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Managing America: Energy

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Week Ending June 15, 2007

S.1419 A bill to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers from price gouging, to increase the energy efficiency of products, buildings and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purposes.

The overall goal to improve energy productivity by at least 2.5% by 2012 and to maintain the rate of improvement through 2030 through regulation, funding and policy.

S 1419 as amended an included under HR 6

Biofuels for energy security and transportation

One year from enactment, the President is directed to promulgate regulations to ensure that motor vehicle fuel, home heating oil and boiler fuel contain a percentage of renewable fuels. The percentage would be 8.5% in 2008 increasing to 36% in 2022. There would be no ‘per gallon’ obligation on the use of the fuels and there would be no restriction on where the fuels could be used nation wide. Advanced biofuels would meet similar percentage increases. The onus is on refineries, blenders and importers to meet the percentage levels. Small refineries would be exempt until 2013 or 2015 depending on type of ownership. Exemptions would be based in part on disproportionate economic hardship.

Anyone violating the required percentage goals may face fines of $25,000 per day. The bill would also provide for improved credits to refineries exceeding percentage requirements to the extent that

To figure how much renewable fuel must be produced to equal a total volume required in coming years, the bill goes into detail to explain that a gallon of Ethanol equals 2.5 gallons of renewable fuel. Price transparency is also required in the President’s plan. Because renewables are organic and wax and wane from season to season, the plan must take that into account to avoid excesses or shortages during seasonal variations. The significance of those formulas for production and assessment of gallons on hand appear to suggest that the actual production amounts will be regulated so to assure a fairly level price year round. Further, States could petition for adjustments on required renewable fuels providing the adjustment would not severely harm the economy or environment.

Biomass fuels would be harvested from the National Forest System or other public lands and elsewhere and would also include feed grains, other agricultural commodities, plants and trees and algae.  Also included are crop residue, animal waste and by-products and food or yard waste.

Grants and loan guarantees

Grants to State, tribal and local governments would be available to establish refueling infrastructure corridors for gasoline blends no less than 11% and no more than 85% renewable fuels or diesel fuel containing at least 10% renewable content. The infrastructure would ensure adequate distribution of renewables within the corridor, provide for equipment to directly support vehicles powered by renewable fuels and for maintenance of the infrastructure and equipment installed. The governments could partner with public and private entities. Grants would range to $20 million under a pilot program and the non-federal share shall be no more than 20%.

Grants and loan guarantees are also available to design and build facilities to produce the renewables that showed the ability to produce at least 50,000 gallons annually. No single facility would be granted more than $250 million. States with low ethanol production may receive grants to build facilities.

Other grants would aim to improve transfer of the raw biomass to the local refineries with what appears to be an emphasis on local production of the fuels or fuel bases. Regular reports to Congress on grants made and grantee progress are ordered.

To facilitate the development and distribution of renewable additions to petroleum products and Ethanol, eleven bioresearch centers are ordered. The Secretary will provide a Center at which interested parties can gain information on programs and incentives, biofuel users and producers. A database will provide the physical properties of and reference materials for different types of alternative fuels. Fuel cap labeling telling consumers that a vehicle can operate on alternative fuels is ordered by 2010.

Other grants would aid small hydroelectric power in Alaska without damming and bodies of water. The use of ocean tides and currents, solar, wind or geothermal energy sources would benefit from the construction grants as well. Federal share of costs would not exceed 50%.

Studies

Studies are ordered on increased consumption of Ethanol blended gasoline, advanced biofuel technologies, the feasibility of pipeline construction, transporting renewable fuels by rail road, optimizing flex-fuel vehicles to use E-85 fuel, credits for use of electric cars, incentives for renewable fuels, carbon content in biofuels and biodiesel, engine durability associated with using biodiesel, and effects of Ethanol-blends on off-road vehicles.  

