(These comments were submitted by Dina Kruger, president of Kruger Environmental Strategies LLC.)

With the election well behind us and four more years ahead for the Obama Administration, many people speculating about EPA’s regulatory agenda in the second term. Will the Agency keep up the pace set in the first term, which saw the issuance of several major rules, or will things slow down? Based on my time at EPA and what I’ve observed since leaving the Agency two years ago, I expect EPA to focus broadly on three major challenges:

· Personnel Turn-over: While EPA’s political management was remarkably stable during the first term, but same may not be true in the second. The big news, of course, it that Administrator Lisa Jackson will be leaving the Agency at the end of January, and other senior political officials may depart in coming months. Filling the political slots takes time, and once the new leaders arrive at the Agency, they must be briefed on the key issues and given an opportunity to put their stamp on the rules under their purview. EPA’s senior career leadership – with their institutional knowledge – has historically played a critical role in this process. But an unprecedented number of senior career executives have recently retired or are scheduled to retire in the coming year. The loss of senior career staff will be moderated by the strength of EPA’s mid-level managers, but it takes even the best manager time to come up the learning curve in the high profile, top level career EPA jobs.

The immediate consequence of Administrator Jackson and other senior leaders departing is likely to be slower decision making. It is not uncommon for important decisions to be deferred until key leadership posts are filled, and lower priority rules may also be slow-walked by acting managers seeking to preserve the prerogatives of their new bosses. Changes at the political level can also significantly impact EPA’s image and influence. Serious damage can occur if weak political leaders are unable to successfully develop and defend the Agency’s regulations and budgets.

· Establishing Priorities: During the first term, it was often difficult for the EPA to establish priorities related to its regulatory agenda. When the Obama Administration came into office, they found a backlog of stalled rules and a pent up demand from the environmental community to get things moving again. The result was what some have called “a tsunami” of rules, several of which were forced into tight schedules established by the courts as a result of settlement agreements and court rulings. In the second term, EPA is likely to be less willing to agree to ambitious rule-making schedules and more likely to push back against attempts to fill up the rule-making agenda with comparatively minor (but just as time-consuming) regulations. If EPA succeeds in managing their agenda, better rules – and hopefully, less litigation -- could result.

· Managing Budget Cuts: Since the first Obama budget (for fiscal year 2010), EPA’s budget has fallen by 18%. The impacts of these cuts are plain to see. There are hiring restrictions in place, less funds to support state implementation activities and enforce the rules already on the books, and fewer people to provide compliance assistance to the regulated community. It does not appear that the budget situation will improve any time soon, with the recent “fiscal cliff” deal pushing the pending budget sequestration two months down the road. If no better deal is reached, EPA’s funding could fall by another 8%. Budget constraints will increase pressure to devote available staff and resources to the most highly visible and important activities. Expect EPA to delay or defer non-essential rule-makings and reduce the size and scope of lower priority activities.

Overall, the most likely outcome is that EPA will continue issuing rules, but not as many or as quickly as in the first term. The Agency will likely place additional effort on finding the “regulatory sweet spot,” the workable middle where industry concerns about cost and timing are successfully balanced against environmentalists’ desire for stronger actions to protect human health and welfare. You can recognize the “sweet spot” because that’s the place where most stakeholders are reasonably satisfied, with no major players either outraged or cheering. That’s basically what we’ve seen with the big rules issued since the election (for example, the PM 2.5, cement, and boiler rules).

With domestic electricity demand scheduled to rise 22 percent by 2035, there is no better time for our country to lay the groundwork for a sustainable energy future than now. We have the opportunity to lay forward a bi-partisan, realistic energy strategy for the 21^st century. While this strategy must be multi-pronged, and protect the environment while satisfying increasing demand and encouraging economic growth, it is now possible for our leaders to make major progress.

There is no one energy source that will solve all of our country’s needs, which is why I support President Obama’s “all-of-the-above” strategy. This strategy has the potential to achieve wide-bi-partisan support, combining new technologies to extract our abundant natural resources with more efficient renewables and power transmission. This plan also includes increased investment in nuclear energy, which is reliable, affordable and provides more than half of our country’s carbon-free electricity. Strong support for nuclear energy has always come from both sides of the political aisle, and must remain so in the future.

Our energy policies must also encourage increased energy conservation. The president has already pushed for increased fuel mileage standards and can do more in a way that would attract bipartisan support. Whether it is measures that create more efficient light bulbs, more cost-effective heating and cooling of homes, or reducing the energy footprint of the US military, these simple efforts are easy to implement and can generate enormous savings over time. For economic, environmental and national security reasons, I believe that proactive legislation on energy conservation could attract support from President Obama and the Congress.

Energy is one of President Obama’s priorities for the next four years. With that in mind, there is an opportunity to make thoughtful, meaningful progress this year. I hope that the President and congressional leadership can make some headway in creating a clean and safe energy future for our country.

Just over a week into the New Year, energy has taken Washington’s main stage as a top issue for 2013—and rightfully so. Technological advancements and new found energy reserves have redefined America as a global energy superpower. The use of hydraulic fracturing and horizontal drilling in North American shale plays alone has provided thousands of jobs and millions in federal, state and local tax revenues. But there is one issue that could cloud the bright future of American energy all the same: the Endangered Species Act (ESA).

On December 28, 1973, President Richard Nixon signed into law the ESA. The definition to “protect and recover imperiled species and the ecosystems upon which they depend.” Unfortunately, the noble goal of ESA has been muddled and manipulated by anti-development groups aiming to stop critical energy production in its tracks. Just this past December, the U.S. Fish and Wildlife Service (FWS) announced its decision to begin consideration to list the Lesser Prairie Chicken as threatened under the ESA. The home of the prairie chicken is also home to robust oil and natural gas reserves.

