GLOBAL CLIMATE DEBATE

[SUITERS] Hello, and welcome to "Clean Skies Sunday," a weekly half-hour look at energy issues facing Washington and America.  I'm Tyler Suiters.  This week, the countdown to the Senate climate bill.  Can lawmakers find enough support for their plan to reduce carbon emissions?  Also, President Obama orders inspections of troubled coal mines in the wake of the West Virginia deadly disaster.  And a compromise to drill off the California coast.  Is it a deal that environmentalists and oil companies can live with?  This is the week the authors of the long-awaited Senate climate bill have planned to unveil their work.  And the effort to craft this legislation has been somewhat unique.  This is a tri-partisan push from Democrat John Kerry, Republican Lindsey Graham, and Independent Joe Lieberman.  But the wait for the legislation has not been unique.  These senators have run into one delay after another, trying to compile a bill involving a complex and controversial topic -- reducing carbon emissions.  This is the latest political football involved in that climate debate and the scramble for 60 votes -- offshore exploration for oil and natural gas.  Allowing new production on the outer continental shelf is a draw for many Republican senators.  You remember the "Drill, baby, drill" slogan from two summers ago.  But now some Democrats are expressing new concerns about the potential impact of an offshore drilling plan, Democrats who would otherwise support the Senate climate bill, among them, Environment Committee member Frank Lautenberg.  Do you feel that your voice is being heard from Senators Kerry, Graham, Lieberman on this issue?

[LAUTENBERG] Well, they know my view.  And we'll continue to work with them.  They're very serious in their interest in getting a bill to reduce global warming.  And I am also, but we're not going to resolve it here.
[SUITERS] Even if the Senate legislation to curb carbon emissions fails, the Environmental Protection Agency could mandate similar emission reductions through regulation.  Administrator Lisa Jackson and the White House have consistently said they would prefer that Congress institute a cap on carbon emissions rather than use regulatory means to do so.  But the Obama administration may eventually decide that reducing greenhouse gases is paramount, even without a climate bill.  Last week, EPA's Assistant Administrator of Air and Radiation discussed the agency's perspective on climate change.  And Gina McCarthy says, amid the push for more clean energy and fewer carbon emissions, there is ultimately another purpose driving EPA to regulate greenhouse gases.

[McCARTHY] Frankly, I think our Clean Air Act requirements will drive clean energy forward in a tremendous way.  And we need to do that, cognizant of what the costs are and the timelines, but we do need to recognize that this clean energy agenda is really about public health.  Mine is.  It's about saving people's lives.

[SUITERS] Back now to saving that Senate climate legislation.  Once the Kerry-Graham-Lieberman bill does arrive, Majority Leader Harry Reid will then take control of its future.  But many insiders see the bill as dead on arrival, especially after health care and the upcoming heavy lifts on financial reform and immigration.  Last week, the Obama administration dove headlong into an energy-related piece of that financial reform.  Many blamed derivatives for the record-high oil prices we saw back in 2008.  And ever since then, Congress has talked about stopping speculators.  In fact, the House passed a bill, and Senate Democrats leading the agriculture and banking committees negotiated their versions with Republicans.  Now, President Obama says it is time to decide, and he won't sign anything full of loopholes.  "Clean Skies'" Margaret Ryan explains.

[RYAN] Derivatives are used as insurance by companies whose business would be ruined by big swings in energy prices, but the big banks and traders writing those derivatives also use them to make money.  They bet on how energy currency and other prices will go.  President Obama stepped squarely behind forcing most derivatives trading into regulated exchanges or clearinghouses, where prices will be public.

[OBAMA] We cannot have a circumstance in which a meltdown in the financial sector once again puts the entire economy in peril.

[TIMOTHY GEITHNER, SECRETARY OF THE TREASURY] We need to bring derivatives out of the dark, so we don't have future AIGs.  We saw what devastation that caused when you let huge, complex companies write hundreds of billions of dollars of commitments in derivatives without the capital to back that.
[RYAN] Gary Gensler, chairman of the Commodity Futures Trading Commission, warned against Congress exempting some players from the new rules.

