Policy and Legislation

Morgan GoodspeedAvi MayerMark Hall

What We Have NowWhy This Is InsufficientWhat Needs to Be Done

3 Focus Points

WHAT WE HAVE NOW

The Energy Policy Act of 2005

$14.5 billion new and extended tax breaks

Nuclear: greater federal backing and insurance for construction of new plants

Low-carbon: wind, biomass, landfill, geothermal tax incentives

Coal: $1.8 billion clean-coal and gasification technologies

Oil: SPR expanded from 700 mil to 1 bil

Energy Policy Act, CON Transportation: fuel additives increase

according to Renewable Fuel Standards, tax credits for hybrids, clean-diesel, hydrogen

Efficiency: federal buildings 20% reduction

Uranium: 100 pounds weapons-grade may be exported annually

Renewable: 7.5% increase by 2013 is the objective

Daylight-Saving Time (DST)

A policy, first instituted in 1918, aimed

at better-utilizing daylight hours and

conserving energy by setting-ahead-s in order

tohave the rise and set later in the

day.

DST Background

Concept first suggested by Adopted by a number of European countries during World War I. 1918 – First DST law enacted in the

Established standard time zones. Set DST to commence March 31. Repealed in 1919 due to Reinstituted during

WWII. Repealed following the war.

DST Background

1973 – OPEC oil embargo! Emergency Daylight Saving Time

Energy Conservation Act signed by Instituted year-round DST for 2 years. 1975 - Congress refused to

renew the Act, again due to 1986 – Public Law 99-359 signed by

Instituted DST from first Sundayin April through last Sunday in October.

I am not a crook!

Win one for the Gipper!

DST Advantages

DoT and DoE studies suggest 10,000 barrels were saved daily during the 1974 and 1975 trial years. Current daily use: 20 million barrels (savings would equal 0.05% of current daily use)

BUT serious problems with making current determinations based on that data

To be continued…

Energy Infrastructure Siting

Federal government final say on LNG terminal siting authority through FERC

FERC request for eminent domain for onshore sites

Kelo v. City of New London (public purpose over public use interesting applications for the energy industry)

Energy Siting, CON October House bill

gave the President authority to site refineries in old military bases

Greater number of projects exempted from traditional environmental testing under the Energy Act

EPA

The Environmental Protection Agency (EPA) is concerned with the country’s energy usage.

Fuel Economy Energy Star Program

Fuel Economy

Test created in 1972 Calculates fuel consumption by

using formulas and equations Test does not directly measure fuel

consumption

Energy Star

Created in 1992 Focuses on getting products to be

more energy efficient Saved 10 billion dollars in 1994

WHY THIS IS INSUFFICIENT

National Security

The territorial integrity, sovereignty, and

international freedom of action of the

National Security Background

Oct. 6, 1973 – Yom Kippur War Soviets ship billions of $ worth of arms to

the Arab states Oct. 8 – OPEC members demand 100%

increase on posted oil prices

Oct. 17 - OPEC announces it will halt exportation of oil

to countries that support Israel

National Security Background

Oct. 19 – Nixon requests funding for airlift to Israel

Same day – King Faisal of Saudi Arabia announces embargo of

oil shipments to the U.S. Embargo extended to the Netherlands,

Portugal, Rhodesia and South Africa Nov. 5 – OPEC members announce 25%

output cut and threaten further cuts

National Security Background

Price of oil quadruples overnight to $12 a barrel ($52.98 today) Price of 1 gallon of gasoline rises from

national average of 38.5 cents to 55.1 cents ($2.43 today)

NYSE shares lose $97 billion ($428.3 billion today) in value in six weeks

Nov. 27 - Nixon signs Emer. Petroleum Allocation Act

National speed limit of 55 MPH imposed Recession

National Security Quotations

”Now we have a choice. But if we wait, we will live in fear of embargoes. We could endanger our freedom as a sovereign nation to act in foreign affairs.”