PROMOTING ENERGY EFFICIENCY

Energy efficient lighting

By 2010 all general purpose lighting shall be Energy Star products with a study that will take into account the cost of replacing all general service lighting and cost reduction. Specific wattage use of fluorescent lights and incandescent reflector lamps is to be reduced.

The Senate recognizes that there are 4 billion traditional light sockets in the US and that lighting technology is 125 years old. National policy and energy use standards can improve lighting efficiency. Created in the bill is the Bright Tomorrow Lighting Prizes to be awarded for various improvements to products providing increased lighting and reduced energy use. Private funds may add to the prize amounts ranging to $10 million. There appears to be no restrictions on whether or not a private, commercial entity donating to the prizes would be given any privilege to gaining copyrights of the produced products. More efficient lighting can reduce electric costs nation wide by $18 billion annually, the Senate holds.

Energy efficient products

Minimum levels of energy efficiency are to be developed and will reach to faucets, bathrooms, clothes and dishwashers. Regional standards may be increased for heating and cooling products to include furnaces, boilers or central AC equipment. Consideration will be given to proven excessive burdens on manufacturers of energy-using products. Various current regulations will be under continuous review.

Energy efficient products will be labeled for consumers within about 3 years of enactment. The labeling will include TVs, personal computers, cable and satellite boxes, video recorders and computer monitors. Other products may be added.

Products for heating hot water will come under efficiency standards including a prohibition of constant-burning pilot lights in hot water or steam boilers.

Various types of electric motors with power ratings no less than 1 and no more than 200 horsepower will be required to have a nominal full load efficiency within 3 years.

Home appliances

Refrigerators and freezers, residential clothes- and dishwashers, dehumidifiers made before January 2011 will be required to have improved modified energy factors with further improvements after January 2012. The Secretary may make awards to manufacturers producing high-efficiency consumer products. Awards would be lump sum payments. No award amounts are given in the bill.

Commercial, energy-intense industries.

The Secretary shall establish a program in cooperation with materials manufacturers, companies engaged in energy-intensive commercial applications, and national industry trade associations to support, develop, and promote the use of new materials manufacturing and industrial and commercial processes, technologies, and techniques to optimize energy efficiency and the economic competitiveness of the United States. One example is feedstock and recycling research, development and demonstration projects. Feedstock is the raw materials used in manufacturing, chemical and biological processes. Federal share is no more than 50%.

Promoting high efficiency vehicles, advanced batteries and energy storage.

The National Goals for energy savings in transportation are 20% by 2017, 35% by 2025 and 45% by 2030 to be reached through regulatory, funding and policy efforts.

The Secretary must develop a program to determine ways through which vehicle weight can be reduced to improve fuel economy without compromising passenger safety, cost of lightweight materials to build those vehicles. Automobile parts manufacturers may receive loan guarantees for fuel-efficient auto past manufacturing as would efforts towards advanced technology vehicle manufacturing with improved local/highway fuel economy.

Energy storage

An Energy Storage Advisory Council is created to consider various storage potentials including compressed air energy storage, Ultra capacitors, the energy storage industries and research and development towards improved storage options for batteries and other energy sources for vehicles in particular. Funds will be made available on a cost-share basis for R & D and demonstration projects involving electric vehicles.

An advanced battery initiative to be established through which grants to private businesses and others would spur research in that area.

50% of civil claims against those who might violate this Act would be used for research and development purposes.

National Media Campaign

The Secretary of Energy will develop and conduct a national effort in increase energy efficiency throughout the economy, promote national security benefits associated with energy efficiency, decrease oil consumption over the next decade. The effort will be up for competitive bid. And will include most media outlets.

Another campaign will be undertaken to raise consumer awareness of Flexible fuel autos. Flexible fuel autos are defined as capable of operating on gasoline or diesel fuel.

Modernizing the electricity grid

The bill establishes that is US policy to develop and deploy advanced technology to modernize and increase the efficiency of the US electricity grid to maintain reliable and secure electricity transmission and the distribution infrastructure to meet future growth demand.