[GENSLER] That we not enact broad exemptions for particular classes of contracts based on which party stands behind them.  And I know this has been a very open and I think a very healthy debate around whether some end users should be out or in the clearing requirement.  I believe that it's important to note, though, that the American taxpayers were not required to cover any market exposures from the cleared futures transactions.  They were required to put in $180 billion to AIG.

[RYAN] Regulation opponents say energy derivatives can't be standardized because companies' risks vary widely.  They say U.S. regulation will just send the derivatives business overseas.

[GEITHNER] We've been working very closely, because of that potential challenge, to make sure that European countries and others are moving with us and put in place a complementary framework of very similar protections.  And we have very broad convergence with the Europeans on what we think would be an effective global framework that will avoid that risk.
[RYAN] But Republican leaders warn the Democratic bills will just make things worse.
[SENATOR MITCH McCONNELL, (R) KENTUCKY] If you look at it carefully, it will lead to endless taxpayer bailouts of Wall Street banks.  That is clearly not the direction the American people would like for us to go and also not the direction Senate Republicans would like to go.

[OBAMA] I am absolutely confident that the bill that emerges is going to be a bill that prevents bailouts.
[ROBERT GIBBS, WHITE HOUSE SPOKESMAN] The president was very, very clear with the members this morning.  He is happy to listen to, happy to work with, and happy to incorporate any ideas that strengthens financial reform.  But we are not going to make bad policy decisions through the artificial lens of hoping something is bipartisan.

[RYAN] The stakes are enormous for the biggest Wall Street banks, an estimated $20 billion in trading profits just last year.  The Senate Banking Committee has passed one reform bill, but last week, Arkansas Democrat Blanche Lincoln said she'll offer a bill that's even tougher on derivatives.  But like climate, the big question is, can legislation this divisive get passed by the Senate this year?  In Washington, Margaret Ryan, Clean Skies News.

[SUITERS] That 2008 record run for oil prices that we mentioned was the main selling point behind the Pickens Plan, a national energy strategy pitched by T.  Boone Pickens himself.  Well, last week the legendary oil and natural gas man appeared before the House Ways and Means Committee, discussing tax credits for energy production -- sources like wind, ethanol, biodiesel -- but Pickens wants to add another kind of credit -- $65,000 for truckers who convert their diesel-powered big rigs to run on natural gas.  After that hearing, Pickens talked with Clean Skies News.
[PICKENS] Our approach is very simple.  We are hunting with a rifle.  We are aimed at the 8 million 18-wheelers and the 65,000 incent.  So, I don't see anything complicated about it.  Standing alone, it will pass in a minute, I promise you.  We've got 141 cosponsors for the bill.  But right now they're holding it back to put some other stuff on it, which, I'm watching that very closely and I don't want any tax problems to come into the industry.

[SUITERS] Pickens tells us the tax credit is needed to offset initial conversion costs.  They can run as high as $80,000 for an 18-wheeler.  But, according to Pickens, owners of some trucks could recoup their cost in fuel savings in just about four years.  Along the way, they could also cut U.S. diesel demand by about 5% each year.  In the wake of the West Virginia mine disaster, President Obama is now ordering federal mine safety and health officials to take another look at all mines with troubling records of violations.

[OBAMA] This tragedy was triggered by a failure at the Upper Big Branch Mine, a failure, first and foremost, of management, but also a failure of oversight and a failure of laws so riddled with loopholes that they allow unsafe conditions to continue.  But this isn't just about a single mine.  It's about all of our mines.  The safety record at the Massey Upper Big Branch Mine was troubling, and it's clear that while there are many responsible companies, far too many mines aren't doing enough to protect their workers' safety.
[SUITERS] And the safety of U.S. miners took center stage at a congressional hearing last week.  Some of the country's top coal company CEOs appeared before lawmakers, stressing that safety is their top priority, although Massey Energy's CEO, Don Blankenship, did not appear.  Massey is the company that owns the mine where 29 workers died earlier this month.  Now, the original intent of the House hearing was to discuss the role of coal as the U.S. considers cutting its greenhouse gas emissions.  The coal CEOs called on lawmakers to help ease the construction of new, more efficient coal-fired power plants and to designate more federal funding for carbon capture technology.  Also, the coal leaders say they are willing to work with Congress to avoid future EPA regulation.  Still, some in the coal business say Congress is waging war on their industry.

