Five top federal energy policy moments in 2011

It’s been a long year in the energy arena in 2011.

Republicans and Democrats clashed over pipelines, light bulbs, gulf leases and pollution, and natural gas and fracking became a national debate. Here is our list of five of the top moments:

5. Obama administration hands down new environmental regulations, Republicans fight back:

If anything, 2011 will be remembered as one of the most politically polarized years, and the tension between Republicans and Democrats was never stronger than on two new Environmental Protection Agency regulations for power plants. The new rules — one to regulate cross-state air pollution and another to limit mercury and toxic pollution — caused endless fights in Congress.

Republicans fought the rules by saying they were job-killing and examples of energy-supply-threatening regulatory overreach. Texas and Gov. Rick Perry even got into the mix too by suing the EPA over the cross-state air pollution regulation. However, in the end, congressional Republicans ultimately failed on nearly all counts as the Democratic-held Senate didn’t act on measures to delay and weaken the rules.

The GOP did win a nine-month delay in federal enforcement of tougher energy-saving standards for light bulbs. The day before New Year’s Eve, the states and utilities that had sued over the cross-state rule won at least a temporary victory as a federal court temporarily blocked the regulation from taking effect on Jan. 1, 2012.

4. Fracking debate continues as natural gas becomes newest potential path toward energy independence:

Natural gas prices hit a more than two-year low Friday, but the industry continues to ramp up production of gas drilling (both offshore and in shale plays) to tap the estimated 100 years of natural gas reserves in the U.S. After years of oil dominating the energy discussion, natural gas has become the newest potential path for the U.S. to reach energy independence from foreign oil.

However, the bigger headline continued to be about the potential environmental problems of hydraulic fracturing, a process of injecting water, sand and chemicals at high pressure underground into shale formations to release trapped oil and gas. Environmentalists argued it causes water contamination, earthquakes and air pollution, but the industry has countered by saying there was no evidence of any ill side effects.

But environmentalists got a little support from a new EPA study in December that suggested a link between a hydraulically fractured well in Pavillion, Wyo., and groundwater contamination nearby. Republicans and the industry immediately raised questions about the study. And it all came as federal and state agencies considered new regulations for fracturing wastewater disposal and gas drilling. The debate promises to live on in 2012.

3. The chill on offshore drilling after the Gulf oil spill starts to thaw:

In the first full calendar year since the Gulf of Mexico oil spill, the Obama administration ramped up permitting of offshore wells and proposed a five-year plan featuring lease sales in the Gulf and some Arctic areas. At the same time the administration sought to get tougher on safety, reshuffling its regulatory structure and putting in place new safety rules.

The developments had elements that pleased and disappointed all stakeholders, ranging from environmental activists to oil and gas industry groups.

The controversy-plagued Minerals Management Service was replaced with a new agency known as the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) in April. BOEMRE was then split into two agencies, including the Bureau of Safety and Environmental Enforcement tasked with offshore safety and permitting, in October.

2. The Solyndra blunder:

We all know the story, but if you need a recap, here it is. Solyndra, a California solar-panel maker, received a $535 million loan guarantee from the Department of Energy in 2009, and then the company filed for bankruptcy in September 2011. Republicans in Congress investigated the loan guarantee, and the Solyndra loan guarantee soon became a symbol for wasteful, ineffective and politically influenced “green energy” policies in the Obama administration.

GOP investigators released troves of emails they said showed the Obama administration approved the loan guarantee for the company despite warnings about its financial state. Republicans then revealed the Energy Department had restructured Solyndra’s loan in February to put $75 million in new private-sector debt ahead of taxpayers for repayment. The GOP also suggested Obama donor George Kaiser, whose nonprofit Kaiser Family Foundation was Solyndra’s largest investor, might have influenced the decision on the loan guarantee.

But the Obama administration has long maintained the loan guarantee’s approval was done solely on the merits. Alternative-energy backers and climate activists warn against using the failure of one company to bash policies supporting alternative energy, saying the U.S. risks losing out to China and other countries that are heavily subsidizing development of alternative sources. However, the damage may already be done. Polling after the controversy showed that public support for federal funding of alternative-energy development had fallen.

1. Republicans, environmentalists clash over proposed Keystone XL pipeline:

How many people in the public had even heard of the project before this year?

Environmentalists, who were disenchanted when President Obama shelved tougher standards on ozone pollution in September, latched onto the debate over whether to approve the 1,700-mile pipeline from Alberta, Canada to the Gulf Coast of Texas. They said the pipeline would transport dirty tar sands oil, whose extraction would require more energy than for conventional oil, and put freshwater drinking supplies in the pipeline’s path at risk.

Then, the decision morphed into a political hand grenade.

Environmentalists and some key Democratic donors warned they might not back Obama as passionately in his re-election bid if he approved the pipeline. Obama also risked alienating labor union supporters who backed the pipeline, saying his rejection of the pipeline would tell the public he wasn’t serious about creating jobs. Either way, Obama would alienate one group of supporters.

Environmentalists made their stand outside of the White House, resulting in more than 1,200 arrests during “sit-ins.” Then in early November, 10,000 pipeline opponents circled the White House to put more pressure on the president. Within days, the State Department announced it was delaying a decision until early 2013 to study an alternative route to take the pipeline away from an aquifer in Nebraska, amid concerns raised by the state’s politicians.

Environmentalists celebrated, while Republicans and business groups jeered.

But it wasn’t over. Republicans won a provision to expedite a decision on the pipeline in a bill extending the payroll tax cut by two months. Though disappointed, environmentalists said the deadline wouldn’t give the administration enough time to study alternative routes for the pipeline, perhaps dooming it.

Others:

• Fukushima nuclear disaster: The nuclear power plant was hit by a earthquake and tsunami, causing its electricity to fail and left the power plant crippled. The power plant teetered on a complete meltdown, and the disaster became the worst nuclear disaster since Chernobyl in 1986. The disaster prompted the U.S. to examine the design of its nuclear power plants and whether similar issues could happen at American nuclear facilities.
• BP legal fights: The Gulf oil spill was the biggest story of 2010, but BP still continued to deal with the disaster. A series of reports on the oil spill came out from various bodies who all pinned blame on BP, Halliburton and Transocean, and the reports warned tougher regulations and standards were needed to prevent another such disaster from happening. Halliburton and BP traded plenty of shots, but the oil giant did settle with Anadarko and Cameron. BP will still be dealing with the spill next year too. A Gulf spill civil trial is set to start in February in New Orleans.