Real-time monitoring and analysis is required to maximize capacity and efficiency, reliability, reduce line loss and facilitate real-time pricing. The grid is to incorporate renewable energy generators and displace a portion of the petroleum used to power the national transportation system.

The Federal fleet is required to achieve a 20% reduction in petroleum consumption by October 2015 and 10% annually thereafter through a plan to be developed using alternative fuels, acquisition of higher fuel economy vehicles and by substituting cars with light trucks. Other factors such as reducing fleet size are to be included. Federal employees will be encouraged to telecommute, use public transport, carpooling and use of bicycles. Law enforcement, emergency vehicles and military vehicles are not included.

Federal buildings are required to reduce energy use by 30% in 2015.

Efforts will be made to purchase electricity from renewable sources by 10% in 2010 and 15% in 2015. Federal contracts would be looked to for various energy efficient elements. Other performance standards are created. Standards are established to govern energy use in public or assisted housing.

Energy efficient commercial buildings

A consortium of developers, builders, state and local governments to move towards building commercial buildings that require greatly reduced energy use that are economically viable. Standards developed would apply to buildings built by 2030, 50% of buildings by 2040 and all commercial buildings by 2050.

Weatherization assistance for low-income persons will be aided by grants.

The General Services Administration is directed to accelerate cost-effective energy technology in government buildings through a centralized effort taking responsibility for recommendations practices, and activities as well as providing technical assistance to government agencies charged with lowering energy uses. The GSA will report on current cost-effective lighting technologies in use. GSA will move quickly to upgrade to cost-effective lighting as is feasible and report on those efforts and opportunities within one year. Replacement of current technologies would be completed in five years.

Local governments

The EPA may provide competitive grants to local governments to deploy cost-effective technologies and practices and achieve operational savings. If a community is economically depressed the EPA may waive up to 100% of the local share of the project.

States

States must improve energy efficiency in utilities to include electric and natural gas utilities. Block grants are available based on population size served. Federal share is 75%.

Grants will be made to States to reduce fuel wasted by idling school buses.

Colleges and universities

Grants are available to improve energy efficiency at educational institutions as well as grants to engage in innovative energy sustainability projects

CARBON CAPTURE AND STORAGE RESEARCH, DEVELOPMENT AND DEMONSTRATION

A program will develop now or improved technologies for capturing carbon dioxide, develop technologies that reduce the cost and increase the efficacy of compressing CO2 for storage, field demonstrations and an assessment of risks relating to field sites where the CO2 may be stored. Efforts will look into recycling and reusing CO 2. A study is to be conducted to determine the viability of injecting CO2 into operating oil and gas fields, depleted oil and gas fields, unminable coal seams, deep saline formations and deep geological systems. Seven large-scale demonstration projects for geological containment are authorized.

Capturing CO2 from electric energy production, petroleum refining, manufacturing of iron, steel, cement, commodity chemicals and fuels from coal is to be demonstrated with an award for high-capacity storage to 85%.

CORPORATE AVERAGE FUEL ECONOMY STANDARDS

The Secretary of Transportation shall prescribe average fuel economy standards for autos, medium-duty trucks and heavy-duty trucks manufactured beginning 2011.

Beginning in 2013, fuel economy for medium and heavy duty trucks shall be 4% greater than the previous year for the next twenty years.

After the prescribed fuel economy rate for autos is set in 2011 the industry must produce fuel economy for models by 2020 at at least 35 miles per gallon. For models through 2030 must increase by 4% the fuel economy of the previous year model. In the end, actual fuel economy levels must be feasible. Crash testing is also ordered to limit injury and death.

Credit trading

“The Secretary of Transportation may establish, by regulation, a corporate average fuel economy credit trading program to allow manufacturers whose automobiles exceed the average fuel economy standards prescribed under section 32902 to earn credits to be sold to manufacturers whose automobiles fail to achieve the prescribed standards.”

