Energy policy seen ripe for compromise after Republican gain

Jim Snyder and Mark Drajem (c) 2014, Bloomberg News. WASHINGTON — President Barack Obama and Republicans now in charge of Congress may find common ground on energy issues like nuclear power, wind turbines and efficiency even as they continue to fight over climate change and drilling access.

Energy analysts and lobbyists said energy policy is ripe for compromise in part because the political battle lines are sometimes based as much on geography as they are on ideology.

Dealing with atomic waste, extending renewable tax credits and promoting energy conservation are issues that may offer a chance for agreement, possibly aiding companies including Exelon, Siemens and Johnson Controls Inc.

“There will be increased pressure on Republicans to legislate and to make Congress functional, especially given what’s at stake in 2016,” said Jeff Navin, a Washington consultant and former aide to Tom Daschle, who became Senate majority leader when Democrats took control in 2001.

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“It remains to be seen as to whether or not Congress can move beyond the message votes, and actually sit across from each other and get things done,” Navin said in an interview.

Republicans will have a too-slim majority to pass big- ticket items like blocking the Environmental Protection Agency from limiting carbon dioxide emissions or forcing approval of the Keystone XL pipeline over a veto from Obama. That would require 67 senators to vote to override.

A measure that could reach Obama’s desk next year with a chance of success is a Senate efficiency bill that had bipartisan support, yet was held back over more contested issues like Keystone, according to lobbyists.

The version by Sens. Jeanne Shaheen, a New Hampshire Democrat, and Rob Portman, an Ohio Republican, seeks to increase efficiency for residential and commercial buildings that account for 41 percent of the nation’s energy use.

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Lawmakers will see the low public approval ratings for Congress “and say: ‘We need to demonstrate a new way forward here,'” Democrat Byron Dorgan, a former North Dakota senator, said in an interview. Passing measures like the energy efficiency bill “will show that bipartisan legislation can still be done,” he said.

The bill could boost companies including Johnson Controls and Dow Chemical Co. that make energy-efficiency products.

Navin said nuclear power is another area for compromise. While Republicans resist carbon-dioxide caps to slow climate change, some may support spending or policies targeted at encouraging nuclear power, which doesn’t release carbon dioxide when generating electricity, to help states comply with pending climate rules from the Environmental Protection Agency, he said.

That could benefit utilities like Exelon that operate nuclear power plants.

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“Spent nuclear fuel is an area for potential compromise,” either on-site at nuclear power plants or in regional repositories, said Colin Hayes, a former Republican aide on the Senate energy committee.

That may not include Yucca Mountain, the permanent waste site in Nevada where the Obama administration has halted work, he said. Sen. Harry Reid of Nevada, who will become minority leader in January, remains deeply opposed, and electric utilities and other stakeholders have begun to look for different options for storing waste.

“The dynamics of Washington have been to stab the other guy in the back just to see how he dies,” said Michael Webber, deputy director of Energy Institute at the University of Texas in Austin.

Republicans and Obama may have more in common than they realize, he said.

For example, Webber said Obama has resisted pressure from environmental groups to regulate hydraulic fracturing, the underground drilling technique that’s driven the U.S. energy boom while spurring community concerns about tainted water. Republicans also oppose adding federal rules for a process mostly regulated by states.

While some tea party lawmakers have criticized tax breaks for renewable energy, including wind, as unnecessary government tinkering, the benefit has backing from Republicans who come from rural areas where wind energy development has been booming, Webber said. That is an area where Republicans and Obama might find common ground, he said.

That may mean an extension of tax breaks benefiting wind turbine makers like Siemens or Vestas Wind Systems.

Other energy issues may face more challenges.

From her new perch as chairwoman of the Energy and Natural Resources Committee, Sen. Lisa Murkowski, an Alaska Republican, will be better able to promote her priorities, such as removing limits on U.S. oil exports.

Not all Republicans on are board, making it unlikely she’ll be able to advance a bill ending a near total ban on crude exports in place for four decades, lobbyists said.

“We’re going to talk a lot about exports,” Michael McKenna, president of MWR Strategies in Midlothian, Virginia, a lobbying and polling firm, said in an interview. “But at the end of the day, I don’t think there’s 50 votes in the Senate.”

Obama’s climate goals and emissions limits are probably most at odds with the new Senate majority.

Hal Quinn, chief executive officer of the National Mining Association, which includes coal producers including Peabody Energy Corp., said the election was a repudiation of Obama’s agenda, which includes limits on carbon dioxide emissions that could curb coal use.

“Using the executive pen to wrap vital industries in more red tape, increase their energy costs and jeopardize middle class jobs clearly does not resonate with the American public,” Quinn said today in a statement.

Sen. Mitch McConnell, set to become majority leader next year, has vowed to thwart the EPA’s carbon rule for power plants, which he said is a threat to coal producers in his home state of Kentucky, the third-biggest U.S. coal producer.

“The question is: How does the president respond to legislation sent to his desk dealing with these issues?” said Jeff Wood, a lawyer at Balch & Bingham and former Senate Republican staff member working on environmental issues. “Climate is an area where he feels like he is establishing his legacy.”

McKenna, a Republican lobbyist and strategist, said while party leaders probably can’t stop the climate rule, they’ll try to slow it.

“It’s all about appropriations and it’s all about oversight,”said Scott Segal, a lobbyist for coal companies and power companies at Bracewell & Giuliani in Washington. “It can’t be over the top, but limited changes to the regulatory agenda will be possible” in funding bills, he said.

Environmental groups say they are ready to guard against those Republican efforts, and that measures to beat back EPA’s regulatory effort will come with their own political costs, especially for possible 2016 presidential candidates.

“The public is on our side, and supports taking action,” said Gene Karpinski, the president of the League of Conservation Voters. “Yes, we lost some of our friends in Congress, but the public knows that climate change is real, and they know we need to take action.”

— With assistance from Laura Litvan in Washington.