[REPRESENTATIVE JAY INSLEE, (D) WASHINGTON] We have put in a pool of $60 billion to your industry to be able to save it, save it in the sense that you have a way to sequester carbon dioxide.  And the smart folks on this panel recognize that the day will come that coal will not be a viable alternative if we do not find that technology.  And we've given you $60 billion.  We don't give $60 billion to Al-Qaeda.  You want to see a war?  We're in a war.  We don't give them $60 billion.  We don't give $60 billion to industries we're at war with.  We give $60 billion to people we hope maybe there's a chance of saving, and that's what we're doing.  So let me just ask you, will you personally, or your organization that you represent, tell us that you will replace that $60 billion that we have offered you in this bill?
[MIKE CAREY, PRESIDENT, OHIO COAL ASSOCIATION] Well, Mr. Chairman, Congressman Inslee, I would say that CCS is important, but if you're asking me to make a personal commitment that I will personally put $60 billion into carbon sequestration, that's not a very serious question, Congressman.

[INSLEE] How about your company?
[CAREY] My association?  My association represents small-, medium-range companies --
[INSLEE] I'm going to take your answer as "no."

[CAREY] That actually work on behalf of Ohio.

[INSLEE] Got it, I've got to ask Mr. Boyce a question.  I'll take your answer as "no." If you want to amend it, go ahead.

[SUITERS] And still ahead on "Clean Skies Sunday," the realities of offshore drilling, after President Obama opens up new tracts to exploration.  I'll talk with the former head of the Energy Information Administration, Guy Caruso.  And how a proposed plan to drill off the California coast could be good news for oil companies and environmentalists alike.
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I wish I could capture cherished moments to put in my pocket and keep forever.  Like the first cold snap of the season, when there's a crisp edge in the air that says, winter is almost here.  And then a few months later when the sun cuts through the morning mist and you can almost hear the dogwood blossoms bursting out of their branches.  But the best moment, by far, is when I'm playing with one of my kids and they get one of those deep belly laughs from way down inside, with a look on their face that can only be described as absolute joy.  Some things are definitely worth hanging on to.  The spring skies may grumble and complain, sometimes even work themselves into a rolling rage, but if we're lucky, the seasonal rains are just enough to wash away the winter crust, to cleanse the earth, to nourish new life.  The streams run without regard to their earthen boundaries, the rivers gently push toward their final destination.  The lakes reflect back to the beginning.  Spring is a delicate dance.
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[SUITERS] Welcome back to "Clean Skies Sunday." The Obama administration has now thrown open major parts of the outer continental shelf to new energy exploration.  But there may be a disconnect between the energy promises and the energy realities of that decision.  I recently spoke with Guy Caruso.  He spent six years leading the Federal Energy Information Administration under President Bush, and he tells me he does not expect the OCS areas to produce significant energy for another 5 to 7 years.
[CARUSO] Technically, it could be much quicker.  But, even with that timing, the volumes are unlikely to be large, because the normal way is you bring on these deposits relatively slowly.

[SUITERS] And Caruso says there's another timing issue involved, one that may lie here in Congress.  During debate over its pending energy bill last spring, the Senate Energy Committee discussed who among the states should get how much from offshore energy royalties.