Labeling of autos regarding fuel economy that can be expected over the life of the vehicle will be required and will allow consumers to compare performance results with other vehicles. The Fuelstar program will be established to rate, by stars o the label the auto’s performance. A National Academy of Sciences study is ordered to evaluate vehicle fuel economy standards. The bill aims to have 50% of manufactured auto flexible-fuel autos by 2012 rising to 80% in 2015.

The Secretary of transportation may create rules establishing a national tire efficiency consumer education program. Tires may be labeled but not permanently.

PRICE GOUGING

Unconscionably excessive pricing means a price charged that represents a gross disparity between the current price and the price normally requested before the declaration of an energy emergency but is not attributable to increased wholesale or operational cost outside the control of the supplier.

Market manipulation to deceptively manipulate the cost of petroleum distillates or by providing false information is prohibited. The President may call for an energy emergency for 30 days with an extension possible under some conditions. The US FTC will investigate price gouging and related laws and the State Attorney Generals will enforce the laws. The FTC may intervene in State court actions to be heard and file petitions for appeal.

ENERGY DIPLOMACY AND SECURITY

A major energy producer had in the previous year produced 1 million barrels or more per day, had oil reserves of 6 billion barrels or more, The MEP also had gas production of 30 billion cubic meters and has reserves of 1.250 trillion cubic meters or more.

A major energy consumer used 1 million barrels per day with an 8% increase over previous year and uses over 30 billion cubic meters of natural gas with a 15% increase over the previous year.

Congress finds that it is imperative to national security and prosperity in the US to have reliable, affordable, clean, sufficient and sustainable sources of energy and that the US dependency on oil imports causes tremendous costs to national security, economy, foreign policy and so on.

It is the policy of the US to advance global energy security through cooperation with foreign governments to promote reliable, diverse and sustainable sources of all types of energy. The policy included increasing availability of renewable and clean sources of energy and decrease global dependence on oil and natural gas energy sources. The Secretary of State is directed to report on progress made in developing strategic energy partnerships aiming to strengthen global relationships through a mutual understanding of each others energy needs. Priorities and policies, measures to respond to acute energy needs, long-term reliability and the safe guard of nuclear fuel are elements of the partnerships among others.

Response mechanisms to an energy emergency in India and China, in cooperation with those governments, are priorities. The bill appears to suggest that a international petroleum reserve be established and that it be coordinated or perhaps fueled by a drawdown of the national strategic petroleum reserve to respond to such emergencies.

Sponsor:  Senator Harry Reid (D-NV)

Vote: A motion to invoke cloture on S 1419 passed 230 to 195 (RV 39). A motion to invoke cloture and proceed to final vote passed 62 to 32. RV 225. The bill then passed 65 to 27 June 21, 2007. RV 226

The underlying bill, HR 6, passed the House 254 to 163 (RC 40), A Motion to Recommit the bill with instructions failed 194 to 232 (RC 38).

Cost to the taxpayers: CBO estimates that enacting this legislation would increase

direct spending by $1.8 billion over the 2008-2012 period and by $2.5 billion

over the 2008-2017 period. In addition, CBO estimates that the legislation

would reduce revenues by $0.4 billion over the 2008-2012 period and by

$2.7 billion over the 2008-2017 period. Increased federal outlays and revenue

losses from enacting S. 1419 would total $2.2 billion and $5.2 billion,

respectively, over those periods (see enclosed table).

CBO has not completed an estimate of the bill’s estimated impact on

discretionary spending, but we estimate that implementing the legislation

would have additional costs of at least $7 billion over the 2008-2012 period,

assuming appropriation of the necessary funds. The bulk of that spending

would be for energy research and development activities related to increasing

energy efficiency, reducing carbon emissions, and advancing renewable

energy technology.

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MORE INFORMATION

FINDINGS

FINDINGS

(a) Findings- Congress makes the following findings:

(1) It is imperative to the national security and prosperity of the United States to have reliable, affordable, clean, sufficient, and sustainable sources of energy.

