The first major energy policy story occurred in June, when a major climate-change bill died in the Senate after Majority Leader Harry Reid, D-Nev., ended a week of bipartisan squabbling by pulling it from the floor.
The Climate Security Act would have established a carbon-trading scheme in the United States. Under such a system, carbon dioxide emissions are capped at a certain level, and then businesses and other entities are allotted emissions shares, which they can sell to others if they cut their pollutants below the required level.
The virtue of a cap-and-trade program remains highly debated, both in and out of government, and opinions on the bill's failure swing from one extreme to the other. Some economists breathed a sigh of relief in June, including Peter Morici, a professor at the University of Maryland.
"I think it's bad for the economy if China doesn't have to do it too," he said. "Every two years, China adds another Japan to the global-warming equation, so it really doesn't help if the U.S. does it on its own."
Instead, it could drive jobs overseas to emerging economies like China and India, where production costs are lower and technologies generally dirtier, thus damaging the U.S. economy and increasing total global carbon dioxide emissions, free-market economists say.
Environmentalists aren't giving up this year, though, and a number of policymakers have stated they plan on pushing cap-and-trade legislation during the next Congress, including Sen. Barbara Boxer, D-Calif., who co-sponsored the bill that failed last summer.
"This bill will reflect the strong partnership we will have with the new administration, and will focus on achieving the emissions reductions needed while restoring the economy," Boxer said when she announced last month her intention to introduce a carbon-trading bill soon after Congress returns in 2009.
In September another step of inaction sparked further controversy when Congress allowed a 26-year-old moratorium on offshore drilling to expire.
Domestic-drilling proponents were pleased by the turn of events but wary about whether it will actually pan out.
"If it proves to be simply a failure to renew it and there's no action on drilling, I don't think it was a good thing," said Christopher Horner, author of "Red Hot Lies," a recently published book on climate change.
That's because it took the spotlight off the drilling debate without really solving it, he said.
"It lulled the public into thinking Congress was acting in their interest," Horner told UPI.
Drilling opponents, on the other hand, expressed regret at the moratorium suspension and said more drilling won't solve the nation's energy woes, including Frances Beinecke, president of the Natural Resources Defense Council, an environmental organization.
"The gains from expanded offshore drilling are minimal," Beinecke said in a statement. "Only 3 percent of the world's reserves are off our coasts, yet we consume 25 percent of the world's oil. And offshore drilling won't produce results for 10 years."
Other energy industries have their own lists of successes and failures for the year, including nuclear power.
"It wasn't federal legislation that was most positive, but the submission of 17 applications for 26 new nuclear reactors to the Nuclear Regulatory Commission," said John Keeley, spokesman for the Nuclear Energy Institute, a pro-nuclear policy organization.
While it likely will take a couple of years before the NRC makes a final decision on any of the pending applications, it's still a "very important step for nuclear power," Keeley told UPI.
The renewable-energy industry also had something to celebrate about this fall, when Congress, in one of its only major legislative actions on energy this year, passed tax incentives for alternative energy.
The law extends until the end of 2009 the Production Tax Credit, set to expire on Dec. 31, which gives some renewable energy facilities, including wind and geothermal, a 1.9-cent per kilowatt-hour benefit for their first 10 years of operation.
As the largest producer of renewable energy, the PTC for wind will have the greatest impact on the budget. Industry representatives said the extension was vital to making sure a number of planned projects go online in the next year.
"This was a critical victory for the wind industry, because without the PTC or a comparable federal policy, wind is at a significant disadvantage when competing with other generation technologies that receive their own forms of federal support," said Greg Wetstone, senior director for government affairs at the American Wind Energy Association, the industry's trade organization. "The single-year extension … enables investment to continue into 2009, and many projects that are currently under construction will be completed in the coming months."
The law also extends the PTC for hydropower, geothermal and bioenergy until the end of 2010; establishes a new tax credit for wave and tidal energy; and prolongs through 2016 a 30 percent investment tax credit for those who purchase and install solar energy systems.
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