[CARUSO] Will there be a form of revenue sharing, you know?  And I know that's more important now, probably, than ever, given the budgetary situations in many of these states.  So I think there is that sweetener that can maybe move this sale along more quickly than previous ones.
[SUITERS] That would mean even more of the OCS opened to energy exploration even sooner, but first, there's a looming hurdle under the current proposal, albeit one Caruso sees as avoidable.  If you look at this map of the newly opened areas, the Atlantic coast of Virginia and the Gulf Coast of Florida, they are both home to extensive military activity.
[CARUSO] I think that can be handled pretty readily, given the new techniques we have now for subsea completions and ability to do the horizontal directional drilling.  And I think you can avoid sensitive areas.

[SUITERS] Now, you saw on that map that the California coast is not open to new exploration in federal waters, but the state waters off of Santa Barbara have seen drilling for decades.  And now there is a new deal between environmentalists and Plains Exploration and Production, also known as PXP, a deal that could bring that drilling to an end by the mid-2020s.  "Clean Skies'" Dan Goldstein reports.

[GOLDSTEIN] In less than two decades, these rigs just off the California coast could be a memory.  Under the proposed deal, PXP would remove four offshore platforms and two onshore plants within 15 years.  PXP would also donate 4,000 acres of coastal land for open space and help Santa Barbara County reduce greenhouse gases.  In return, PXP could slant-drill up to 17 wells from its platforms into the Tranquillon Ridge, which hold as much as 150 million barrels of oil.  Under the new deal, the state would also get more enforcement accountability and the public much more review, both issues that scuttled the deal last year.  PXP would also agree to forfeit any profits if it continued drilling beyond the 15-year term of the lease.

[ABE POWELL, PRESIDENT, GET OIL OUT] It accomplishes the very things that Get Oil Out has been fighting for for the last 41 years -- removal of oil platforms and facilities, restoration of the coast, and return of land to the people.
[GOLDSTEIN] In January 1969, a blowout just six miles from the beach spewed more than 3 million barrels of oil onto the shore, killing thousands of birds and fouling the coastline for months.  That blowout is credited for spawning the modern environmental movement.  Some of the groups organized in the wake of the blowout, like the Environmental Defense Center, are now behind the deal.  They hope it will end oil drilling off this part of the California coast for good.  But not everyone is convinced.

[REPRESENTATIVE PEDRO NAVA, (D) SANTA BARBARA] The Environmental Defense Center still has provisions in this agreement that call for it to lobby on behalf of this oil company before regulatory bodies.  That's a huge mistake.  And I really don't understand why California has to be the only state on the entire western coast that allows drilling in its state waters.
[GOLDSTEIN] And it's not just Santa Barbara County that's wrestling with the issue of oil drilling.  California voters go to the polls in November to elect a new governor and, perhaps, a new senator, and the issue of oil drilling could very much be on their minds.  Incumbent Senator Barbara Boxer has long opposed oil drilling, but in some polls, she's running dead even or even behind her likely opponent, Republican Tom Campbell, who supports offshore drilling.  Meg Whitman, who's seeking the Republican nomination for governor, says she's open to it as well, but under certain conditions.  She leads her opponent, former governor Jerry Brown, who touts himself on his campaign Web site as a fighter of big oil.  But some analysts say Californians may be worried about a repeat of $4 gasoline this election cycle, rather than another blowout in 1969.

[BRUCE CAIN, DIRECTOR, WASHINGTON CENTER, UNIVERSITY OF CALIFORNIA] It's a distant memory for the people that were here, and you have a lot of voters that have come in that weren't voting or weren't around or weren't even alive at that time.  And so a generational replacement of voters can mean that what was a vivid image for voters in the '70s is not a vivid image right now.
[GOLDSTEIN] Bruce Cain, director of the University of California's Washington Center, says, as oil drilling becomes more popular among California voters, a new crop of politicians are paying attention.

[CAIN] It's clear that something's happened to the attitude of Californians towards oil drilling.  Again, 15 years ago, it would have been anathema for any candidate, Democratic or Republican, to really be pushing oil drilling.  Now we have two years of polling indicating an openness on the part of a majority of Californians to the idea of drilling off of the California coast.  So clearly the world has changed.

