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Political Scene

The Energy Bill: Is It Big and Broad Enough?
Linda Rowan

Every year since 2001, the Bush Administration has requested a comprehensive energy bill from Congress, with hopes to avoid a potential energy crisis. Congress has failed to approve a comprehensive bill on two previous attempts. This year, the House passed an energy bill in April, and the Senate is still working on their version. With less than half of Congress’ work completed on this year’s legislation and a long hot summer ahead, the president and others have raised serious concerns about whether the legislation is comprehensive enough to ease our energy needs.

The president would like a national energy policy that helps the private sector promote dependable, affordable and environmentally sound production and distribution of energy, as the country faces increasing energy demands. Reliance on fossil fuels for electricity generation and transportation is up and is expected to continue to increase for at least the next 25 years. The country’s dependence on foreign sources of oil and gas are increasing, while the price of oil and gas has rapidly risen. The price of a barrel of oil has increased since 2001, and last April reached a peak of $57 a barrel. Prices have skyrocketed because of fears over demand outpacing supply, and the capacity to process petroleum to meet future growing demands is uncertain — a single critical failure in world supply could create a crisis.

The United States consumes about 25 percent of the total fossil fuels produced for a population that is less than 5 percent of the global total. In the meantime, China and India, with much larger populations, have burgeoning energy needs. The global demand for cheap and reliable fossil fuels is growing at an alarming rate, and the concentration of 64 percent of the world’s known petroleum resources in the volatile Middle East exacerbates geopolitical concerns over the stability of the supply. The world’s dependence on fossil fuels also has environmental consequences because of pollutants emitted into water and air, including greenhouse gas emissions that cause atmospheric warming.

Unfortunately, the House bill falls short of achieving a comprehensive national energy policy and will do little to prevent a potential global energy crisis. The bill focuses on significant incentives and tax credits for large oil and gas producers, while providing far fewer incentives for alternative energy producers. Democrats claim the incentives and tax credits are corporate paybacks by Republicans who received campaign donations from large energy companies.

The bill includes provisions for companies to streamline leasing and permitting, reimburse costs of environmental reviews, and for the government to repurchase leases where exploration and development are not allowed. The tax breaks in the bill total $8 billion with only 6 percent going to alternative energy sources and efficiency measures, whereas Bush’s plan requested $6.7 billion in tax breaks, with 72 percent for alternative energy sources and efficiency. In particular, Bush’s request called for $3.6 billion in tax incentives through 2010 for hybrid and fuel-cell vehicles and residential solar heating, as well as energy from landfill gases, wind, biomass, and combined heat and power sources.

Bush warned against significant oil and gas producer incentives, just days before the bill was passed, saying, “with oil at more than $50 a barrel … energy companies do not need taxpayer-funded incentives to explore for oil and gas.” Some lawmakers have advocated for far greater incentives for more efficient vehicles and far greater promotion of alternative energy resources than are contained in the House bill.

Still, research and development spending in the bill will help promote cleaner fossil-fuel technologies and cheaper renewable energy resources. The bill includes $4.9 billion for “clean coal” technology development; $1.3 billion for a nuclear hydrogen power plant; and $4 billion for hydrogen fuel-cell research. The question is whether this research will lead to better technology that is also cheaper to implement than conventional technologies. If the innovative and cleaner technologies are not cost-effective, then the United States and other countries will not develop them.

The bill also includes an additional $2 billion for research into ultra-deep oil and natural gas drilling in the Gulf of Mexico. Some critics say that the major oil and gas producers, which are making recordbreaking profits from current high prices, should support such research instead of the government.

The House energy bill also contains two controversial provisions that stalled the 2003 energy bill: drilling in the Arctic National Wildlife Refuge (ANWR) and legal protections for producers of the gasoline additive methyl tertiary butyl ether (MTBE), a groundwater contaminant. There may not be enough votes in the Senate to retain either of these provisions. Congress will be forced to approve drilling in ANWR in some legislation this year, however, because the expected revenues estimated from ANWR oil reserves are built into the final budget agreement and cannot be filibustered.

The House energy bill is not comprehensive enough to reduce the nation’s energy or environmental concerns. More research and development and more incentives for a greater variety of renewable energy resources, as well as greater incentives for conservation and efficiency, are missing from the legislation. A national energy policy needs to drive the market — both corporate and individual consumers — to conserve more fossil fuels, demand more alternative energy resources and create more innovative advances. An efficient and distributed energy market will drive industry and the government to support cleaner, sustainable and more diversified energy consumption while mitigating the potential global energy crisis.

Rowan is director of the American Geological Institute’s Government Affairs Program. E-mail:

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