Energy Conference Update #35 (Floor Statement)

November 19, 2003
12:00 AM
Today, the Senate is beginning its final debate on H.R.6, the Energy Policy Act of 2003. Our previous debates on energy policy have ended with overwhelming votes in favor of taking a balanced policy approach – an approach that combined measures relating to energy supply, energy efficiency, and concern about the important connections between energy policy and environmental policy, including global warming. It is no easy task to deal with the myriad competing views and objectives related to energy to be found among the leadership of the other body. While the existence of a conference report is certainly one measure of success, a more important measure of success is what that conference report contains. Chairman Domenici acknowledges that the conference report is not perfect. I could not agree with him more. I recognize that it is probably not fair to expect perfection from the final product of any legislative enterprise. I believe though, that this year’s conference could have been much better. It could have been much better in terms of the process followed. More importantly, it could have been much better in terms of the product that was produced. I believe that we find ourselves now with a bill that will not command the broad support and staying power that a national energy policy should have. The only difference this time is that we cannot further improve or amend it. I have been one that's advocated for adopting an energy bill. I have advocated for essentially the basic premise that President Bush campaigned on when he ran for office. He said we needed to try to put in place something that was coherent national energy policy, and I essentially agreed with that idea. I remember former Chairman Bob Galvin of Motorola saying at one point that there are certain things that a country should set out to do on purpose. To me, establishing a national energy policy seems to be one of those things that we should set out to do on purpose. Because if we allow the issue to go unaddressed and the subject to go unaddressed, we can find ourselves substantially disadvantaged economically and many other ways by virtue of not having an energy policy. I fear that's where we find ourselves today in many respects. So while I compliment the President for recognizing the importance of an energy policy, I do not think he got us off on the right foot, once he became president, in trying to develop that comprehensive, coherent energy policy. By that, I'm referring to the Cheney Task Force on energy policy. That was a closed process. There have been efforts through the courts and otherwise to try to find out precisely who was talking to whom, and which groups and individuals were consulted, but clearly that was a closed process. There was no reaching out to Democrats here in the Congress, to my knowledge there was no reaching out to many of the groups that have a vital interest in this issue. That was a mistake. At the time, I said it was a mistake. It prevented policymakers from hearing the broad range of views that would have been offered, I believe, in a constructive manner. And in addition, the conduct of the Cheney Task Force in that closed process failed to generate the public trust and confidence that we ought to have behind the energy policy that we adopt. These mistakes of the President’s policy advisors have been repeated in the process that has led to this final conference report. My colleagues and I on this side of the aisle have voiced our concerns about them many times throughout the recent energy conference. The conference was a closed process. The drafting was done without the involvement of Democratic conferees, and we were offered only limited opportunities to comment on the less controversial parts of this proposal. Some key provisions, such as the provisions on ethanol and electricity, were never even shown to us in any form prior to being finalized. And the final conference meeting that was held was a cosmetic exercise. When the conference meeting was held two days ago, its outcome was fore-ordained. Over a period of 3 and a half hours, Democratic conferees offered 20 substantive amendments on a wide variety of topics in the conference report. Not one of those amendments can be found in this conference report today, not one. 16 of the 20 were rejected outright by the Senate Republican conferees, voting as a bloc. Of the 4 that slipped through that process, all were rejected on a party-line basis by the House Republicans, as the first order of business when they met. We went to conference on this bill expecting to participate in a meaningful way, and that didn’t happen. But there is common ground on energy policy that could be the basis for a bipartisan energy policy. This common ground is based on a few basic principles. First, and perhaps most important, we need an energy policy, and an energy bill, that strikes a balance between measures to increase energy supplies and measures to encourage additional energy efficiency. To say that we need only increase energy production, or that we need only increase conservation, is to pose a false choice. The reality is that our country needs both kinds of measures. On the energy supply side, perhaps one of the most important national needs is to meet our ever-growing demand for natural gas. Natural gas is the fuel of choice for most electric generation that is now being planned. It will play an important role in any new distributed generation that is planned in the future. It is favored by alternative fuel vehicle programs in both the government and private sector. It is the most likely feedstock to produce hydrogen, when and if we come to use hydrogen as a fuel. And apart from its energy uses, natural gas is also a critical feedstock for the petrochemical and fertilizer industries. Over the long haul, natural gas consumption is outstripping the amounts produced in the lower 48 States, and we as a nation are in the early stages of developing a substantial dependence on imported natural gas, particularly liquified natural gas from countries with unstable politics. So, just as we have, for several decades, become more dependent on imported oil, we face a growing dependence on imported natural gas that will have to come to our shores in tankers. At the same time, we have at least 35 trillion cubic feet of natural gas stranded on the North Slope of Alaska at Prudhoe Bay. That gas has been produced along with the oil that we now produce from that location. But the gas is currently being pumped back into the ground, because there is no way to transport it to the Lower 48 where it is needed. We need to provide effective incentives to the private sector to build a pipeline that can bring this