What Will Energy Reform Look Like?

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(Washington, DC - Todd Zwillich, Transportation Nation)  This is the week we’re supposed to see the climate change and energy bill Democrats hope to pass in the Senate before breaking for August. The bill’s actual form is not yet known, but proponents of an economy-wide cap and trade scheme to combat global warming are likely to be disappointed.

Lawmakers—even those firmly behind broad cap and trade policy—acknowledge they do not have the 60 votes needed to overcome objections in the Senate. That’s left Majority Leader Harry Reid and his lieutenants to get less ambitious, hoping to find a scaled-back formula that can corral enough votes while still enabling Democrats to declare an environmental victory just months before the midterm elections.

The debate is supposed to kick off next week. Senators are now looking at a utilities-only cap and trade proposal that cuts emission targets from electricity plants starting in 2012, but leaves out transportation, manufacturing and other sectors.

That’s not to say transportation interests won’t have plenty to chew on when the debate gets started. Reid is likely to include a package of new incentives for electric cars, plug-in hybrids and high-tech, high-capacity battery development. Several clean transportation proposals knocking around the Senate now already have bipartisan support.

Also watch for how far the bill goes in cracking down on offshore oil drillers and their regulators. With the Deepwater Horizon oil spill still at the top of the headlines, lawmakers will likely feel lots of motivation to vote on legislation that “gets tough” on BP and other producers. Look for possible efforts to raise or eliminate oil companies’ liability caps, to toughen environmental regulations for would-be drilling leases, or to raise royalties and fees on BP and other companies.

You may see new money and new incentives for transit programs, and reports in the New York Times and elsewhere suggest a plan supported by Sens. Orrin Hatch (R-Utah) and Bob Menendez (D-N.J.) for stoking interest in natural gas as a commercial transportation fuel is also gaining some traction.

What you likely won’t see, however, is a fundamental shift away from America’s fossil fuel-based energy economy.  Senate leaders say there are not the votes right now to do it. And political wisdom (the conventional kind, anyway), suggests that broad and sweeping legislation like a cap and trade energy plan is gets harder to pass the closer Congress gets to an election.

You also won’t see anything on President Obama’s desk any time soon. Whatever the Senate passes is guaranteed to differ in significant ways to what the House narrowly passed last summer. That means a potentially difficult conference in an already acrimonious environment between House and Senate lawmakers. It also could mean another difficult and politically-perilous vote in a House full of Democratic incumbents frightful of losing their jobs in November. Many of them are looking for ways to show constituents they can stand up to Speaker Nancy Pelosi and President Obama.  Not exactly a good recipe for passing a bill that changes the trajectory of the U.S. economy.