(2) United States dependence on oil imports causes tremendous costs to the United States national security, economy, foreign policy, military, and environmental sustainability.

(3) Energy security is a priority for the governments of many foreign countries and increasingly plays a central role in the relations of the United States Government with foreign governments. Global reserves of oil and natural gas are concentrated in a small number of countries. Access to these oil and natural gas supplies depends on the political will of these producing states. Competition between governments for access to oil and natural gas reserves can lead to economic, political, and armed conflict. Oil exporting states have received dramatically increased revenues due to high global prices, enhancing the ability of some of these states to act in a manner threatening to global stability.

(4) Efforts to combat poverty and protect the environment are hindered by the continued predominance of oil and natural gas in meeting global energy needs. Development of renewable energy through sustainable practices will help lead to a reduction in greenhouse gas emissions and enhance international development.

(5) Cooperation on energy issues between the United States Government and the governments of foreign countries is critical for securing the strategic and economic interests of the United States and of partner governments. In the current global energy situation, the energy policies and activities of the governments of foreign countries can have dramatic impacts on United States energy security.

(b) Sense of Congress- It is the sense of Congress that--

(1) United States national security requires that the United States Government have an energy policy that pursues the strategic goal of achieving energy security through access to clean, affordable, sufficient, reliable, and sustainable sources of energy;

(2) achieving energy security is a priority for United States foreign policy and requires continued and enhanced engagement with foreign governments and entities in a variety of areas, including activities relating to the promotion of alternative and renewable fuels, trade and investment in oil, coal, and natural gas, energy efficiency, climate and environmental protection, data transparency, advanced scientific research, public-private partnerships, and energy activities in international development;

(3) the President should ensure that the international energy activities of the United States Government are given clear focus to support the national security needs of the United States, and to this end, there should be established a mechanism to coordinate the implementation of United States international energy policy among the Federal agencies engaged in relevant agreements and activities; and

(4) the Secretary of State should ensure that energy security is integrated into the core mission of the Department of State, and to this end, there should be established within the Office of the Secretary of State a Coordinator for International Energy Affairs with responsibility for--

(A) developing United States international energy policy in coordination with the Department of Energy and other relevant Federal agencies;

(B) working with appropriate United States Government officials to develop and update analyses of the national security implications of global energy developments;

(C) incorporating energy security priorities into the activities of the Department;

(D) coordinating activities with relevant Federal agencies; and

(E) coordinating energy security and other relevant functions currently undertaken by offices within the Bureau of Economic, Business, and Agricultural Affairs, the Bureau of Democracy and Global Affairs, and other offices within the Department of State.

(a) Findings- Congress makes the following findings:

(1) United States Government partnership with foreign governments and entities, including partnership with the private sector, for securing reliable and sustainable energy is imperative to ensuring United States security and economic interests, promoting international peace and security, expanding international development, supporting democratic reform, fostering economic growth, and safeguarding the environment.

(2) Democracy and freedom should be promoted globally by partnership with foreign governments, including in particular governments of emerging democracies such as those of Ukraine and Georgia, in their efforts to reduce their dependency on oil and natural gas imports.

(3) The United States Government and the governments of foreign countries have common needs for adequate, reliable, affordable, clean, and sustainable energy in order to ensure national security, economic growth, and high standards of living in their countries. Cooperation by the United States Government with foreign governments on meeting energy security needs is mutually beneficial. United States Government partnership with foreign governments should include cooperation with major energy consuming countries, major energy producing countries, and other governments seeking to advance global energy security through reliable and sustainable means.

(4) The United States Government participates in hundreds of bilateral and multilateral energy agreements and activities with foreign governments and entities. These agreements and activities should reflect the strategic need for energy security.

