Democratic Budget Amendment on Energy (Part I)

March 14, 2006
03:46 PM
Democratic Budget Amendment on Energy
Prepared Floor Statement
Sen. Jeff Bingaman (D-NM)
"Mr. President, the amendment that I have sent to the desk, on behalf of myself and many of my colleagues, does three things.
First, it fulfills the commitment to secure, affordable, and clean energy that we made in the energy bill we passed last year – a commitment that has been ignored by the Administration and this Budget Resolution.
Second, if this Amendment passes, it will enable us to take the next major step forward to clean and affordable electricity beyond what was contained in the energy bill, by extending for 4 years the renewable energy production tax credit.
Finally, this amendment accomplishes these goals in a budget-neutral fashion – in fact, the amendment overall would reduce the deficit by $3.2 billion over 5 years, because it raises more funds than it would spend, by assuming the reinstatement of the Superfund tax.
"Every Senator knows that America faces some huge energy challenges. Energy prices and energy security are among the top concerns of our constituents. Simply put, Americans want their energy to be more secure, to be more affordable, and to be cleaner. Every one of us has devoted a lot of time over the past 3 Congresses to developing legislation that would deliver secure, affordable, and clean energy.
"Last year, we finally enacted the first comprehensive energy bill in 13 years – the Energy Policy Act of 2005. We did so after repeated requests from the White House to send the President a comprehensive energy bill. It was a substantial bipartisan accomplishment. The President gave a strong speech about how good the bill was, when he signed it into law. At the bill signing last August, in Albuquerque, the President declared that "This bill launches an energy strategy for the 21st century." He also observed that, prior to the bill’s enactment, "For more than a decade, America has gone without a national energy policy." If we finally have a new energy strategy for the 21st century, then where is the funding to implement that new strategy? When it comes to energy, "where's the beef" in this Budget Resolution?
"If you were to look at the Budget that was sent to Congress in early February by the President, and at this Budget Resolution, you would be hard pressed to find any beef.
"Let's begin with the President's Budget Request. Instead of making a strong push forward on programs to deliver new sources of secure and affordable energy, the Administration's Budget Request basically treads water. The bottom line proposed for the Department of Energy in the new budget is almost exactly the same funding level as the current fiscal year. Some individual programs are up. But other programs that are equally important to our energy security and to affordable energy are cut. Instead of a broad and comprehensive effort to implement the Energy Policy Act of 2005, we have a cherry-picking zero-sum energy strategy in the Budget Request. That is something that none of us voted for.
"When you look at this Budget Resolution, you also see an energy policy that is dead in the water. The Budget Resolution has a specific Function devoted to energy – Function 270. In the tables distributed by the Chairman of the Budget Committee describing his Mark, which we now have before us, discretionary spending in the Energy Function – Function 270 - falls from $3.84 billion in the current fiscal year to $3.83 billion in fiscal year 2007. In fact, the projected spending on energy in 4 out of the next 5 fiscal years in this Budget Resolution is less than what we are doing today.
"I don't think it is acceptable to have an energy policy over the next 5 years that is basically "less of the same." And that is not what we voted for and supported last year. We shouldn't be voting for that now. So, my Budget Resolution Amendment changes the totals in Function 270. It increases them to make them correspond to the programs and funding that we put in place last year to improve our energy security and to improve the affordability of energy for Americans into the future.
"The dollar amounts that I am proposing to add today are the result of a careful analysis of the President's budget by my staff at the Energy Committee. We sent that analysis to the Department of Energy for comment in connection with our annual Budget hearing last month. The Department provided us with its comments on our assessment of how the Budget Request matched up with the authorizations in last year's energy bill, so we have a pretty good idea of where the funding shortfalls are and how to remedy them.
"Let me describe in detail the areas in which this Amendment will enable us to meet the challenges of energy security and affordability.
Energy Efficiency
"The first area is the area of energy efficiency. Nothing lowers your energy bill more than saving energy. Nothing makes us less dependent on foreign oil than using less of it. Maximizing the usefulness of every barrel of oil we consume and every watt of electricity we generate enjoys broad bipartisan support because it is almost a no-brainer. For that reason, it is incredible to see major cuts to energy efficiency being proposed by the Administration and being carried forward in this Budget Resolution.