As Texas, Oklahoma, Colorado, and New Mexico flourish thanks to the hard work of our independent energy producers—companies with an average of 12 employees who drill 95 percent of America’s wells—the anti-development movement is attempting to hijack the ESA to stop economic progress in our resource-rich regions. Listing the Lesser Prairie Chicken as threatened could all but paralyze development in these states, and undercut the independent initiatives that are already taking place to assure energy development does not adversely impact local and regional ecosystems. After all, environmental stewardship is a fundamental pillar of the operations of America’s independent producers. These companies and their employees are integral members of the communities where they live and work, and they have a personal interest in protecting the environment and surrounding wildlife.

Already, several groups including the Panhandle Producers and Royalty Owners Association and the Permian Basin Petroleum Association have come together to draft voluntary conservation agreements for oil and natural gas companies operating in areas that overlap with prairie chicken habitats. Companies who choose not to participate could face fines or jail times should there be a negative impact on wildlife or habitat due to their operations. Governors from the southern Great Plains have also announced they will release a five-state strategy to protect the lesser prairie chicken early in 2013, demonstrating states’ ability to manage, protect, and support local ecosystems and avoid unwarranted federal listings by the United States FWS.

Taking protection away from the states and placing the prairie chicken on the threatened species list would be the start of a slippery slope that would set a dangerous precedent for future energy production, economic growth, and working conservation efforts. And not just for oil and natural gas development. Wind energy has come under attack from these same groups targeting an end to energy infrastructure and development. Our independent producers will continue to work with state agencies to ensure the continued protection of our nation’s robust ecosystems and species. We are also meeting with the administration to voice our concerns and determine the best balance going forward. Only through transparent and reasonable discussion of these important issues can our ecosystems be protected while our critical energy sources are developed. To use the ESA as a means of halting development altogether stands against the true meaning of its existence and certainly against the all-the-above energy promise President Obama pledged to the American people.

In recent statements, President Obama has ranked addressing climate change one of his top three priorities for his second term. Win, place or show, the President has already offered up a two-track course forward: first, take immediate action on near-term greenhouse gas emission reductions; and, second, simultaneously launch a conversation on how to put the U.S. on a longer term path to both avoid the worst impacts of climate change, and promote economic growth and job creation.

We have already made progress on the first track. In 2009, the President committed the United States to a 17 percent reduction in greenhouse gas emissions by 2020, and an 80 percent reduction by 2050. The U.S. currently is within striking distance of the 2020 goal for carbon dioxide, partly due to the Obama Administration’s leadership in setting fuel economy standards for cars and trucks. But much of the forecasted carbon dioxide reduction is due to the economic slowdown and to the historically low price of natural gas. But we can’t rely on natural gas prices remaining low forever and we want economic growth. We must work to meet U.S. climate goals based on smart choices, not chance.

The President should take two clear, and immediate steps – neither requiring Congressional action: First, EPA can finalize the Clean Air Act performance standards for carbon dioxide emissions from new fossil power plants, followed immediately by a regulatory program to control carbon pollution from existing power plants. Second, EPA can regulate methane emissions from the oil and gas industry -- a strategy that will yield almost immediate climate benefits.

Power Plants: Electricity production is the largest industrial contributor to domestic carbon dioxide emissions – and EPA’s power plant carbon dioxide emissions standards must be finalized at the emissions rate typical for a new natural gas power plant. Most domestic carbon dioxide emissions come from existing power plants, of course, so setting aggressive yet attainable performance standards will rebalance the generation mix by curtailing the operation of older, inefficient coal plants, in favor of cleaner plants, like underutilized existing natural gas plants.

Reducing carbon dioxide emissions will also unlock billions of dollars in capital investment to improve overall system efficiency and to install pollution controls. These improvements, in turn, will create thousands of jobs. Moreover, sending this economic signal now, while companies and states are still making decisions regarding how to comply with the soot, smog, and toxics rules, could avoid billions of dollars of stranded investment in emission controls on outdated coal plants.

Methane Regulation: EPA should set comprehensive methane emissions standards to minimize the largest source of methane pollution in the US – the venting and leaking of natural gas (which is mostly methane) from natural gas production and transmission systems. Controlling methane emissions presents an immediate – and cost-effective -- opportunity to deliver swift climate benefits. Pound for pound, methane pollution warms the climate over 70 times more than carbon dioxide. However, unlike carbon dioxide, methane degrades in the atmosphere in a few decades. As a result, reducing methane emissions quickly can provide some significant temperature benefits. These standards would save precious fuel, money (many recommended measures pay for themselves quickly, since they conserve gas which can then be sold), and lives (methane and other pollutants in natural gas are ingredients in ozone smog, while other chemicals in natural gas are toxic). Doing so is also essential to ensuring the climate benefits of a policy that shifts more power generation to natural gas.

Creating these standards will also create jobs for everything from designing even better new control techniques and new tanks, to detecting and repairing leaks in the system, and to building pipelines to avoid wasteful flaring of gas at oil wells.

Taking the Longer View:

But clearly we need more than these technologies to tackle the enormous climate challenge ahead. Abundant natural gas, while less carbon-intensive than coal, is not a long-run climate solution, as the National Petroleum Council noted in its 2011 report “Prudent Development.” To ensure adequate long-term progress, the Obama administration must revamp energy technology innovation initiatives to ensure the U.S. can deploy sufficient low/zero carbon electricity and transportation technology to meet the 80 percent carbon dioxide emissions reduction target by 2050.

To reach that goal in just 37 years, we must drive the development of a broad portfolio of low-cost, zero-carbon technology options. The U.S. does not need to pick “winners” among new technologies and firms, but rather, it must cultivate and support promising technologies at their early stages so they can seriously enter the race. And to move advanced technologies forward will require much more effective innovation policies than are in place today. Some examples might include:

· Competitively bid production tax credits for the use of captured power plant carbon dioxide in enhanced oil recovery;

· Targeting federal clean energy procurement to truly innovative technologies rather than today’s technologies;

· Reorganizing the Department of Energy’s innovation work around the strategic grand challenges of zero carbon energy rather than technology-specific silos; and

· Support for Nuclear Regulatory Commission licensing procedures designed to enable successful commercialization of promising advanced nuclear technologies.

