The American Clean Energy and Security Act is critical to our nation, saving the environment, and curtailing global warming! At least that is what the nation voted for, in part, in the last election. And, moving with change in the air, the Congress has produced a sweeping important piece of legislation that will effectively address the climate issue and drive the necessary change, right?
Not so sure? 1,500 pages of legislation suggests a lot of deep thoughtful thinking. I am reminded by a Mark Twain quote, “I didn't have time to write a short letter, so I wrote a long one instead.”.
After my last posting from Sunday summarized key elements of the legislation, I got a lot of interesting Emails. The short summary is ACESA is a bill with way to many very detailed (Nanny) solutions mixed together in one big piece of legislation, which as observed by Mark Twain may represent a lack of time. But what is the rush? Are the polar caps melting? Is a hurricane coming?
I am told that the bill was rushed through for purely marketing reasons. Pelosi et. al., apparently in anticipation of upcoming world wide climate discussion in Copenhagen, wanted to get the bill passed in the house so that the US can demonstrate moral leadership on the climate issue. But, I am told by DC insiders, she and Waxman know the bill as it stands will never get through the Senate! Furthermore, she apparently let several democrats with marginal re-election changes to vote No on the bill (you mean the american people may not be For higher utility bills in a recession). Its all politics.
So, the American people vote for change. They appear to want action on the climate. Congress musters the effort for climate, and they deliver a bill that is tuned to please Copenhagen instead of the American people. If your life depended on it, who would you bet on first, Europe or the US.
I am further told that Senator Reid has no plan to address the Clean Energy bill in the Senate until after health care. This suggests 4th quarter 2009 or early 2010. The polar bears are waiting. More over, the bill will be dramatically revamped to address impact on the economy amongst other things. If the economy keeps going into the ditch, failing to save or create more jobs, the votes "For" will vaporize as we approach an election season. Perhaps Reid is Mark Twain in disgust, using time to write a shorter bill. We have had a Democrat lead Senate and House since 2006, and the furthest we have gotten in a comprehensive energy bill is the changes in lighting standards passed under Bush's presidency.
Though we have learned to expect little from congress, there is a broader issue of our country's move to a more secure and energy efficient place. My sense is, based on the election, that a majority of us would like to import less energy and emit less CO2. We would like to do this even more if was cost effective, created jobs and improved the United States competitiveness in the world. Interestingly enough the United States knows a thing or two about competing. Our companies do it quite well time and time again, always beating the odds.
Indecision however is the cholesterol in our arteries. GE, Emerson, etc are bringing more efficient things to market. They are ready to do more. Solar, wind, nuclear, lighting are all evolving. In the last 30 years energy consumption as a function of GDP has declined almost 50% (From ~10% in 70's to 5% today). We know how to work these things out. Good legislation, like EPA Energy Star, have created a gentle nudge to help drive more efficiency. But, uncertainty slows the innovation process. Is the Government going to implement Cap Trade? What will it look like? How will money be distributed? Is DOE going to provide their promised "Bonus Incentives" to vendors of super performing appliances? Will congress be planting more trees or should those selling Renewable Energy Credits do it? After 1,501 pages of legislation you can imagine there are all sorts of winners, losers, and new incentives.
So imagine you are CEO of Emerson, Boeing, Duke, or some other industrial concern deciding how to invest $5B in R&D to be competitive in the emerging landscape. You need to build a new power plant. With Cap Trade and Government incentives you would go with solar. Without Cap Trade, you will build coal. Oh, and you need to make the decision today so its on-line and producing in 2015 when its needed. You have 10M homes to light up, day in, day out. The answer is, as CEO, you would try not to do anything. They would look for any small increment of investment that would let them delay a decision on investment until the Congress, Senate, and President make a decision. Of course after their trip to Copenhagen to show off their newly formed Moral Authority.
It must be fun to be in charge in Washington getting to make all the big decisions, talking about how the creation of a Bill might change the world. But the world is changed by companies and people implementing new innovations. It is changed by people adopting solutions that work for their lifestyle, family and location. Washington might be a great place to feel good about oneself, while everywhere else we live in a reality that has to make real decision about how to invest, employ resources, hire/fire people, grow, divest, etc.
A 1,501 page bill, designed to persuade the world we mean business even though the bill will be slashed by the senate some time in the future is a hypocrisy. It will take several years for the DOE and executive branch to translate this bill into rules and procedures and a couple more years after that for industry to understand how to operate under these new regulations. This bill is a giant distraction, just like the department of home land security was. Its moving a bunch of deck chairs around in a way that appeals to Washington. Maybe instead they should enact legislation that tells us which way to generally head, and let industry figure out the best deck chairs to deliver and how to set the view.
Pelosi, Waxman, Reid, Obama, etc have succeeded in delaying progress. Their antics will just delay the decision companies need to make. Capital will be held at bay until clarity emerges. Other countries will continue to innovate in their local markets while we wait for our gang to return from Copenhagen, maybe with an Emmy, Oscar or Nobel Prize.
What a disappointment!
