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Breaking the Energy Stalemate

Even though Obama took bold steps for a Democrat, most Republicans would tilt policy further toward new production.

As the debate over climate policy stirs from its long winter's nap, more is at stake than whether the United States can set a course to reduce both its carbon emissions and its dependence on foreign oil.

The approaching legislative skirmish will also test whether Washington can escape the straitjacket of "either-or" alternatives to attack big problems with comprehensive solutions that blend the best ideas from both parties. President Obama and the trio of senators expected to soon release a compromise bill are making extraordinary efforts to address the concerns of energy interests and legislative moderates on both sides who have resisted action on climate. If those incentives can't break the logjam, the result could be a sustained stalemate that prevents the United States from advancing in any direction on energy.


Obama and the senators formulating the new approach -- Lindsey Graham, R-S.C., John Kerry, D-Mass., and Joe Lieberman, ID-Conn. -- are pursuing a grand bargain: more incentives for nuclear power and greater domestic production of oil and gas in return for limits on the carbon emissions linked to climate change. The deal makes good policy sense: Under any scenario, the United States will consume fossil fuels in large quantities for years to come as it transitions toward a lower-carbon energy mix that includes a substantial contribution from nuclear power. The deal adds up politically as well: Although climate-change skeptics can block Senate legislation that aims solely to reduce carbon emissions, Senate environmentalists can block legislation that aims solely to expand energy supply. Absent compromise, the Senate could be immobilized between competing filibusters, possibly for years.

Stalemate would force more-severe carbon-emission reductions later on. It would also shroud the energy sector in uncertainty. That could especially hurt the utility industry. The federal Energy Information Administration projects that through 2020 electric utilities must build facilities equal to 80 percent of their existing capacity -- to replace aging plants and meet new demand. That will require enormous capital investments, which could generate badly needed jobs. But that modernization process is now "frozen," says James Rogers, chief executive of North Carolina-based Duke Energy. One reason is that utilities can't fully assess the cost of competing fuels, such as coal, wind, natural gas, and nuclear, until the federal government sets the rules for regulating carbon. "If you are going to modernize the fleet," Rogers says, "you want to know what the carbon regime is."

Obama has moved to break the energy stalemate by offering expanded offshore drilling and loan guarantees to build the first nuclear plants since 1978. Republicans want more. Even though Obama took bold steps for a Democrat, most Republicans (and some Democrats) would tilt policy further toward new production.


But as long as Obama is president, the only practical way to do that is to embed additional production incentives in a package that also addresses climate change. That's exactly the possibility that the tri-partisan bill offers. Graham has indicated that he wants the proposal to open more offshore acreage than Obama did. If enough Senate Republicans accept legislation that includes carbon limits, Obama would likely do still more to promote nuclear power and domestic oil production -- even if that disturbs his core supporters. But if no Republicans except Graham will back the underlying bill, even with such concessions, Obama has no incentive to incorporate them. For the minority party, support is the price of influence.

In our modern quasi-parliamentary system, though, the minority party almost always chooses to fight, not influence, the president's legislation. That makes it tougher for Washington to produce balanced answers. On health care, medical malpractice reform (a GOP priority) would have complemented Obama's cost-control focus. But because the issue divides Democrats and no Republicans would back the health legislation even if it waterboarded trial lawyers, Obama would have lost, not gained, votes had he added more malpractice reform to the bill. Unsurprisingly, he didn't.

The common principle, which applies equally to immigration, debt reduction, and education, is that the best way to produce comprehensive solutions to big problems is for each party to accept some of the other party's priorities as the price of advancing its own. By contrast, most legislators today "would rather have nothing than give up anything," says a senior Senate aide involved in the climate talks. On energy, Obama has rejected that paralyzing perspective. Now the question is whether any Senate Republicans besides the promiscuously courageous Graham will join him.

This article appears in the April 10, 2010 edition of National Journal Magazine.

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