So with these and other enabling policy actions, in the power sector, for example, we can and must develop and commercialize:

• Carbon capture and storage for all coal and gas power plants ;
• Advanced nuclear energy technologies;
• Grid-scale energy storage to support optimal deployment of intermittent renewable resources and to complement base-load nuclear power systems; and
• Advanced, more economically competitive renewable, energy technologies.

In the transportation sector this strategy would include developing and commercializing:

· Electric technology systems for all light vehicles and freight rail transportation;

· True zero-carbon liquid fuels that – unlike biofuels - do not emit carbon throughout their lifespan; and

· Synthetic hydrocarbon fuels based on recycled carbon dioxide captured at power plants.

Some of these improved innovation policies may not require substantial new financial resources. But let’s face facts: putting the United States back into global technology leadership in energy will not be free. The United States leads the world in military technology due partly to a military R&D budget of $60 Billion annually. A considerably smaller energy innovation budget could ensure America’s position as the world’s clean energy technology leader.

Climate change has been rightly called a “wicked problem,” involving enormous uncertainties and unknowable risks, multiple and sometimes competing pathways forward, and disagreement about what “success” would be. Still, we know the direction we need to head: towards a society and economy with lower emissions of greenhouse gases. The short-term policies described above constitute a serious start, and set the stage for long-term progress through a new and focused energy innovation initiative.

These days it’s become increasingly difficult to garner bipartisan support for almost anything at the national level. That’s why I am working with a diverse and talented group of colleagues on the Bipartisan Policy Center’s Energy Board. We are led by four very distinguished and experienced national leaders: former Senators Byron L. Dorgan and Trent Lott, General James L. Jones, and former EPA Administrator, William K. Reilly. We all see the tremendous growth in America’s supply of both traditional energy sources and all forms of renewable energy. Even with this growing energy abundance there are still challenges ahead that demand close attention by our elected officials and policy makers. One of our key strategic energy policy initiatives calls for the creation of an energy strategy council to promote a truly balanced “all of the above” energy portfolio that can turn the energy challenges of 2013 and beyond into great opportunities for a more secure, prosperous and healthy America.

Citizen support for clean, renewable energy--- support that is strong and bipartisan as we know from consistent polling numbers--- should mobilize political leaders to adopt long-term renewable energy legislation. American voters in swing states overwhelmingly support candidates who support government investment in clean energy, far more than those who do not. The extension of the Production Tax Credit for renewable energy in the very beginning of 2013 reflected the interests of American voters. It would be wise for policymakers to listen to voters and to consider further revising key policy incentives for renewable energy in 2013. The clear message: Americans want clean energy.

An important finance policy mechanism being discussed in 2013 would allow renewable energy projects to benefit from Master Limited Partnerships (MLPs), creating a more robust renewable energy market. MLPs would level the private sector’s energy investment ‘playing field’ by tapping capital from investors currently unable to invest in renewable energy projects due to laws that only allow MLPs to be used for oil and gas production. Increased levels of capital introduced in the renewables market by MLPs would significantly reduce construction finance costs for many renewable energy developers. Senator Chris Coons (D-DE) and Jerry Moran (R-KS), introduced the Master Limited Partnerships Parity Act that would allow MLPs for renewable energy development and the legislation should see bipartisan support this year.

Despite the challenges of partisan divisions, the 113^th Congress should consider reflecting their constituent’s views and agree on a national Renewable Portfolio Standard (RPS). A regionally tailored set of clean energy goals would certainly create great economic development in states and quickly build a stable business landscape for renewable energy – increasing job opportunities for Americans, attracting private capital for investing, and mitigating carbon emissions. A national RPS, or, alternatively, a Clean Energy Standard (CES), would mark America’s strong commitment to moving to a clean energy economy and to a leadership role in confronting the global security problem of climate change. If a national RPS is too far a reach for 2013, defending and strengthening state RPS mandates across the country are critically important. Many states have seen significant gains in jobs and private investment directly due to RPS policy and it is important to continue this positive trend.

Energy is not a Democratic issue nor is it a Republican issue. It’s an American issue. The people have spoken and Congress should listen and enact bipartisan-crafted legislation that supports the development of made-in-America renewable energy. It is crucial for our policymakers to support one of the fastest growing segments of the American economy. Renewable energy had made great strides in the past four years – it’s important to build on this to create more American jobs and secure America’s energy future.

President Obama’s second-term priorities (immigration, the economy, energy, and tax reform) reflect his hoped-for legacy – and his misunderstanding of the importance of energy to the U.S. economy.

American companies have unlocked huge shale oil and gas resources that promise renewed prosperity and a cleaner environment, if government policies encourage investment. But the President continues to demand higher taxes, more rigid regulation, and more spending on “fuels of tomorrow,” even after decades of subsidies, repeated failures and bankruptcies. These positions, according to experts, bode ill for energy, the environment, and national prosperity over the next four years.

The International Energy Agency and the U.S. DOE Energy Information Administration have reported how hydraulic fracturing and directional drilling (“fracking”) are bringing change to the country. Companies are opening long-closed chemical plants and new manufacturing facilities here, as huge supplies of cheap natural gas makes investment feasible. Energy experts report that the new resources are driving economic activity, even in states outside the producing areas; 1.7 million jobs and $63 billion in new government revenues; with 3 million jobs and $113 billion in annual government revenues by 2020.

As to the environment, the IEA says that natural gas-driven change makes it likely that the U.S. will be the only nation to attain its 2020 goal for greenhouse gas reduction (17% below 2005 levels). Coal, which fueled 53% of U.S. electric generation only a dozen years ago, fuels 40% now, and is being rapidly replaced by clean natural gas – but the EPA is poised to implement rules that will “bankrupt or close” coal-fired generating plants. Such action will impose high costs and economic disruptions across the nation; but is likely in 2013.