(b) Statement of Policy- It is the policy of the United States--

(1) to advance global energy security through cooperation with foreign governments and entities;

(2) to promote reliable, diverse, and sustainable sources of all types of energy;

(3) to increase global availability of renewable and clean sources of energy;

(4) to decrease global dependence on oil and natural gas energy sources; and

(5) to engage in energy cooperation to strengthen strategic partnerships that advance peace, security, and democratic prosperity.

(c) Authority- The Secretary of State, in coordination with the Secretary of Energy, should immediately seek to establish and expand strategic energy partnerships with the governments of major energy producers and major energy consumers, and with governments of other countries (but excluding any countries that are ineligible to receive United States economic or military assistance).

(d) Purposes- The purposes of the strategic energy partnerships established pursuant to subsection (c) are--

(1) to strengthen global relationships to promote international peace and security through fostering cooperation in the energy sector on a mutually beneficial basis in accordance with respective national energy policies;

(2) to promote the policy set forth in subsection (b), including activities to advance--

(A) the mutual understanding of each country's energy needs, priorities, and policies, including interparliamentary understanding;

(B) measures to respond to acute energy supply disruptions, particularly in regard to petroleum and natural gas resources;

(C) long-term reliability and sustainability in energy supply;

(D) the safeguarding and safe handling of nuclear fuel;

(E) human and environmental protection;

(F) renewable energy production;

(G) access to reliable and affordable energy for underdeveloped areas, in particular energy access for the poor;

(H) appropriate commercial cooperation;

(I) information reliability and transparency; and

(J) research and training collaboration;

(3) to advance the national security priority of developing sustainable and clean energy sources, including through research and development related to, and deployment of--

(A) renewable electrical energy sources, including biomass, wind, and solar;

(B) renewable transportation fuels, including biofuels;

(C) clean coal technologies;

(D) carbon sequestration, including in conjunction with power generation, agriculture, and forestry; and

(E) energy and fuel efficiency, including hybrids and plug-in hybrids, flexible fuel, advanced composites, hydrogen, and other transportation technologies; and

(4) to provide strategic focus for current and future United States Government activities in energy cooperation to meet the global need for energy security.

(a) Findings- Congress makes the following findings:

(1) Cooperation between the United States Government and governments of other countries during energy crises promotes the national security of the United States.

(2) The participation of the United States in the International Energy Program established under the Agreement on an International Energy Program, done at Paris November 18, 1974 (27 UST 1685), including in the coordination of national strategic petroleum reserves, is a national security asset that--

(A) protects the consumers and the economy of the United States in the event of a major disruption in petroleum supply;

(B) maximizes the effectiveness of the United States strategic petroleum reserve through cooperation in accessing global reserves of various petroleum products;

(C) provides market reassurance in countries that are members of the International Energy Program; and

(D) strengthens United States Government relationships with members of the International Energy Program.

(3) The International Energy Agency projects that the largest growth in demand for petroleum products, other than demand from the United States, will come from China and India, which are not members of the International Energy Program. The Governments of China and India vigorously pursue access to global oil reserves and are attempting to develop national petroleum reserves. Participation of the Governments of China and India in an international petroleum reserve mechanism would promote global energy security, but such participation should be conditional on the Governments of China and India abiding by customary petroleum reserve management practices.

(4) In the Western Hemisphere, only the United States and Canada are members of the International Energy Program. The vulnerability of most Western Hemisphere countries to supply disruptions from political, natural, or terrorism causes may introduce instability in the hemisphere and can be a source of conflict, despite the existence of major oil reserves in the hemisphere.

(5) Countries that are not members of the International Energy Program and are unable to maintain their own national strategic reserves are vulnerable to petroleum supply disruption. Disruption in petroleum supply and spikes in petroleum costs could devastate the economies of developing countries and could cause internal or interstate conflict.

(6) The involvement of the United States Government in the extension of international mechanisms to coordinate strategic petroleum reserves and the extension of other emergency preparedness measures should strengthen the current International Energy Program.

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