The New York Times, May 17, 2001
St. Paul, Minn., May 17 - President Bush laid out his long-awaited energy plan today, proposing looser regulations on oil and gas exploration, conservation-minded efforts like a review of gas mileage standards and a $4 billion tax credit for a new generation of highly fuel efficient cars. And he urged a reconsideration of a quarter-century ban on the reprocessing of nuclear fuel.
Mr. Bush further called for "a new harmony between our energy needs and our environmental concerns" and lamented that "too often, Americans are asked to take sides." With a declaration that the energy problems threaten the nation's economy and security, the Bush plan also ordered a sweeping review of public lands to determine whether more energy resources can be extracted.
Anticipating the opposition that the proposal is sure to touch off, Mr. Bush called today for a commitment "to live well and wisely on the earth." "Environmental interests and energy production are not competing priorities," the President said, to applause. As expected, Mr. Bush called for a revived commitment to using nuclear power. How many Americans, he wondered aloud, know that nuclear power already supplies one-fifth of the country's electricity "safely and without air pollution"?
"America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970's," the administration's energy report states. Without action, projected energy shortfalls in coming years "will inevitably undermine our economy, our standard of living and our national security." The proposals are among 105 initiatives outlined in the administration's energy report. (The report is available online at www.whitehouse.gov.)
In his address today, Mr. Bush said energy production will be ever more vital in the information age. "Even the sleekest laptop needs to plug in to an electrical outlet from time to time," he said. A senior government official said that Mr. Bush would also issue two executive orders later this week directing all federal agencies to consider the effects of all new regulations on energy production
and to expedite permits for all energy projects "while remaining mindful of protecting the environment."
An overview of the plan states that federal regulation of the nation's energy producers has unduly inhibited production and increased prices. "Regulation is needed in such a complex field, but it has become overly burdensome," the report says. "Regulatory hurdles, delays in issuing permits and economic uncertainty are limiting investment in new facilities, making our energy markets more vulnerable to transmission bottlenecks, price spikes and supply disruptions."
Mr. Bush will also order the secretary of the interior, Gale Norton, an outspoken proponent of seeking new sources of energy on federal lands, to "look at any impediments" that discourage exploration for oil and gas. "Our nation and our hemisphere are rich in natural gas resources," Mr. Bush said today, adding that too often exploration was hobbled by over-regulation. The report repeats Mr. Bush's commitment to explore in the Arctic National Wildlife Refuge - a proposal that seems unlikely to survive in Congress - and also urges a review that will include other locations in Alaska, the Rocky Mountains and the Gulf Coast.
The report also urges the revision or reinterpretation of a major clause of the Clean Air Act that requires long government review of any modifications of power plants that affect their emissions.
The senior government official, who was deeply involved in the development of the plan, argued that the "new source reviews" conducted by the Environmental Protection Agency are a "time-consuming process" that often "discourage fuel efficiency." The Justice Department will also be ordered to review several multi-million dollar lawsuits brought by the Clinton Administration against utilities accused of ignoring the law.
One official of an environmental group said the report was about what he had expected and he predicted conservation organizations would be highly critical. "This has just a lot of opportunity for mischief from the energy producers and no real solid commitments for the green components," said David G. Hawkins, senior attorney of the Natural Resources Defense Council. He said he was "astounded" that the policy would recommend a review of legal actions now underway on utility emissions, calling it "political interference with law enforcement."
Mr. Bush announced his plan at an innovative energy plant in St. Paul, Minn. But even before he begins his campaign for a national energy policy, he has touched off a heated political argument between Democrats and Republicans over how to balance environmental concerns against growing energy needs, and whether to impose temporary price caps in places like California, where a deregulation program and soaring demand has sent prices through the roof.
Democrats have urged the use of such controls, while Mr. Bush will continue to argue "vociferously," one aide said, that the controls would only discourage the production of more electricity. Mr. Bush's report adopts a tone that is by turns admonishing and encouraging. "The complacency of the past decade must now give way to swift, but well-considered, action," it says in its introduction, echoing themes that Mr. Bush and Vice President Dick Cheney, who headed the task force, have hit in recent weeks.
"Present trends are not encouraging, but they are not immutable," the report says. Then, in a clear effort to separate Mr. Bush's approach from Jimmy Carter's politically disastrous calls for household austerity during the energy crises of the 1970's, it adds: "Our country has met many great tests. Some have imposed extreme hardship and sacrifice. Others have demanded only resolve, ingenuity, and clarity of purpose. Such is the case with energy today."