"The disconnect on saving energy dollars and being more secure through efficiency is even more striking, because energy efficiency is one of the areas of the energy bill that the President singled out for praise when he signed it.
"Here are his words: 'The bill makes an unprecedented commitment to energy conservation and efficiency -- an unprecedented commitment. The bill sets higher efficiency standards for federal buildings and for household products. It directs the Department of Transportation to study the potential for sensible improvements in fuel-efficiency standards for cars and trucks and SUVs. It authorizes new funding for research into cutting-edge technologies that will help us do more with less energy.'
"Yet in this first budget that we are getting after the enactment of the bill, those authorizations for cutting-edge energy efficiency technologies are being cut, as is funding for energy efficiency in many other programs.
"I think that this Budget Resolution needs to keep the commitment to energy efficiency in the Energy Policy Act that the President praised, and then his Administration ignored.
"In the area of transportation vehicles, we have identified $629 million of funding, over what the President proposed, that would be required to meet the levels we all authorized when we voted for the Energy Policy Act of 2006.
This amendment would allow full funding for the advanced vehicle deployment programs at the Department of Energy.
It would accelerate new hybrid vehicle technologies into the market.
It would encourage the development of engines that would run biodiesel.
It would give a strong push to fuel cells in school buses and transit buses, and would make the Federal government a leading-edge customer for fuel cells.
This Amendment would bolster other technology programs for vehicle efficiency, and provide full funding for the hydrogen research and development programs contained in the Energy Policy Act. There was a lot of enthusiasm in the Senate last year for the long-term promise of hydrogen-fueled vehicles. But the current Budget Proposal short-changes these hydrogen programs, compared to what we authorized, by $268 million. If we want to see a technological revolution in the long term that takes us toward hydrogen-powered cars, then we need to step up the funding at the Department of Energy beyond what this Budget Resolution will allow.
"Another key area in keeping energy affordable relates to the efficiency with which we heat and cool buildings, and the energy we use when operating appliances in our homes and commercial equipment in the workplace. This winter, consumers have been paying unprecedented prices for heating oil and natural gas. And we have been lucky – the exceptionally mild winter prevented us from seeing sharp price spikes and spot shortages resulting from the loss of natural gas and oil production from the hurricanes of last year. But consumers are still paying too much for energy, and improved energy efficiency can make a real different to families struggling to pay the bill from one month to the next.
"In this area, the Administration's Budget Request makes some completely wrongheaded choices. For example, there has long been a Federal program to help States implement weatherization programs to reduce energy waste and save consumers money. By all accounts, it is an effective way to help cut monthly energy bills for working families. In the Energy Policy Act, we slated that program for a substantial increase. In the Administration's Budget Request, though, that program is going to be cut by 32 percent. That makes no sense, so my Amendment to this Budget Resolution provides for the full funding of weatherization programs, as well as other State energy programs to help consumers, at the levels we all agreed to in the Energy Policy Act last year.
"In the area of energy efficiency for affordability, then, this Amendment would add $1.17 billion. That's the amount that we have authorized for these programs last year that the Administration left out of its Budget Request. This funding would fully support key new programs to help keep energy costs down for consumers.
It would fund rebate programs for energy-efficient appliances.
It would help utilities pilot new programs to encourage their customers to save energy.
It would help States improve their building codes for energy efficiency.
It would accelerate Federal energy conservation standards.
It would capitalize on opportunities to save energy in low-income communities, where some of the most energy-inefficient buildings and equipment can be found.
"Finally, this Amendment provides full funding for the energy efficiency research and development authorized last year by the Energy Policy Act. The Administration's budget request was $462 million short of what we agreed made sense for these programs in the Energy Policy Act. This additional funding will make American industries -- like our steel, aluminum, and forest industries -- more competitive by lowering their energy requirements. This funding will also allow us to make a stronger push towards the next generation of lighting, in which the old incandescent bulb, which wastes most of the energy you put in it as heat, is replaced by semiconductor lighting that is incredibly long-lived and energy efficient.
Renewable Energy
"Saving energy through conservation is one way in which we can make energy more affordable. But conservation is just part of the answer. We also need to develop new supplies of clean energy to meet our future needs.
