10 Things to Know About Lugar’s Energy Bill

The latest twist in the road to comprehensive climate and energy legislation arrived on Wednesday, in the form of Sen. Dick Lugar’s (R-Ind.) proposal for what he calls the “Practical Energy and Climate Plan.” Lugar’s bill, presented as an alternative to the American Power Act introduced by Senators John Kerry and Lieberman last month, is coming out about a year after climate legislation cleared the House and the Senate began its long, often stale-mated slog to produce its own version.

Here are 10 things you should know about the latest proposal for how the feds should act (or not) to reduce emissions, boost efficiency and pave a path for greener cars in the coming decades:

1). What It Proposes: Lugar proposes to pick the lower-hanging fruit for cutting greenhouse gas emissions by boosting efficiency for cars, light trucks and new buildings. The bill also emphasizes reducing oil imports by raising vehicle fuel economy standards and supporting domestic oil production. According to the Alliance to Save Energy (whose board includes both Rep. Ed Markey, co-sponsor of the House climate bill, and Sen. Lisa Murkowski, who’s seeking this week to block the EPA’s landmark “endangerment finding”) the bill’s use of “energy efficiency as the core of its provisions” make it a “solid foundation” for an energy bill.

2). What It Leaves Out: Lugar’s bill would not set mandatory cuts in greenhouse gas emissions and it avoids the issues of offshore oil drilling and cap and trade. The Union of Concerned Scientists said today the legislation would deliver only about a 9 percent drop in emissions below 2005 levels by 2017, compared to the 17 percent reduction from 2005 levels by 2020 with the “American Power Act” proposed last month.

3). Carrots for Coal Shutdowns: The bill would let coal plants skip investments in technology needed to comply with environmental regulations if they voluntarily enter a binding agreement to shut down by the end of 2018 (Sec 302).

4). Support for Nuclear Power: Lugar calls for increasing federal loan guarantees to a total of $36 billion to finance nuclear power plants (Sec 303), as proposed in the Obama administration’s 2011 budget request.

5). Wide Open Clean Energy Goals: Under Lugar’s proposal, utilities and states would be able to count renewable energy sources, “clean coal” with carbon sequestration, nuclear power and efficiency improvements toward national standards for gradually increasing the percentage of cleaner resources in the energy generation mix (15 percent by 2015, stepping up every five years to reach 50 percent by 2050). States would also have the option of an up to three-year deferral period to meet the targets.

6). Raising Fuel Economy: The bill would increase fuel economy standards by 4 percent each year, starting with the 2017 model year. Raise fuel economy requirements for medium- and heavy-duty trucks every four years or less starting in 2017 “to achieve the maximum technologically feasible fuel efficiency improvements.” But these increases could be waived if the Secretary of Transportation demonstrates the targets will not be cost effective or will compromise vehicle safety.

7). Incentives for Higher MPG Cars: There are also $1,000-$3,500 tax credits (depending on the year and relative fuel economy) for new passenger vehicles and light trucks purchased or leased for less than $50,000 that rank among the best in their class for fuel economy, starting in 2011. The Union of Concerned Scientists supports the proposals for higher fuel economy standards, vehicle “feebates,” and expanded cellulosic biofuels efforts, but notes most of the provisions are already on the books as federal law, so Lugar’s bill would not further reduce emissions from the transportation sector.

8). Biofuels in the Game, Beyond Cellulosic: Lugar calls for an expansion of the Department of Energy program supporting cellulosic biofuels to include all renewable fuels, specifically including algae and excluding grain. The bill also calls for increasing the authorized funding for the program to $250 million per year over five years. Money under this program would be awarded via the existing reverse auction process, with the lowest bidders receiving federal support.

9). Support for Building Retrofits: Lugar proposes offering low-interest loans through the USDA Rural Utilities Service to help rural consumers pay for efficiency-boosting retrofits on their homes, repaying the loans on their utility bills. The bill would also set efficiency standards for federal buildings and authorize the Secretary of Energy to award $2 billion in loans, loan guarantees, credit and other mechanisms to help finance energy retrofits for residential, small business and commercial buildings.

10). How the Administration Weighed In: Secretary of Energy Steven Chu sent Lugar a letter today praising the emphasis on reducing dependence on oil and improving efficiency (“the fastest, cheapest route to our energy and climate change goals”), but said he still believes “we need comprehensive legislation that puts a price on carbon and makes clean energy the profitable kind of energy.”