gas to the lower 48 States. Such a project would be a boon not only to our national energy security, but also to our domestic steel and construction industries. On this topic, the conference report does not measure up. While it contains the regulatory streamlining measures for the Alaska gas pipeline that I worked out with Senator Frank Murkowski in the last Congress, there is a critical part of the problem that is left unsolved. That is to provide effective fiscal incentives for the pipeline. The Senate voted for them, but the Administration opposed them. Once Chairman Domenici announced publicly that they would not be in the conference report, all conferees received a letter from the CEO of the gas company that has been most active in promoting the Alaska gas pipeline. He stated that, based on his understanding of the conference report, his firm could not proceed with this project in the face of the extraordinary financial risk it would incur if gas prices plummeted below what the Energy Information Administration agrees is a very unlikely price level. So, for lack of a risk mitigation mechanism that might never have costed taxpayers a dime, our Nation will forego the possibility of relying on domestic, reliable, Alaskan natural gas for its future supply needs. We will depend on imports of liquified natural gas from countries such as Nigeria and Trinidad that have their own problems with political stability. Building the necessary transportation system for LNG will create jobs for shipyard workers in Korea, instead of pipeline construction jobs for Americans. I believe that this is an unfortunate policy mistake. Along with providing more robust domestic supplies of natural gas, we should look for ways to diversify our energy generation away from such a strong reliance on gas. One important arena in which we can do this is in electricity generation. The bill that the Senate passed earlier this year focused this diversification strongly on new technology, including ultra-clean ways of burning coal. Ultra-clean coal is the most sustainable way, over the long term, to ensure coal’s place in our national energy mix. This is because concern about levels of pollution emitted from coal-fired plants is only increasing, as is concern about the contribution of coal-fired generation to global warming. This conference report, unfortunately, takes a step back from the Senate bill in its commitment to ultra-clean coal. The percentage of funding dedicated to these purposes is cut by 20 percent. A new, competing program of direct grants to companies to pay for half the cost of current-technology pollution equipment and current-technology coal-fired generation is also put in place. In my view, focusing on government subsidies to buy today’s technology instead of investing to create tomorrow’s coal technology risks coal’s ultimate future ability to contribute to our energy needs. That is a mistake. Another key part of a strategy of diversifying away from natural gas would be to tap into opportunities for distributed generation such as combined heat and power at industrial facilities. Here, too, the conference report falls short, as it does not really address the barriers that have been erected to uniform interconnection of distributed generation to the grid. It is not enough to have the technology. We need to rid ourselves of the red tape that is keeping this technology from being used, and this bill does not do that. Along with these steps, we must also make a greater push to introduce renewable energy technologies for electricity generation. Some of these technologies, such as wind power, are already cost-competitive. But in order to see widespread exploitation of these opportunities, both financial and regulatory incentives will be needed. That means both a meaningful production tax credit for renewable energy and a flexible renewable portfolio standard for electric utilities. Both measures are essential, in my view, in order to give enough certainty to the fledgling market to allow economies of scale to drive down costs and improve manufacturing capacity for renewable energy equipment in the United States. The lack of an effective renewable portfolio standard in this conference report is a major missed opportunity for our country. There are those that may argue that we should just leave everything up to the hypothetical free market. But the majority of the Senate and a majority of Senate conferees disagree. This conference report is pretty much status quo on the future role of renewables. The tax credits are extended for a few more years and slightly broadened, but renewables don’t get anywhere near the attention lavished on coal and nuclear power. But coal and nuclear power have problems with social acceptance, so in the absence of a stronger push forward on increasing renewables in our electric system, this conference report is basically making a choice in favor of the existing trends towards an over-reliance on natural gas for future electric generation. That choice will leave our citizens with future natural gas and electricity prices that are more volatile, resulting in more frequent price spikes. Renewable energy technologies can help with another energy supply issue that we face, that of transportation fuels. This conference report mandates a phased-in introduction of up to 5 billion gallons of ethanol per year into our gasoline supply, by 2012. While that is not an unreasonable final goal, it has been coupled in this conference report with a very questionable set of provisions relating to the gasoline additive, methyl tertiary butyl ether, or MTBE. One provision in the ethanol title purports to ban MTBE in the year 2014. But this ban is full of loopholes. For one thing, each State Governor can opt his or her State out of the ban. This language is sufficiently vague that it appears that States can opt out even after the purported national ban goes into effect. For another, the President is given the extraordinary power to make the statutory ban null and void by a stroke of the pen in 2014. With these kind of loopholes, it is not likely that MTBE will actually be banned nationwide in 2014. In addition, the conference report provides product liability protection to MTBE, reaching back in time to wipe out any lawsuit filed after September 5 of this year. This specifically affects some suits that have been filed by State attorneys general. I think it is a pretty questionable proposition for us to be fixing pending court cases here in the Congress, particularly when the cases are being brought by the States. Mr. President, I have much more to say about this bill, and about the need for a sound energy policy, but I will yield the floor at this point so that some of my other colleagues can speak. # # #