"All of us are concerned about the security implications of our dependence on foreign oil. Improved transportation efficiency is one key part of the solution, but so is greater reliance on domestic sources of energy for transportation. One area that captured a great deal of attention and support in the Energy Policy Act is making ethanol out of cellulosic plant materials. This would expand the resource base for ethanol beyond cornstarch, which is the current feedstock for making ethanol. It would allow ethanol to be made in a wider geographic area than the Midwest. This is important, because ethanol is difficult to transport in pipelines and needs to be trucked to fuel terminals in order to be mixed into gasoline. The Energy bill authorized a half billion dollars in production incentives and conversion assistance for making ethanol from cellulosic biomass. The Administration's Budget Request did not include any funding for this purpose. The Budget Amendment I have offered would allow for full funding for these important initiatives.
"This Amendment also allows for full funding of the renewable energy research and development programs in the Energy Policy Act. In the Budget Request, the Administration proposed to terminate research and development programs in geothermal energy and in hydropower. These are important resources that we can't ignore as part of the energy mix. If my Amendment were adopted, they could be fully funded, instead of being terminated.
"Finally, in the area of renewable energy production, this Amendment takes the first big step beyond the Energy Policy Act. The Energy Policy Act expanded the renewable production tax credit, and created a companion Clean Renewable Energy Bond program for public power. Both the tax credit and the bonds aimed at stimulating the construction of new capacity for generating electricity from solar, wind, biomass, geothermal, and other renewable energy sources. These fiscal incentives, though, expire on December 31, 2007. To qualify, generating facilities have to be placed in service by that date, which is less than 2 years away. That means that these incentives are not going to be stimulating much activity over the next year, because unless your project is already well along, you will not be completed in time to benefit from the tax credit or the bond.
"My amendment allows for a 4-year extension of both the renewable energy production tax credit, and the comparable Clean Renewable Energy Bonds. We need to get these fiscal incentives on a time scale that actually matches the requirements of putting electric generation construction projects together. I believe that there is tremendous interest in building new renewable electricity capacity in this country. If we could give the market the certainty of knowing that this tax credit would remain in place until 2011, at this juncture, I believe that we would see an explosion of new construction. That would help us in two important ways. First, the new renewable generation would tend to back out power generated by natural gas, which would take pressure off of natural gas prices. All consumers would benefit form that. Second, the additional construction would provide employment both in States with renewable resources and States where renewable energy generation equipment is manufactured.
"Right now, the extension of these fiscal incentives for energy production is not in the Budget Resolution or in the plans of the Finance Committee for this year. If this Amendment were to pass, though, we would have the resources to act on extending this tax credit in this Congress, when it can do the most good.
Secure Energy from Other Sources
"This amendment also adds funding for a variety of other secure, affordable, and clean energy generation technologies that were left out of the Administration's Budget Request.
"It fully funds the Clean Coal Technology program, which received almost no funding in the Administration's proposals. This program is essential to helping coal find a place in the generation mix of the future, which will place a premium on controlling emissions and capturing carbon. This amendment also makes a major commitment on distributed electric generation technology, which is likely to have greater overall system efficiencies.
"This Amendment also allows us to fix one of the most glaring errors in the Administration's energy budget request – it recommendation that we terminate all domestic oil and gas research and development programs. For a country facing $60-per-barrel oil and high natural gas prices, the idea that we will cut off R&D spending for domestic production is a little bizarre. When you realize that most of the Department of Energy program being terminated is focused on helping independent oil and gas producers, and not the major oil companies, it is even harder to understand. There are a lot of small oil and gas producers in my State of New Mexico, and they certainly are benefiting from current high prices. But none of them are in the position to start up R&D departments. And oil and gas is a boom-and-bust business, while R&D is something that you need to have a long-term commitment to, in order to achieve results.
"The Administration's proposed termination of domestic oil and gas research and development flies in the face of its own statements.
For example, when the President signed the Energy Policy Act last August, he favorably singled out some of the oil and gas programs it authorized. Here are his words: "The bill authorizes research into the prospects of unlocking vast amounts of now -- energy now trapped in shale and tar sands."
Last October, the Secretary of Energy announced funding for 13 R&D projects aimed at tapping unconventional sources of natural gas. That funding, like most of DOE’s funding for oil and gas R&D, went to universities, National Laboratories, and independent oil and gas producers. In announcing these projects, he stated, "The projects we are funding today are an investment in our Nation’s energy security and economic security, and will help us obtain the maximum benefit of our domestic energy resources in an environmentally sensitive way." But three months later, the Administration proposed to zero out those same programs in the Budget Request, at a time when our need for new domestic sources of natural gas and oil are quite clear.