Other “sleeper” issues for the President, the regulators and the Congress in 2013 include the Keystone XL Pipeline to bring oil from the Canadian oil sands to refineries in Texas. The President put off that decision last year; now it’s time for a ruling. Pipeline construction would provide thousands of American jobs and the oil flow would add hundreds of thousands of barrels of oil from a secure, friendly source (which has the alternative of shipping that oil overseas to China and Japan). Environmentalists and Utopians oppose the pipeline, hoping wind, solar and other fuels of tomorrow will take over today.

Another issue is whether the US should export Liquefied Natural Gas to Asia and possibly Europe. Fracking opens the possibility, and one former LNG import facility is being refitted for exports. Others may consider such investment – but in the past, Congress has severely constrained oil and gas exports. Exports would foster additional production, but there will be opposition. The first Congressional hearings could be this year.

Utopians and regulators also oppose expanded use of non-conventional oil and gas resources because it may (it is) foster a reindustrialization of the United States. Diametrically-opposed forces are aligning on the “legacy” issues. The outlook for significant cooperation between the President and the Congress is not much different from the last two years.

Three issues will undoubtedly demand attention in 2013—fiscal policy, the continuing natural gas boom and upcoming Clean Air Act greenhouse gas (GHG) rules. Each presents an opportunity for federal lawmakers to think long-term about the nation’s energy and environmental challenges.

The next round of the fiscal policy debate is already underway. With Congress unable to agree on calculating cost-of-living increases for Social Security, the prospects for a grand bargain in the near future seem dim. That said, tackling the deficit will almost certainly require additional tax revenue and there will be little appetite to revisit income taxes. This scenario has already led to suggest carbon taxes as a solution, and we will likely hear more about the idea in the coming months. An important question is whether such a tax designed for fiscal imperatives would have a substantial impact on emissions and the energy mix.

Senator Ron Wyden’s (D-OR) new role as chair of the Senate Energy and Natural Resources Committee—coupled with his seniority on the Finance Committee and the Budget Committee—will make him a major player on issues involving energy and fiscal policy. As a long-standing advocate of renewable energy, he will be well positioned to argue that any deals include continued funding and incentives for renewable energy technologies. He has already indicated a carbon tax would be a “big lift politically.” Once he settles into his new leadership role with the Energy Committee, he could decide he has enough political muscle to force serious conversations about a carbon tax even if the lift is too great for legislation at this stage. Congressional policy tends to build over time and a push now could lead to action in future fiscal negotiations.

Natural gas prices will continue to drive electricity generation choices, with or without new federal action. Already, sustained low natural gas prices have led utilities to mothball or retire a large number of older fossil fuel-fired power plants. Earlier this week, Georgia Power, a Southern Company subsidiary, announced it will retire over 2 GW of coal- and oil-fired generating capacity by April 2016, replacing at least some of the generation with natural gas-fired units.

Senator Wyden suggested recently that natural gas could lead to an energy policy compromise. As the electricity sector increases its reliance on natural gas, there will be calls for certainty regarding access to shale gas resources, as well as calls for water quality protections and limits on methane leakage. The stars could align in the new Congress, with senators Wyden and Murkowski leading the charge for a bipartisan energy bill that centers on natural gas, but also tackles other energy issues.

Finally, the Clean Air Act provides the U.S. Environmental Protection Agency (EPA) and the states with a powerful regulatory tool to address GHG emissions from the electricity sector. The EPA will likely finalize the New Source Performance Standards (NSPS) rule limiting GHG emissions from fossil fuel-fired power plants this year. If the final rule resembles the proposed rule released in March 2012, any new coal-fired power plant would have to install carbon capture technologies within the first 10 years of operation. Finalizing the NSPS rule will trigger Section 111(d) of the Clean Air Act, requiring the EPA and the states to regulate GHG emissions from existing fossil fuel-fired power plants.

As discussed previously on this blog, the language in Section 111(d) is quite broad and grants a fair amount of discretion to the EPA and the states. “Going big” on existing source regulations could include combining significant emission reduction requirements with flexible compliance mechanisms such as averaging or emission permit trading. Even if the rule does not achieve major emission reductions in the near term, the rule could also “go big” in a bottom-up way by encouraging states to experiment with cost-effective compliance strategies—allowing creative ideas to filter up to the federal level.

With new leadership in Congress, a president beginning his second term, and the policy drivers described above, we just might see meaningful progress on the nation’s pressing energy and environmental challenges.

One energy policy question that will be answered in 2013 is the issue of U.S. liquefied natural gas (LNG) exports. In this case, the wise policy course is already clear. The U.S. Department of Energy should approve all permits for LNG exports and allow the laws of supply and demand to determine which export projects are eventually built.

The United States’ newfound wealth of natural gas has re-drawn the global energy map. We are now in the position of having enough excess supply to meet domestic demand, support our manufacturing base and still be able to take advantage of the economic benefits of selling a small percentage of natural gas to our allies abroad. It’s time our policy makers recognized this opportunity and made every endeavor to encourage free trade by approving LNG export projects currently pending with the administration.

Approving these projects and allowing the market to dictate their pace would put the United States in the position of becoming a global supplier of an affordable and clean fuel source. It would lower global carbon emissions, and demonstrate the United States’ commitment to free trade, including supporting our longtime ally, Japan, whose energy supplies were devastated by the Fukushima disaster in 2011.

Nonpartisan experts such as the Brookings Institution and the Council on Foreign Relations have concluded that limiting our LNG exports would only be limiting our own gains from trade.

The U.S. Department of Energy agrees. Their own recent third party study performed by NERA on LNG exports found that the United States would experience net economic benefits from increased exports and our consumers here at home would see more in income and tax revenues. In fact, for every export scenario tested, the higher the level of exports, the greater the benefit to the U.S. economy.