[GOLDSTEIN] In the end, it may all come down to money.  Governor Schwarzenegger has touted the drilling royalties the Santa Barbara deal would bring in.  $100 million a year, and perhaps as much as $4 billion over 15 years.  That could lower California's budget deficit.  Ultimately, how voters decide in November could determine whether this new Santa Barbara deal is an end for drilling in California or a new beginning.  Dan Goldstein, Clean Skies News.

[SUITERS] That plan would shut down three platforms within nine years and then a fourth platform by the end of the 15-year lease.  Critics of this deal contend it is not ironclad.  They say a future governor in California could simply come into office, reject the shutdown agreement altogether, and keep that offshore oil pumping.  Still ahead on "Clean Skies Sunday," utilities move toward a smart grid future.  Also, black and white turn green.  The latest police cruiser is easy on the environment but still tough on the bad guys.  We'll explain.
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Do you ever gaze into the sky and wonder if it looks the same as when people thousands of years ago looked to the heavens?  Not just wondering if ancient people recognized the sun and stars and clouds for what they are -- we know they didn't -- but wondering if in that same spot where you are standing today, did some primitive nomadic hunter look up at a sky that was bluer and clearer and more brilliant than what you see?  We know mankind's footprint has changed the land in ways that would make it unrecognizable to primitive man.  But what have we done to the untouchable, limitless sky?  Maybe the more important question is, what will the sky look like in only a hundred more years?

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[SUITERS] Welcome back.  Your monthly utility bill shows you how much power your home consumes and how much your power costs, but soon you'll be able to track those numbers every minute of the day.  Utilities in various states will begin installing millions of smart meters, part of the country's move to an interactive smart electric grid, one that will let you micromanage your power use and also let utilities micromanage their resources.  "Clean Skies'" D.  Bhambhani has the story.
[BHAMBHANI] As consumers use more and more electricity from computers to cell phones to cars, the Obama administration sees a digital interactive smart grid as a key to meeting rising energy demand more efficiently.
[STEVEN CHU, ENERGY SECRETARY] The president has said, the nation that leads the world in creating a new clean energy economy will be the nation that leads the 21st-century global economy.  We are now taking major steps in order to modernize our grid.

[BHAMBHANI] The term "smart grid" is applied to an array of digital controls that let utilities more closely control their lines, and consumers know what they're paying in real-time for their power.

[CHU] I dream of the day when my wife wants to turn on the dishwasher and a little sign politely says, "It's only two-thirds full, dear.  [Laughs] Do you want to wait?"

[BHAMBHANI] The smart grid unites more than the nation's power systems; it unites Congress.  In the 2007 Energy Act, Congress authorized $100 million per year, from 2008 to 2012, for smart grid development.  The act created a Grid Modernization Commission to assess benefits of demand response.  Congress also directed the Federal Energy Regulatory Commission and the National Institute of Standards and Technology to develop smart grid standards.  And in the 2009 stimulus bill, Congress gave $11 billion to the development of a smart grid.  On April 7th, FERC hosted a showcase of technologies from leading smart grid companies that have already installed smart meters and gadgets as part of state pilot projects around the country.  The smart grid purports to make electricity delivery more transparent.  Digital controllers let utilities identify equipment problems before components fail, leading to better system reliability.

[EVAN GADDIS, PRESIDENT AND CEO, NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION] There's such a demand out there, and it's only growing exponentially.  Probably 30%, 40% in the next 10 to 15 years.  So to meet that demand and to do what the public expects us to do, we're going to need all of this and more.

[BHAMBHANI] But experts admit there's still a load of uncertainty out there about the benefits and costs of a smart grid.  John Norris is the newest member of the Federal Energy Regulatory Commission.  He says both state regulators and utilities are skittish.

