and clean energy, and upgrading and modernizing the nation’s electric energy infrastructure.

Greenhouse Gases and Climate Change
At the end of June, the House of Representatives passed the first bill in Congress that would set limits on greenhouse gas emissions, including carbon dioxide (CO2). Referred to as “energy legislation” and alternatively as the “cap-and-trade” bill, the House’s efforts would establish national targets for greenhouse gas emissions for key sectors of the economy including the electric utility sector, transportation fuel production, energy-intensive manufacturing and natural gas use. Agriculture would not be regulated under the cap, however, reductions made in this sector could provide “offsets” that could be monetized and/or tradable in the cap-and-trade program. The Senate will consider similar legislation in the fall, with the express hope of sending President Obama to the upcoming global climate change meeting in Copenhagen this December with an enacted law in hand, representing a U.S. commitment to reduce greenhouse gases. Specific provisions in this bill are intended to bolster demand for renewable and low-carbon resources, such as wind, solar, geothermal, waste-to-energy and biomass on the electricity side, and batteries for hybrid vehicles and biofuels and natural gas use in the transportation sector. Using electric vehicles in the transportation sector also could help reduce dependence on foreign oil.

Modernizing the Nation’s Electric Infrastructure
In the American Reinvestment and Recovery Act of 2009, also known as “the stimulus,” Congress moved a key Obama priority forward when it dedicated $4 billion to jump-starting projects throughout the nation aimed at upgrading the nation’s electricity system, which is reliable, but not leading edge. This should create greater flexibility within the existing infrastructure to support the integration of intermittent energy sources such as wind and solar; a “smarter grid” allows customers to have more control over their energy consumption. This additional control is sought because the current reprieve in energy commodities prices is not guaranteed to be long-lived when the economy recovers. Further, one of the most cost-effective ways to keep electricity prices from going up is to avoid the addition of power plants that may only be used during peak times – often fewer than 100 hours in a year – by temporarily cutting usage. Companies targeting this exciting space include meter equipment manufacturers, service firms that help companies and residents conserve energy and reduce energy usage at peak times, software and networking companies (start-ups to internet giants), and the companies that manufacture the cables, substations, switches and other components of the electric transmission and distribution system.

Although the congressional agenda is crowded and concerns about the health of the economy persist, we expect the Obama administration and Congress to continue working toward these goals.

About Christine Tezak
Christine Tezak is Baird’s senior analyst in Energy & Environmental Policy. Prior to joining Baird in 2009, she was a senior vice president, Electricity, Natural Gas and Environmental Policy Research, at Stanford Group Company and a principal, Washington Research Group, at Schwab Capital Markets. She was also previously a research associate at HSBC Securities / Washington Analysis Corporation covering the water industry and at NatWest Securities / Washington Analysis Corporation covering the environment and agribusiness. Tezak has a Bachelor’s degree from Boston College and an MBA in Finance from George Washington University.

Baird’s Research Department consists of 110 research professionals covering more than 590 U.S. companies. Baird analysts have been recognized repeatedly in The Wall Street Journal’s annual “Best on the Street” survey and honored by StarMine as top analysts.

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