(April 18, 1977)

”Declining domestic oil production, rising oil imports, and growing Free World dependence on potentially insecure sources of supply raise a number of concerns, including vulnerability to a major supply disruption.”

(January 3, 1989)

National Security Stats

The United States currently imports some

58%of the oil it consumes,

most of it from Canada, Saudi Arabia, Mexico and Venezuela.

National Security Quotations

”We value an America that controls its own destiny because it’s finally and forever independent of Mideast oil. What does it mean for our economy and our national security when we have only 3 percent of the world's oil reserves, yet we rely on foreign countries for 53 percent of what we consume? I want an America that relies on its ingenuity and innovation, not the Saudi royal family. And our energy plan for a stronger America will invest in new technologies and alternative fuels and the cars of the future so that no young American in uniform will ever be held hostage to our dependence on oil from the Middle East.”

(July 29, 2004)37:30

National Security Quotations

”To keep our economy growing, we also need reliable supplies of affordable, environmentally responsible energy. Nearly four years ago, I submitted a comprehensive energy strategy that encourages conservation, alternative sources, a modernized electricity grid, and more production here at home, including safe, clean nuclear energy… Four years of debate is enough! I urge Congress to pass legislation that makes America more secure and less dependent on foreign energy.”

(February 2, 2005)

12:20

Bureaucratic Entanglements

Oil: total refining capacity lower than 1981 levels due in part to oil companies’ business tactics

Nuclear: no new plants have been ordered since 1978, and none since 1973 have been completed, mostly for perceived safety risk

Bureaucracy, CON LNG: landlocked

states outvote the coastal states that will be most affected

Electric grid: local opposition to state and federal projects often because unsightly, perceived as lowering neighborhood value

Legislative Shortcomings

Climate-change issues notoriously absent from most pieces of legislation, environmentalists unhappy about the disregard for greenhouse gases

Requirements or recommendations? Lacking teeth behind reduction suggestions and putting resources into production, exacerbating the problem

Shortcomings, CON BIGGEST: Where are

the increased CAFÉ standards?

Would do the most to decrease reliance on foreign energy

CAFÉ given only $6 million over 5 years

Politicians claim job loss and safety as their primary concerns

Problems with Fuel Economy

Test is outdated Requirements are too easy Greenhouse gases aren’t taken

into enough consideration

WHAT NEEDS TO BE DONE

DST Proposals

Reps. Markey (D-Mass.) and Upton (R-Mich.) introduce amendment to Energy Policy Act Would extend DST by two months. Claim that measure would save 100,000

barrels per day

”The beauty of daylight saving time is that it just makes everyone feel sunnier. In addition to the benefits of energy saving, less crime, fewer traffic fatalities, more recreation time and increased economic activity, day light saving just brings a smile to everybody’s faces.”

DST Eh… nope

Estimates based on thirty-year-old data

”I want to note that these studies are over 25 years old and were limited in scope. Congress captured many of the benefits identified in our studies in the legislative changes to daylight saving time enacted in 1986. There have been dramatic changes in lifestyle and commerce since we completed our studies that raise serious questions about extrapolating conclusions from our studies into today’s world.”

- Linda Lawson, DoT

DST Eh… nope

2001 – California energy crisis State studies potential benefits of DST

”Our report indicated that if we [extended] daylight saving time through all of March, there would be a decline of electricity use at peak hours of about 3.5 percent. However, overall electricity use would only decline about one half of a percent. You're basically shifting non-critical energy use to later in the day.”

- Claudia Chandler, Calif. Energy Commission

DST Eh… nope

Objections to the Markey/Upton proposal… National PTA United States Conference of Bishops Jewish groups Air Transport Association Private utilities Groups representing Oracle and Yahoo! Dairy farmers NASA Others…

DST Outcome

Markey/Upton amendment reduced by one month and passed Implementation contingent upon DoE

study Set to kick in no earlier than March 2007

Benefits still murky

DST Our Verdict

We are

AGAINSTany further extension of DST, unless it is proven that such an extension would provide substantial energy savings and determined that those benefits would

outweigh any costs.

