Today's Outrage: Senate Punts, Kicks Clean Tech in the Head

The Senate punt on energy reform is a clear kick in the head to the clean tech sector.
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NEW YORK (

TheStreet

) -- The Senate "punted" on energy legislation in the political parlance, but in doing so -- and in dirty fighting language -- it gave a kick in the head to backers of alternative energy.

Take Andrew Littlefair, CEO of natural gas vehicle company

Clean Energy Fuels

(CLNE) - Get Report

-- which counts among its board members

T. Boone Pickens

. Littlefair had been a key natural gas transportation player in the lobbying effort to get energy legislation passed that included federal support for a natural gas vehicle market.

TheStreet

reached out to Littlefair this week, after Senate Majority Leader Harry Reid (D-Nev.) decided to pull the energy legislation just introduced, but Littlefair was out of the country. One can't blame him from getting as far away from Washington as possible after the latest failure to pass an already eviscerated version of energy reform.

>>Natural Gas Vehicle Stocks to Watch: Earning Outlook

It's a given that a legislative effort as broad as energy reform is not going to see easy passage. Even with the contentious carbon cap-and-trade proposal eliminated, renewable portfolio standards jettisoned, and the energy bill that was finally introduced -- at least introduced for a day or two -- focusing on the popular Main Street issue of the oil spill, the House only got the energy bill approved because enough representatives were absent from voting. In the Senate, Harry Reid took one look at the Grand Canyon-sized gap of common ground between Democrats like Bernie Sanders of Vermont and Mary Landrieu of oil-state Louisiana, and decided to wave the white flag.

The problem with the latest failure in the near-dysfunctional Senate is that the quick hit oil spill bill was not even a genuine effort to enact energy reform. Senate Majority Leader Reid had the white flag in his pocket all along. He was just using the bill as a pre-mid-term elections stunt to try and pin the energy reform failure on Republicans.

Energy reform as political pawn is bad enough, but even worse, it can be argued that Reid failed to score the minor political points he had hoped to gain when he set up the alternative energy industry for the cheap kick to the head. In announcing that the Senate would pass on energy reform until at least September, Reid spun his words about obstructionist Republicans -- but political analysts saw through the rhetoric to the divisions within Reid's own party. The rhetorical flourishes obscured the fact that the Senate punt showed the strength of the pro-oil, pro-drilling bloc.

One political analyst for the energy sector who has been on the Hill for the past several weeks as the events unfolded, said after the Senate punt that all along his understanding was that the bill introduced would never pass, and Reid thought he would be able to paint the Republicans as standing in the way of that effort.

"It looks like they lost as many as five Democratic Senators, and in that event, the whole point of saying that the Republican were standing up for Big Oil fails," the analyst said. Still worse, the Senate Majority Leader realized that the cheap political stunt could turn on the Democrats, and led to a Republican substitute bill being introduced that could garner even more votes.

One energy analyst was categorical in his view of the Senate punt, saying, "This was not an attempt at passage, and while Reid can keep saying it was the Republicans, he didn't have the votes from his own party."

That's the really scary part for investors hoping that the alternative energy markets will benefit from energy reform. Though at the same time, it's clearly good for the medium-sized oil producers in the Gulf that expected to be squeezed by an unlimited oil spill liability cap.

It's not that energy isn't at the forefront of the Democratic Party agenda, but the fact that the Senate couldn't bridge differences over the oil spill bill before the recess could be an indication of the unmanageable nature of the interests within the Democratic Party. It seems to some that progressives would rather take nothing over something at this point, and use attempts like the Reid oil spill quick hit bill to at least try and salvage some cheap political points.

Before the Senate punt, there seemed universal agreement that some oil spill-related provision would pass this year. That's still the opinion of many and the stated intention of the government. Yet after the Senate punt on energy reform, there was a sense that it might now be going too far to state categorically that some version of energy legislation would pass before the end of the year. If the Democrats lose big in the upcoming elections, there would be little incentive for senators from drilling states to compromise in a hurry, as any deal they could get in December they could wait on until 2011.

For all the talk of an American public ready for energy reform, the country doesn't seem to be there. All the progress made during the past two years on alternative energy have been a subset of the fiscal stimulus package or within the rhetoric of creating manufacturing job growth in the U.S.

The cheap points that Senate Majority Leader Reid tried to score aren't good for investors who are betting on the federal government stepping up and supporting alternative energy on its own merits.

-- Written by Eric Rosenbaum from New York.

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