The decision to offer a relatively hefty tax credit for "hybrid" cars, which use a combination of gas and battery power, is bound to help both Detroit and two Japanese automakers - Honda and Toyota - which are already marketing such vehicles in the United States. They will be less enthusiastic about orders by Mr. Bush for the government to review the federal standards for automotive fuel efficiency - though the report makes no commitment that those standards will be raised.
The plan also calls for a new evaluation of nuclear reprocessing, a technology that takes advantage of the fact that as reactors consume uranium, they also produce plutonium. If the plutonium is chemically scavenged from the fuel, it can be used to run reactors. But the technology has drawbacks. The work is dirty, with the threat of radioactive releases, and it is expensive. For the last decade at least, it has been far cheaper to fuel reactors with new uranium than to recover plutonium. And while uranium fuel used in power reactors cannot be used to make a bomb, plutonium can, raising the threat of world commerce in a material that could be diverted by countries that want a bomb, or even terrorists.
Japan, France and Britain currently reprocess fuel, although the British are considering ending the practice because it is so costly. But reprocessing can reduce the volume of plutonium requiring disposal, which is important because plutonium is so long-lived and difficult to store safely. Some opponents of the technology said today that they believed it had been included into the Bush plan as a sop to the state of Nevada, where the Energy Department is trying to build a waste repository. Reprocessing would not eliminate the need for such a repository, however.
In a section of the report on the foreign policy implications of a new energy strategy, the administration calls for a review of American policy on sanctions, clearly with an eye toward lifting those sanctions that have prevented American companies from exploiting resources in countries that violate human rights or are openly hostile to the United States. It says there will be no change in sanctions against Libya, Iran and Iraq. But that leaves open the possibility of lifting controls on Azerbaijan and Myanmar, formerly known as Burma. It also calls for cooperation with Canada on building a pipeline that could bring more natural gas into the United States.
The report mixes a number of existing initiatives with new ones, particularly in the area of conservation. For example, of $10 billion in proposed tax credits over the next 10 years, $5 billion are already in the budget or the result of extending existing credits. Other programs get modest increases. The administration recommends $300 million in new funds for the Low Income Home Energy Assistance Program and calls for funneling some oil and gas royalty payments, which companies pay the federal government for extracting resources on public land, to the program for the poor.
Similarly, in an effort directed toward environmentalists, it would commit royalties from any energy extracted in the Arctic National Wildlife Reserve for land conservation efforts. There are no credits or other tax breaks for oil or gas producers, or electric utilities - a reflection of the sensitivity of the White House to criticism that Mr. Cheney and other top officials spent their private-sector years in the energy industry. But the tone of deregulation, reassessment of the merits of the Clean Air Act and the emphasis on opening of federal lands to more energy production - everything from wind power to oil and gas drilling - provides those industries with effective subsidies totaling in the billions.
Much of the report simply urges companies to build, build and build some more, including 38,000 miles of new gas pipelines, 255,000 miles of distribution pipelines and a new power plant every few days for the next 20 years. But for every such proposal, Mr. Bush's team carefully inserted proposals for expanding the use of renewable fuels, from geo-thermal energy sources to the methane produced in landfills.
The nuclear power industry gets one major concession: A tax break that would eliminate the double taxation of funds put aside for decommissioning plants. Those taxes have been a deterrent to buying and selling nuclear plants. It commits $2 billion over 10 years to a clean coal technology program in the Department of Energy.
It urges the Federal Energy Regulatory Commission to speed the licensing of hydroelectric power plants - Mr. Bush will visit one on Friday in Pennsylvania. It also seeks "market-based incentives" to reduce pollutants that cause global climate change. But Mr. Bush rejected several months ago any American participation in the Kyoto treaty on global warming, which would have mandated cuts in American emissions, at considerable economic cost.
Bush National Energy Policy Expands Nuclear, Oil Drilling, Renewables
WASHINGTON, DC, May 17, 2001 (ENS) - The Bush administration's National Energy Policy Development Group headed by Vice President Dick Cheney issued a comprehensive plan today that puts environmental issues front and center.
The proposed policy would expand the role of nuclear power, open the Arctic National Wildlife Refuge for oil exploration, limit toxic emissions from power plans and offer new tax incentives for the development of renewable energy.
President George W. Bush called the policy "a very optimistic look at America," after a presentation to the Cabinet Wednesday in Washington. "This isn't just a report that's going to gather dust," the President said, "this is an action plan."
