The U.S. Senate will kick off deliberations over a (potentially) bipartisan energy bill this week.
Reaching consensus on energy legislation has been notoriously difficult, but the Republican lead on energy in the U.S. Senate believes that they could push something through for the first time in almost a decade.
But the bill faces an uphill battle. Any bill that is to make it to the President’s desk will necessarily have to avoid a lot of poison pill issues. “I want to change energy policy and you can't do that without the legislation becoming law,” Senator Lisa Murkowski (R-AK), the chair of the Senate Energy Committee, said last week. “And so not only do we need the support of the House, we need to have the president support it as well.”
Sen. Murkowski has tried to only bite off issues that could actually become law, while eschewing more controversial elements that would end up sinking the effort. She has worked with the ranking member on the committee from the Democrats, Maria Cantwell (D-WA), who has lent her support, at least so far.
The bill would include an acceleration of federal approvals for LNG export terminals. It would update energy efficiency standards for the first time since 2007. It would also update standards for the electric grid, address some cybersecurity concerns, and expand conservation funding. But the bill will largely steer clear of issues relating to fossil fuels, renewable energy, or climate change. In years past, those latter issues dominated the debate, causing previous efforts to go nowhere.
With a narrower focus on less contentious issues, 2016 could be different. The bill already got approval at the committee level, on a 18-4 vote, showing that there is definitely a degree of support from both parties.
Still, there are over 100 amendments to the bill, which could drag down the whole effort. The most high-profile of which is a push by the delegation of Michigan to include $600 million in federal funding for the water crisis in the city of Flint, Michigan. Sen. Murkowski has tried to keep the fragile coalition together on the bill by vowing not to include provisions that require increased spending. The Flint amendment could lead to Republican opposition.
Separately, the two Senators from California want to include an amendment that would require the federal government to get involved in the ongoing gas leak in Los Angeles. Also, Republicans are trying to include language that would block the Obama administration’s latest decision to stop new sales for coal leases on federal lands. In a non-energy or environmental effort, another amendment seeks a resolution to Puerto Rico’s debt crisis.
Nevertheless, Democrats are so far offering some support. Senate Minority Leader Harry Reid called Murkowski’s energy package a “good bill.” His counterpart, Senate Majority Leader Mitch McConnell (R-KY), described it as "the latest reminder of what’s possible with cooperation in this Senate.” For its part, the White House also lent some cautious support for the effort, citing the upgrades to energy efficiency, infrastructure and conservation.
Aside from deeper liberalization of LNG exports, there is not a whole lot in the energy bill that will affect energy markets in a significant way. Even the LNG issue might not matter too much in the near-term. There are already a handful of LNG export terminals that have received full approval from the federal government. Beyond that, new terminals might be difficult to pull off. Global LNG markets are oversupplied, and the glut could worsen in the coming years. LNG prices have crashed in Asia, and after factoring in the cost of liquefaction and transportation, exporting natural gas from the U.S. could be difficult.
So, the bill could become law in a rare bit of bipartisan consensus precisely because it includes only small-bore energy provisions. But that is just about all the bitterly divided Congress can stomach.
The Senate began working through the backlog of amendments on Monday, although not all of which will actually come up for a vote.
By Nick Cunningham of Oilprice.com
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