What to Expect on the Energy Front from Congress in 2009

In his State of the Union address, President Obama identified energy above healthcare and education as one of the most critical areas to the future of the American economy. President Obama announced his support for increased domestic manufacturing of clean technologies such as solar panels and batteries along with more R&D spending and a cap-and-trade policy to incentivize corporations to implement these new technologies. Yet regardless of President Obama's popularity, congress has the ultimate say regarding if and how these policies will be written. Yesterday, Senate Majority Leader Harry Reid outlined his three step plan to turn President Obama’s goals into realities:

1) Congress will pass a bill establishing a renewable energy portfolio standard, among other increased efficiency requirements.

2) To help meet this portfolio, Congress will then pass a bill to support the development of "a highway to transmit electricity to where it's needed," which could bring the nation’s vast but isolated solar and wind resources to markets.

3) The first two bills will hopefully build enough political momentum to pass a cap-and-trade policy by the end of the year.

Perhaps 2009 could be the year the US government finally passes what could be considered a comprehensive energy policy: one that tries to manage both supply and demand with the same end-goal of reduced emissions. While details of the proposed bills are scarce and political gimmicks like corn ethanol or hydrogen may still find their way into the policy, at least the mention of a new electricity transmission infrastructure shows that Congress understands a fundamental obstacle to expanded clean energy generation capacity. Jeff Otto recently discussed the inherent contradiction between clean energy and “shovel-ready” projects. Additionally, while the stimulus bill does cover 30% of the costs of new wind and solar farms, that is not enough to make up for the disappearance of capital that once profitable banks invested in exchange for tax write-offs.

Despite the pervasive economic gloom, 2009 could be a seminal year for clean energy in the US.