Indeed, each LNG export terminal is a multi-billion dollar investment in the U.S. workforce and manufacturing industry. And, according to a study by ICF International, each terminal has the ability to create as much as $11 million in annual tax revenue and reduce the U.S. trade deficit by as much as $7.1 billion each year. According to the U.S. Trade Administration, for every $1 billion invested in U.S. exports, approximately 6,000 new jobs are created at home. Furthermore, it’s worth noting that a recent study from IHS CERA found that increased natural gas production, some of which would supply LNG exports, will support 1.5 million jobs by 2015, and as many as 2.4 million by 2035.

Given the reality of our economy, the support of countless economic and industry experts and the endorsement of the Energy Department’s own report, moving forward as quickly as possible with LNG export projects is a necessary step in 2013.

Almost lost amid the fireworks over the “fiscal cliff” is the fact that Congress and the Administration did an eminently smart thing on energy efficiency as part of the compromise fiscal package.

The President has now signed into law an extension through 2013 of two important tax incentives, 25C and 45L, that will continue spurring jobs and growth in a sector of the economy – construction and home retrofitting – that desperately needs it. Does this success on tax credits mean that 2013 will be the year that Washington policymakers – at long last – embrace a concerted commitment to energy efficiency?

Let’s hope so, because encouraging energy efficiency would go a long way toward helping America achieve our long-delayed goal of becoming more energy independent. As energy efficiency champions are fond of saying, no matter where we get our energy, it makes no sense to waste it. Saving energy equals saving money – no matter the source.

Much of the energy policy debate, regrettably, gets mired in ideological sniping. But that’s not true of energy efficiency. Enacting common-sense policies that incentivize home- and business owners to make greater investments in insulation and other energy-saving measures transcends partisanship. That’s why extending the energy efficiency tax credits had such strong bipartisan backing in the two tax-writing panels: House Ways and Means and Senate Finance.

It also explains why the rest of the energy efficiency agenda – whether it’s the Shaheen-Portman Energy Industrial Savings Act (S. 1000 in the previous Congress), the Bennet-Isakson SAVE (Sensible Accounting to Value Energy) Act (S. 1737), the House’s efforts to strengthen the Property Assessed Clean Energy (PACE) programs (H. 2599), or the fight to extend other energy tax incentives, all have Republican, as well as Democratic, cosponsors.

Each of these initiatives is about more than saving energy: it’s about sparking jobs in places around the country that struggled to survive the Great Recession. Senators Michael Bennet (D-CO) and Johnny Isakson (R-GA) like to point out that their SAVE Act will create some 80,000 construction jobs. That means the workers who build and renovate homes and office buildings, plus contractors, retrofitters, installers, carpenters, et al. – the very jobs that have been hit hardest in recent years. In the 113^th Congress, CNAIMA and other energy efficiency champions will be working with a bipartisan coalition of leaders determined to create jobs through energy efficiency.

Extending the two tax credits through 2013 was a modest but essential step. Energy efficiency, the ultimate renewable, is often called the “low-hanging fruit” of the energy policy debate. That may be true, but that low-hanging fruit has proven elusive in recent Congresses. The North American insulation industry would like to see that more of it gets picked in 2013. We owe that much to the construction sector and to our energy future.

Kate Offringa is the CEO and President of the Council of the North American Insulation Manufacturers Association (CNAIMA).

Over the next four years, energy development will face challenges both from the Obama Administration’s regulatory agenda, as well as from Congress. Additionally anti-development forces are ramping up efforts to block energy development at the local and state level. The regulatory action, stemming mainly from EPA, that stalled during the two years leading up to the election will continue apace, at least until the midterm elections in 2014. Despite the potential for the confirmation of a more moderate Administrator, EPA can be expected to work quickly to promulgate and finalize rules in order to insure completion by 2016. I expect that the agency will push aggressively in several areas including the regulation of coal-fired utilities, regulation of hydraulic fracturing and regulation of offshore oil and gas development.

Given the partisan divide in Congress, enactment of significant energy or environmental legislation dealing with key issues such as energy efficiency, Renewable Fuels Standard reform, and offshore development, will be extremely difficult and Congressional oversight of the federal regulatory agencies will be highly partisan and largely ineffective.

Impacts of a second term will be felt in several key areas:

● Gas Prices

Persistently high gas prices will be an ongoing headache for the Administration. The Energy Information Administration anticipates that the average cost per gallon of gasoline will be $3.43 this year, down from the record annual high of $3.60 in 2012. While gasoline prices have lowered slightly, this should not distract the focus of the Obama Administration and the Congress on efforts to increase U.S. energy security and ensure more affordable prices for American consumers.

● Keystone XL

As perhaps the most politically-charged issue in the energy/environment space, Keystone XL will be in the spotlight as the Department of State conducts its environmental review of the pipeline’s new route through Nebraska and the White House makes a determination on approval of TransCanada’s application for a Presidential Permit. Environmental groups have already announced a series of high-profile protests of the project and will bring enormous political pressure to bear on the White House regarding the permit. Labor groups, the oil and gas industry and the Canadian Government have also promised action – ensuring that this will be a very high-profile political fight throughout 2013.

● Shale Development

There is wide speculation about EPA’s potential impact on hydraulic fracturing both on public and private lands. Final reports based on alleged groundwater contamination in Pavilion, Wyoming will provide clues as to where the agency will focus in the future. EPA has signaled that it will refrain from making claims about the frequency of groundwater contamination.

● Endangered Species Listings

Energy exploration and development will continue to be hampered by an aggressive push by environmental groups on Endangered Species Act designations. The Fish and Wildlife Service has a backlog of ESA Listing Petitions that it will need to make decisions on, and environmental groups have announced plans to file lawsuits in an attempt to force endangerment and threatened listings. Additionally, incentives for the agency to pursue public-private conservation partnerships to help avoid listings will be diminished.