Two of the three basic principles on which the plan is based mention environmental concerns. The "comprehensive" and "long-term" policy will advance "new, environmentally friendly technologies to increase energy supplies and encourage cleaner, more efficient energy use."
"The Policy seeks to raise the living standards of the American people, recognizing that to do so our country must fully integrate its energy, environmental, and economic policies," the policy group says.
But there are few quick fixes promised. "Our energy crisis has been years in the making, and will take years to put fully behind us," the National Energy Policy Development Group (NEPD) predicts.
"To meet projected demand over the next two decades, America must have in place between 1,300 and 1,900 new electric plants," the policy group estimates.
Natural gas will fuel many of the new power plants, and the policy group gives nuclear power, which today supplies 20 percent of America's electricity, "an expanding part in our energy future."
Against the urging of most environmental groups in the United States, the NEPD Group recommends authorization of exploration and, if resources are discovered, development of the 1002 Area of the Arctic National Wildlife Refuge. "Congress should require the use of the best available technology and should require that activities will result in no significant adverse impact to the surrounding Environment," the group said.
Legislation should be passed to "use an estimated $1.2 billion of bid bonuses from the environmentally responsible leasing of ANWR for funding research into alternative and renewable energy resources, including wind, solar, geothermal, and biomass," the group recommends.
The generation of electricity from fossil fuels should be cleaned up, the group said. Their plan recommends "mandatory reduction targets" for emissions of three main pollutants: sulfur dioxide, nitrogen oxides, and mercury.
The group says the Environmental Protection Agency (EPA) should work with Congress to propose legislation that would establish a "flexible, market-based program to significantly reduce and cap emissions of sulfur dioxide, nitrogen oxides, and mercury from electric power generators."
Reductions of these emissions should be phased in "over a reasonable period of time," the group said, comparing the plan to the successful acid rain reduction program established by the 1990 amendments to the Clean Air Act.
Under the plan, utilities would be able to make modifications to their plants without fear of new litigation. Financial incentives such as emissions trading credits would be established to help achieve the required reductions.
Such a program "with appropriate measures to address local concerns" would provide significant public health benefits even as we increase electricity supplies, the group said.
The group proposes the investment of $2 billion over 10 years to fund research in clean coal technologies, and supports a permanent extension of the existing research and development tax credit.
Plans to expand the production of energy from renewable sources such as biomass, wind, geothermal, and solar would include re-evaluation of access limitations to federal lands to site generating facilities.
The group recommends "appropriate funding of those renewable energy research and development programs that are performance based and are modeled as public-private partnerships."
New landfill methane projects would get a tax credit under the proposed policy, and ways would be found to reduce the delays in geothermal lease processing as part of the permitting review process.
The EPA administrator is advised to develop a new renewable energy partnership program to help companies more easily buy renewable energy, as well as receive recognition for the environmental benefits of their purchases.
A extensive public education program would promote consumer choice programs to "increase knowledge about the environmental benefits of purchasing renewable energy." Tax credits for electricity produced using wind and biomass would be expanded.
Direct benefits for consumers include a temporary income tax credit available for the purchase of new hybrid or fuel-cell vehicles between 2002 and 2007, and a new 15 percent tax credit for residential solar energy property, up to a maximum credit of $2,000.
The EPA is advised to issue guidance to encourage the development of "well designed combined heat and power units," commonly called cogeneration units, that are highly efficient and have low emissions.
And the group recommends funding for research into "next-generation technology" including the use of hydrogen as a fuel and nuclear fusion.
The policy also expands the role of energy conservation and efficiency with an expansion of the government's Energy Star certification program and more money for weatherization upgrades to low income housing.
Cheney said, "Here we aim to continue a path of uninterrupted progress in many fields…New technologies are proving that we can save energy without sacrificing our standard of living. And we're going to encourage it in every way possible."
The NEPD Group recommends the passage of comprehensive electricity legislation that "promotes competition, protects consumers, enhances reliability, promotes renewable energy, improves efficiency, repeals the Public Utility Holding Company Act, and reforms the Public Utility Regulatory Policies Act."
Meanwhile, until energy supplies are more plentiful, President Bush said he would work with Attorney General John Ashcroft and the Federal Trade Commission (FTC) to ensure that no price gouging is allowed.
"You know, we can't overcome the fact that we haven't built a refinery in years and we should have. We can make sure that any entity will not illegally overcharge. And so I'm calling on the FTC to make sure that nobody in America gets illegally overcharged. And we're going to make sure FERC [Federal Energy Regulatory Commission] will monitor electricity suppliers to make sure that they charge rates that are fair and reasonable." Bush said.