[NORRIS] There's uncertainty out there about what will be eligible for cost recovery.  And as we move along, as we test and learn more about the deployment of smart grid assets, then I think we can make better decisions about what truly should be in the rate base or cost recovery for utilities.
[BHAMBHANI] Energy experts at a recent Energy Information Administration conference talked about the hurdles to smart grid adoption.  The to-do list was a lot longer than the have-done list.  Christian Grant of consulting firm Booz & Co.  says the smart grid will be needed when electricity demand skyrockets with the coming of electric cars.  He says work must be done today to be ready for them.  Grant and others say the smart grid would also give utilities better control, to add resources like wind and solar -- they're intermittent and could make it difficult to maintain grid reliability.

[GRANT] The utility wants to have the ability, or the energy provider or the distribution company needs to have the ability to manage when and how that power enters the grid so that it doesn't jeopardize that distribution grid.
[BHAMBHANI] Because of the strong government push to create a smart grid, the technology market is expected to double to $42 billion within four years.  In Washington, D.  Bhambhani, Clean Skies News.

[SUITERS] As the workweek officially gets underway tomorrow morning, the next time you're navigating your way through a traffic accident scene or maybe when you see someone else pulled over in rush-hour traffic, think about this.  Police vehicles use 1 1/2 billion gallons of gasoline every year.  And they produce as much as 14 million tons of carbon dioxide.  But as "Clean Skies'" Lee Patrick Sullivan explains this morning, those totals are about to start dropping.  [Siren chirps] [Applause]
[SULLIVAN] The old black and white squad car is going green.  This is the Carbon Motor's E7, a custom-built police car that will be rolling off assembly lines in Connersville, Indiana.  The new cruisers are designed with law enforcement in mind from the in-dash terminal to the molded rear prisoner compartment.

[DAVID COUNCELLER, POLICE CHIEF, CONNERSVILLE, INDIANA] We need a car that, everything's got a place.  And you get in that Carbon car, and everything's got a place.  You've got a computer that's built into the dash, you've got a camera that's built in.  The same way with the radar units, they're all built in to the front and the back.  Everything's right there.
[GOLDSTEIN] These vehicles are designed just the same as many of the squad cars they're replacing, but it's what's under the hood that makes this car a clean, green crime-fighting machine.  Carbon Motors signed a deal with BMW to put these clean-burning diesel engines inside new cop cars.  The 240-horsepower, Austrian-made engines will get about 35 miles per gallon.  Today's V8 cruisers get about a dozen miles per gallon.  The new green cop cars will also emit about 40% fewer greenhouse gases.

[IAN ROBERTSON, PRESIDENT, SALES AND MARKETING, BMW] This is a perfect match.  It underscores our commitment to sustainable mobility and supports Carbon Motors in their commitment to deliver low-carbon law enforcement vehicles with outstanding performance.

[GOLDSTEIN] The folks at Carbon Motors, along with Indiana's senior senator, Richard Lugar, are pushing for the Department of Energy to finalize a $310 million loan to the company.  The plan is to reopen a closed Visteon plant to build the new squad cars.  The plant could bring as many as 10,000 jobs to the Hoosier state.

[WILLIAM LEE, PRESIDENT, CARBON MOTORS] The $310 million loan from the Obama administration is critical in order to put Americans back to work and our collective commitment to do that.  So we're working very collaboratively, in a positive manner, with the Obama administration, to accelerate the production of the E7.

[SULLIVAN] Carbon Motors says it already has orders for 13,000 vehicles from departments around the country.  The company says, if it gets the loan from the DoE, the new squad cars are going to be rolling off assembly lines and into your rear-view mirror as early as 2013.  In Washington, Lee Patrick Sullivan, Clean Skies News.

[SUITERS] And that does it for us for this edition of "Clean Skies Sunday." I'm Tyler Suiters.  We hope you enjoy the rest of your weekend.  We'll see you right back here next Sunday morning, and until then, you can join us any time at cleanskies.com and follow us as well on Facebook and Twitter.  Have a great Sunday.

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