● Offshore Activity

CEA anticipates an aggressive push to implement restrictions on offshore activities through full adoption of the National Ocean Policy at both the federal, state and local level. A National Ocean Policy would regulate shipping, recreational, and marine fisheries interests in addition to oil and gas production. Development of offshore Alaska assets also continue to be at risk, with key permitting dates looming early in 2013. Many anticipate likely legislative efforts to expand leasing in the Outer Continental Shelf and to amend revenue-sharing and forthcoming regulations on OCS safety and liability in the aftermath of the Macondo blowout.

● Energy Taxes

House and Senate Democrats will continue to push for increased taxes on oil and gas production, particularly through reform or repeal of Indirect Drilling Cost credits. CEA also expects that the Administration and Congressional Democrats will make a major push for a carbon tax – both as a means to reduce consumption of fossil fuels and as a revenue raiser in the future Fiscal Cliff negotiations.

● Renewable Fuels

A significant number of organizations and states have pushed very hard for a legislative repeal or reform of the Renewable Fuel Standard in light of the fact that ethanol production is currently consuming 40% of the national corn production and ethanol blending levels are approaching the 10% blendwall. Agricultural groups have pushed back against these efforts aggressively, which will ensure that any legislative debate will be contentious.

One never can be sure of policy developments because they mainly react to two things; abrupt changes in politics and abrupt changes in markets. Let’s look at each in turn.

The 2012 election is past us, and much is as before. At the moment it’s hard to see new political forces driving different policies from what we’ve recently seen. Possibly the President will elevate climate policy but at the moment he seems to be focused more on fiscal issues and immigration reform. EPA probably will take the lead on climate and perhaps on hydraulic fracturing, and there probably will be pushback from others. Still, something like another Macombo oil spill or a major energy- or environmentally-related scandal could change the political horizon, but right now there’s little reason to factor such an event into policy-making.

What about abrupt change in energy markets, such as an oil price spike or very steep fall? Certainly tensions could get far worse in the Middle East, choking oil supply and driving oil prices up rapidly and steeply. Such a development likely would affect energy policy in a couple of directions. Politicians would demand pricing restraint from companies and might agree to release of oil from the SPR. In addition, policies to encourage supply such as approval of the Keystone pipeline would become more likely. Politicians like to be perceived by the electorate as taking action to address a crisis, and if oil supply were disrupted this is the direction they likely would go.

On the other hand, the world economy might be soft for another year, demand might not rise with supply, and prices might fall a little. In that case no dramatic change in energy policy is likely.

Bottom line: it’s hard to see radical change in U.S. energy or environmental policies in 2013. At the margin there’ll be some new developments, but they’ll have relatively minor impacts. Could this be wrong? Sure! A major new event, unpredictable but consequential, could occur at any time. But I’m going with the odds; nothing like that is probable, at least for now.

Multiple swords dangling over the heads of national and international negotiations will influence thinking and affect actions in 2013. Easiest to witness of the economic impacts of the new energy economy are the worldwide efforts to support the fast-growing renewable energy industries. IEA estimates the industry will increase 40% in the next five years. Those seeking growth opportunities are already investing in renewables.

Countries will respond to the challenges of climate change with ‘nationally appropriate mitigation actions’ and, though it may be hard to recognize in the mayhem of other international challenges, nations are indeed implementing such actions. These will become more evident in 2013 and begin to influence the movement and outlook of international energy markets. Recently, Australia, Vietnam, South Korea, China, and Thailand have announced plans for new carbon markets or taxes. Expect more. Of course, without an international agreement, each nation’s program will be different. This means international companies may need to keep track of, and respond to, scores of different requirements, one reason why we will continue to see large fossil fuel companies like Exxon and Shell calling for a price on carbon.

International negotiations have not fared so well in the struggle to define specific expectations or a unified system. Particularly sticky is the question of what are the appropriate expectations for developed and developing nations. The distinction between the two will grow ever more difficult to justify as China, India, Brazil, and other countries take on more and more of the profile of major emitters whose significant resources allow significant action (i.e. developed countries). Look for efforts to clarify what is possible to rein in the growing damage created by emissions from developing countries.

Along with this challenge is an emerging problem with opportunities for extracting wealth from fossil fuels in Africa. As the revolution in exploration techniques extends to shale in eastern Africa, enormous gains in resource potential there open opportunities to increase prosperity and raise living standards. Africa is also rich in renewable resources, so the direction of development will provide clear pointers to the type of emission profile we can expect in the coming decades.

Developed nations, particularly European nations, have their own problems. While the carbon trading system continues to set records for volume of trade – exceeding one billion credits traded in November – there are many internal disputes. And beneath the surface are instances of fraud, and corruption in trading carbon credits. This will not help the effort to control emissions and will be addressed in ever more draconian measures. At the same time, Europe must address the surfeit of credits available on the market – an excess that threatens to undermine the economic investments already made and to limit further actions to reduce emissions. All of these have a direct impact on the energy economy of that continent.

All of these developments, demonstrating the enormous challenges of implementing an international emissions control system, suggest growing actions to impose legal and financial burdens on the emitters via courts. The emerging concept of “Loss and Damage” as a separate track from “mitigation” and “adaptation” warrants careful consideration. Nations, industries, and individuals who suffer the impacts of climate change will seek redress through any means available and one growing opportunity is via the courts. Expect struggles to define the laws of responsibility in this field and increasing attention to liabilities (particularly the fossil fuel industry’s liabilities) as this field crystallizes.