Finally, just earlier this month, the Department of Energy made another announcement. It released a set of reports stating that state-of-the-art enhanced oil recovery techniques could significantly increase recoverable oil resources of the United States in the future. According to the Department's reports, 89 billion barrels or more of oil could eventually be added to the current U.S. proven reserves of 21.4 billion barrels. That would be a huge improvement to our energy security – an amount of oil that is 9 times greater than even the most optimistic projection of the resources of the Arctic Refuge. And this oil would mostly be produced from existing drilling sites in the United States, with little additional environmental impact. So here is the irony – both the program that produced the reports and the program conducting the research on enhanced oil recovery is the same program that the Administration is terminating.
"Our need for new domestic sources of oil and gas is quite clear, as is the need to use advanced technology to find and produce those resources. There is no argument about the promise of such research – even the Administration agrees. I believe that the Senate should be more willing to match its rhetoric with funding than the Administration has been. Therefore, my Amendment restores the existing oil and gas research and development programs to the levels appropriated for the current fiscal year. In my view, that is the bare minimum that we should do.
Low Income Home Energy Assistance
"Our amendment would add $500 million to Function 600 to increase discretionary spending for the Low Income Home Energy Assistance Program. The pending Budget Resolution assumes that appropriations for LIHEAP will be $1.8 billion in FY07 – the same as the President’s budget request. We know from recent experience that this simply is not enough money. Due to very high oil, gas and electricity prices, the FY06 funding of about $2 billion has been totally inadequate, despite a winter that was milder than normal many states.
"Applications for assistance this winter increased an average of 11.4 % across the country. In New Mexico, the number of FY06 applications is projected to be 20 percent higher than last year. New Hampshire -30 percent more applications. Texas – 63 percent more. Wyoming – 47 percent more. Several states have completely run out of funds. Because of this dire situation, the Senate recently passed Senator Snowe’s bill adding an additional $1 billion for LIHEAP grants in FY06 by a vote of 68 to 31.
"Experts predict that energy costs are going to remain high this year and next winter. Contracts for natural gas to be delivered in January 2007 are currently selling for over $10 per MMBtu. Our amendment provides for a needed increase in LIHEAP funds for next winter.
"Mr. President, good energy policy is not something that happens by default. You need to set out with a clear, comprehensive vision and then – most importantly -- stick with it when it comes to implementation. If we don't keep our focus on a comprehensive, balanced approach to both energy efficiency and energy supply, we will not achieve the goals of energy security and energy affordability that we want. I think that the Administration's budget suffers from that loss of focus. Somewhere between the signing ceremony and the submission of the next budget, the energy security of our country was not given a high enough priority. I believe that this Budget Resolution before us now perpetuates that loss of focus. Under its terms, we will actually spend less on our energy security in 4 out of the 5 next fiscal years than we did before we passed comprehensive energy legislation. Something is wrong with that picture.
"I don’t think it’s appropriate to set up some zero-sum game on the DOE budget, where we have to rob Peter to pay Paul down in the Appropriations Committee this summer. The provisions of the Energy Policy Act of 2005 are important enough to the country that we should be working together to increase the bottom line for all energy programs in the energy function of the budget.
"A lot of hard work went into crafting the Energy Policy Act of 2005 on the part of all of us in the Senate. Important priorities for Senators - both Republican and Democratic - in areas such as energy efficiency, oil, natural gas, clean coal, and others have not been requested at levels that will allow the Act to be properly implemented.
"I believe that we should use this Budget Resolution to get to better energy outcomes for the nation. At a minimum, we need to fund the programs we authorized to bring us better energy security and make energy more affordable in the future. It is not a mystery as to what those programs are. We extensively debated them at the Committee level, here on the Senate floor, and in conference during the passage of the Energy Policy Act of 2005. Seventy-four Senators voted to set up those programs when they voted for the Energy Policy Act of 2005. There may be those who say we should go beyond those authorizations and do even more for our energy future, and I would not disagree. But if the good work we have done to date on energy bill is not to be wasted, then we need to vote on this Budget Resolution to at least fund the programs that we established. That is what this amendment does, and I hope that I will have the support of a broad majority of my colleagues to pass it."