National Security Proposals

Key Points Use technology to improve

conservation and efficiency Energy Star

Increase domestic energy production in environmentally responsible ways

ANWR drilling Clean Coal Program Expanding nuclear power

National Security Proposals

Diversify the nation’s energy supply Stimulate development of renewable

fuels via tax credits Hydrogen, ethanol, biodiesel

Modernize the domestic energy infrastructure

Repeal hindrances to investment Encouraging development of new

infrastructure, incl. superconducting power lines

National Security Proposals

Key Points Short-Term

Release of oil from strategic reserves Work with OPEC to increase supply FTC investigation of market manipulation

Long-Term Development of alternative energies Improve fuel economy standards

27.5 mpg across the board Increase conservation efforts

National Security Proposals

H.R. 2730 The United States-Israel Energy Cooperation Act

Establishment of an international grant fund for R&D of reliable energy sources

‘Findings’ include The United States’ dependency on

“nations that do not share the interests and values of the United States”

DoE projections that see dependence increasing by 33% over next twenty years

45 cosponsors

Windfall/Gasoline Tax The big 5--Exxon Mobil, BP Amoco,

Royal Dutch Shell, Chevron, and ConocoPhillips--$33 BILLION third quarter profits: price gouging?

Windfall Profits Rebate Act: 3-year, 50% tax on profits on oil sold at above $40 a barrel, with exemption for development/exploration

Revenue to be returned to consumers in a rebate check for taxpayers

Taxes, CON YES, implement a tax—be it on

profits or a gasoline tax at the pumps (forcing oil companies to lower prices and thus reduce profits that way)

Higher prices will curtail demand and reduce shortage

BUT, do not return the revenue and increase consumption: invest in alternative fuels

Kyoto Protocol Background

Created in 1997 156 member nations The protocol is an agreement to

bring greenhouse gas emission levels down to levels relative to those in 1990

Kyoto Protocol Benefits

Encourages the world to work towards a goal that will benefit us all

Has goals that would significantly affect the environment in a positive manner

Kyoto Protocol Drawbacks

Lack of power to make nations comply

Weak on developing nations Goals may not be attainable

Carbon Credit Trading

Similar to the proposal made by the National Commission on Energy Policy

Puts a price on polluting

Carbon Credit Benefits

Companies are rewarded for using energy more efficiently

Companies are encouraged to do more research of alternate energies

If successful, will have a positive impact on the environment

Helps bring about the goals of Kyoto

Carbon Credit Drawbacks

Too many allowances are being issued

EU-ETS system only covers 40% of carbon dioxide emissions

Some companies feel that they are at a competitive disadvantage

International Cooperation

Int’l Cooperation Background

Cold War Solidifying relationships with allied countries Presenting opportunities for stability and

cooperation with “adversaries” Post Cold-War

Developing the United States’ economic competitiveness by granting U.S. scientists access to foreign research

Vital for the solution of such large-scale contemporary problems as AIDS, global climate change and the proliferation of nuclear materials.

Int’l Cooperation Background

Augments shrinking public research budgets by leveraging publicly funded research through information sharing and technology cooperation

Int’l Cooperation Support

“The United States will pursue international cooperation to affect a more rapid, coordinated advance for this technology that could lead to the elimination of air pollutants and a significant reduction of greenhouse gas emissions in the transportation sector worldwide.”

(2003 State of the Union Address)

Int’l Cooperation Support

“Despite [large-scale domestic efforts and initiatives], our administration knows that such steps, though important, are not enough. It is critical that we collaborate with you on an international basis to address challenges that face all of us in the 21st century.”

(IAEA Conference, April 2003)

QUESTIONS?