Clarity on corporate liabilities will continue to defy precision but expect some increase in the level of the debate as the National Climate Assessment is released in the US. This has been many years in the making under the Obama administration and will serve as important leverage in the continuing debates about a national system in the US. Expect a greater call for science to “attribute” particular types of events to human-driven climate change. This will influence the debate on a carbon tax, already endorsed by Exxon and Shell, to name a few. Later in the year we’ll also get the first hints of the concerns of the Fifth Assessment Report of the UN Intergovernmental Panel on Climate Change. Expect sturm und drang.

Public policy in the US will also revolve around pipelines. The approval (or not) of the XL pipeline is only one of many reshaping our domestic energy economy. Production from new gas developments now fills a million railcars on our railway system because the pipeline system was not created for the current geographical distribution of production. Expect NIMBY and environmental feelings to influence the discussion, which will include the economic and environmental costs and benefits of exporting CNG. The science to watch concerns how much methane is released during recovery. Anything above 7% means the advantage of gas over coal disappears. Individual projects could suffer even as the industry advances.

Expect GHG emissions to continue to rise inexorably. More worrisome, they will continue to rise along the least desirable path laid out in scenarios a decade ago and point toward a world that will warm to extremes of earlier projections. Along with the scientific surprises to expect in 2013, add those that nature will provide, as if 2012 wasn’t enough. The challenge we face here is that science has told us that variability of all measures of climate will increase in future and, for the average human, variability is another word for disaster, whether it be drought, heat wave, storm surge, flooding, or forest fire. Science, including social science, will soon learn to pool our combined outlooks to provide a notion of how many years of continuing extremes must accumulate before the tipping point of public opinion forces unprecedented and stringent action to limit the overall cost. My prediction: it won’t be long.

“One of my favorite lines in the military was "hope is not a strategy." And we need some strategic thinking where energy is concerned. For 40 years, or more, we've had a lot of policies, but we really haven't had a coherent strategy.” – General James L. Jones, Senior Fellow at the Bipartisan Policy Center

This comment is from OurEnergyPolicy.org’s recent panel discussion, which covered the energy policy prospects and challenges that Washington will face in 2013 and beyond. While the National Journal questions accurately suggest that energy issues may command less attention than other Administration and congressional priorities, a failure to press aggressively for a path to a sound energy future for America would be a major mistake. The key energy issues – security, climate, and economic impact – are becoming increasingly urgent.

In OurEnergyPolicy.org's panel discussion, former Senator Tim Wirth stressed the need for a national conversation and improved public education on energy issues. This approach is critically needed, both to articulate these matters more clearly to the public and to create the grassroots support that will make adoption of a sound energy policy more of a priority in Washington. As General Jones indicated, we continue to delay embracing a coherent national energy policy at our peril. Among the issues discussed by the panel were energy production and it’s impact on our geopolitical engagements, the state of the power industry and the role of the EPA.

At OurEnergyPolicy.org we believe that substantive, diverse and widespread dialogue is necessary to uncover common ground on energy issues. Identifying common ground and stimulating innovative approaches among the energy community will help energize and support a more informed policymaking process.

As long as gasoline is available and affordable, neither politicians nor the American public pay much attention to energy policy. Energy was on the agenda for a few months last spring when gasoline prices spiked above $4 per gallon and President Barack Obama claimed he was supportive of an “all of the above” energy strategy. But as soon as gasoline dropped below $3.50, energy virtually disappeared from the public agenda and little was heard during the presidential campaign.

More recently, President Obama has stated “energy” will be among his top priorities during his second term, though he has yet to propose any specific initiatives. Perhaps his State of the Union or Inaugural Address will give us some clues.

One possibility is that the President will continue to turn his back on fossil fuels and double-down on his commitment to so-called clean energy, while emphasizing conservation and efficiency as the route to greater U.S. energy security. In this scenario, he will likely renew his veto of the Keystone XL pipeline while keeping the bulk of America’s offshore oil and gas resources off limits to drilling. He will also renew his executive order from last April directing several federal agencies to promulgate new regulations on hydraulic fracturing, even though there is no evidence of laxity on the part of the states.

New EPA regulations pursuant to mercury, particulates and greenhouse gas emissions are also likely to be forthcoming that, in turn, will accelerate the shift away from coal for power generation and industrial boilers. Since the President first took office, 8,000 megawatts of coal-fired generation have been retired and another 15,000 megawatts will likely be off-line by the end of Mr. Obama’s second term.

A second, though more unlikely scenario, is that the White House will acknowledge that fossil fuels will continue to be the primary energy sources for the foreseeable future and will craft energy policies accordingly. First, Mr. Obama needs to recognize that natural gas, and not so-called “green energy,” is largely responsible for the dramatic drop in U.S. greenhouse gas emissions over the past 20 years. As households and industry continue to use more natural gas and less oil and coal, air quality will improve even more in the years ahead. Cheap and abundant natural gas has also been like a tax cut for millions of households and businesses that are served by utilities burning natural gas to generate electricity or supply natural gas for home heating.

What’s more, by encouraging more natural gas production, keeping federal regulators out of fracking, and accelerating the permitting process for exporting liquefied natural gas (LNG), the President can create a de facto jobs program without any cost to taxpayers. According to a recent study by IHS Global Insight, the fracking-related development of shale gas and oil could generate two million new jobs and billions in tax revenue over the next two decades.

The divided Congress is unlikely to embrace a comprehensive energy policy, carbon taxes, or a national clean-energy standard. But by reining in the EPA, approving the Keystone XL pipeline, encouraging LNG exports, and removing unreasonable restrictions on offshore drilling, the White House can enhance the nation’s energy security while simultaneously stimulating the economy.

Energy will be on the agenda this year, for a variety of reasons. Keystone will demand attention, EPA clean-air regulation will continue to change the game and Congress will be able to do nohting about it, and the U.S. will start to export a lot of natural gas, tightening that market and reversing unprecedented pricing trends. This will provide enough churn to keep our industry interesting all year. But perhaps some larger historical trends will set us up for a bigger win.

