US climate legislation disappoints - but renewable energy to survive

This week US Senate leader Harry Reid announced the Senate draft of the Clean Energy Jobs and Oil Company Accountability Act.

Vicki Bakhshi, Associate Director in F&C's Governance & Sustainable Investment Team, believes the measures on climate change and clean energy are a pale shadow of what President Obama promised on his election, and of the Climate Bill the House of Representatives passed last year.   Bakhshi commented: "Obama's pleas to view the Gulf of Mexico oil spill as a wake-up call on the need for a radical shift to cleaner energy clearly fell on deaf ears. Even Senator Reid himself admitted "this bill does not address every issue of importance to our nation's energy challenges".

Gone is the proposal for a ‘cap and trade' system for greenhouse gas emissions, and the idea of a federal renewable energy standard. Instead the Bill focuses on alternative transport fuels to reduce dependence on oil, with measures to boost gas and electric-powered vehicles, and on the continuation of a range of energy efficiency measures." 

These measures sit alongside swingeing changes to the regulations surrounding offshore oil drilling. The Act now enters a period of complex political negotiation, with the clock ticking ahead of the summer break. 

Bakhshi concluded: "The draft Act is undoubtedly disappointing for the renewable energy industry, which has been struggling with the twin burdens of restricted access to finance and regulatory uncertainty - new wind power starts fell by 70% in the second quarter compared with 2009. But there is some good news, with the House of Representatives putting forward proposals to extend the generous tax subsidies for renewable energy which were put in place after the financial crisis. Combined with the continued commitment of 29 individual US states to mandatory renewable portfolio standards, this should support the continued growth of renewable energy in the US, albeit at a slower pace than would have been the case in the presence of a comprehensive climate bill."