Fear is an excellent motivator, as is ambition. This Congress and this President should be motivated by both to put something significant on the board this year, and energy--unlike many issues with a hard partisan split--is an excellent place to at least hit a triple.

For the President, ambition will be linked to his legacy. As an article in this month's Atlantic magazine points out, second terms are often problematic for presidents. Things more often go very wrong than right, forever tarnishing the president's place in history. The four presidents who have bucked this trend--Jefferson, Lincoln, FDR, and Reagan--stood at the pivot point of an era in which a new set of issues corresponded to new demographics to drastically change the national conversation.

For the Republicans in Congress, there is fear of becoming a permanent minority party. So many demographic factors have moved against them that their breadbasket of core issues is becoming a huge electoral liability. If they can't find a way to connect with voters on a variety of issues, they may be on the wrong side of such a pivot point and experience a painful couple of decades.

One reason the two-party system has been so durable in American history is that once public opinion irreversibly trends in one direction, both parties pull up stakes and move to a new center. This has happened too many times to count, and such a re-alignment is ripe at present.

Unlike, say, abortion, energy is the type of issue in which bipartisan agreement is possible without politicians committing suicide in the next election. There are many areas within the energy conversation for which both parties can negotiate or agree, such as:

1. There should be long range stability in energy policy so that investors and businesses in the can plan. The fiscal cliff agreement was miraculously good to the renewables industry. But policy-makers on both sides of the aisle can agree that the uncertainty of annual mud-wrestling over credits and incentives has to stop.

2. Investment structures, like Master Limited Partnerships, have been available for oil and gas deals for decades. Making them available to renewables should not--and so far has not been--a partisan fight. It's pretty significant for those involved, and it can be added to energy policy without any pain on either side.

3. Advanced energy is not a pro-business/anti-business or pro-jobs/anti-jobs issue. This is all pro: large business, small business, white collar, blue collar, green collar. That becomes more apparent every year and takes a lot of the wind out of the sails of partisanship.

4. Even the more hotly contested issues in energy--like cap and trade and a carbon tax--have a chance to be the basis of agreement, especially with some horse trading around things like implementation of EPA clean air rules. Cap and trade was once a right-wing, pro-business idea; the carbon tax has some support from the same quarters. With many political disagreements, positions are routed in decades of firmly-held beliefs or foundational to a world view. Energy is one area where, if the volume were to be turned down slightly, agreement is possible.

There are some rays of hope--random outbreaks of reduced vitriol--between some of the energy players in Washington. And the public is inexorably trending toward agreement that something must be done about climate change--every super storm erodes the beaches--and solidifies the support for action--a little more.

Which means that smart politicians will start to pull up those stakes and move the center sooner or later. The question is whether it will be sooner, so they can claim a sorely-needed victory now, or later when they are forced. This doesn't even require any real leadership--just raw political calculation.

Four years ago, if one were to predict that domestic oil production would reach a 19 year high in 2012 or that a natural gas boom would changing the shape of the economy, they would have been laughed at. President Obama’s ideology, and that of his appointees, has been hostile to fossil fuel energy. In spite of their opposition, domestic production is up, imports are down, and jobs and investment in the oil and gas industry are growing – all largely a result of affordable natural gas.

The purpose of looking back is to make clear the difficulty of predicting the country’s energy future, especially with so many variables that politicians don’t control and so many global unknowns that impact policy and investment decisions. Predictions are never easy, even more seldom correct, but that difficulty is much greater in today’s political environment.

Looking ahead, the future of energy policy could be bright, but probably not as bright as it could be. A lot will depend on the President’s real priorities, who he appoints to key agencies like the EPA, the Department of Energy, the Department of Interior, and to key White House positions. If he appoints individuals who realists – not ideologues – there is reason for some optimism. If, on the other hand, he appoints people who are zealots, individuals who operate like Lisa Jackson has, it is likely to be a rough four years of weak economic performance and unrealized domestic production.

What the President does about Keystone XL could be telling. Freed from having to cater to the environmental extreme, he should move ahead quickly to grant the long-delayed State Department approval. That would improve relations with Canada, help achieve greater North American energy independence, and help solve the storage and distribution bottlenecks that constrain the movement of domestic crude oil. Fracking regulations, federal leasing, and the previously proposed ozone standards will all act as bellwethers as well.

Based on the last four years, the best outcome is probably an environment that reflects the Hippocratic oath to first do no harm. During the President’s first term, leasing of federal lands was slowed-walked and the regulatory process was marked by excess. A roll back is out of the question, so the best hope for is nothing new. That again will depend on appointments and the President’s priorities.

Energy and environmental legislation are remote at best, although rationalization of major environmental laws is long overdue. What the Senate would pass, if anything, would be unacceptable to the House. And, what the House could easily pass, would be dropped into a black hole by Harry Reid.

As was seen on fiscal cliff negotiations, the White House and Congress simply can’t bargain and close a deal. If they can’t on something as important as taxes and spending, there is little reason to believe they could on energy and environmental issues.

As columnist Bob Woodward observed, we have a situation that is like permanently being in divorce course with no settlement on who gets the kids. More gridlock is the likely future for important legislation and especially energy and environmental legislation. While the President says he will not negotiate again on the debt ceiling, the House and Speaker may be willing to accept a default to get real spending cuts. Default has been made to appear more draconian than it is. Over the last four years, annual federal spending has increased $700 billion. If spending cannot be brought more in line with the pre-recession level going forward there is no hope for fiscal sanity any time soon. The point being made is that the default scenario would make bi-partisan agreement on other matters even more difficult.

The President has shown he knows how to win and get his way on what is important to him—healthcare and taxes—but he has not shown an ability to govern. Unless the White House adopts a different model going forward, we are likely to see an economy that underperforms because of uncertainty by the private sector, excessive regulatory burdens, and hostility toward fossil energy. The President may succeed in achieving an even bigger federal government that resembles the social-democrat model of Europe but the long term consequences will not be rewarding.