Remarks of Sen. Alexander - Importance Of The Senate Passing An Energy Bill

Remarks of Sen. Alexander - Importance Of The Senate Passing An Energy Bill

June 15th, 2005 - Mr. President, I thank the Senator from Idaho for his leadership and work on this issue.

I note the Senator from Florida is here. I will make my remarks on the bill if he has time for me to do that. A lot of hard work has gone into it.

I like the title the Senator from Idaho suggested, ``American Clean Energy Act.'' I hope to explain why.

Let me step back a little bit and try to put what we are debating in some context. September 11 was a terrible surprise for this country. But we now know it shouldn't have been. During the 1980s and the 1990s terrorists attacked American interests around the world. If we had paid more attention then, we might not have been surprised on September 11, 2001.

The next big surprise to the United States will be to our pocketbooks, to our ability to keep our jobs, and our high standard of living in a more competitive world marketplace. We can avoid this surprise if we pay attention to the warning signs. Many of these warning signs have to do with energy. Suddenly, instead of the lowest natural gas prices in the industrialized world, we have in our country the highest natural gas prices in the industrialized world. Gasoline prices at the pump are at record levels. China and India are increasing their demand for energy and their purchases of oil reserves to supply it, which drives prices up. Because of high natural gas prices, manufacturing and chemical jobs are moving overseas, farmers are taking a pay cut, and consumers are paying too much to heat and cool their homes.

We can avoid this next big surprise, a surprise to our pocketbooks, by enacting, as the Senator from Idaho called it, an American Clean Energy Act that does the following things: First, lowers the price of natural gas to American consumers. The price of natural gas to American consumers is at about $7 a unit. Our economy was built on natural gas that cost $2 or $3 a unit. If you work at Eastman Chemical in eastern Tennessee, an area which has thousands of chemical jobs where blue-collar workers and white-collar workers have had good wages for a long time, this causes a massive problem because natural gas is the raw material producing chemicals. If natural gas can be purchased overseas at one-half, 60 percent, or 70 percent of the cost here, and if natural gas is 40 percent of the cost of producing the chemical, where do you suppose the 1 million blue-collar chemical industry jobs are going to be 10 years from now? Not in Kingsport, TN. Not around this country.

First we need to lower the price of natural gas for blue-collar workers. We need to lower it for farmers who are paying expensive amounts for fertilizer. We need to lower it for homeowners.

Second, we need to help to increase the supply of oil worldwide and reduce the growth of our dependence on oil. The Senator from North Dakota mentioned earlier we need to get over our addiction to foreign oil. It would be nice if we could just forget it, but we are not going to be able to forget it. What we need to do, realistically, is to increase the supply of oil worldwide because China and India and Brazil and Singapore and Malaysia all look over here and see we have 5 percent of the people, a third of the money, and we are consuming 25 percent of the energy. They want some of the action, too. So they are buying up oil reserves and keeping their smart people home and creating a demand that raises our prices. And for the foreseeable future we will have to depend upon some foreign oil. But we need to begin to reduce the growth of our dependence on oil. This bill does that.

Third, we need to move our country toward a more reliable supply of low cost, American-produced energy, especially nuclear power, which produces 70 percent of all of the carbon-free energy produced in the United States today. Let me repeat that: Nuclear power, a technology we invented in the United States, produces 20 percent of our electricity, but produces 70 percent of all of the carbon-free energy we have in the United States today.

Coal gasification and carbon sequestration are such long words that it took me a long time to figure out what we were talking about. We are talking about taking coal--which we have a 400-year supply of in this country--turning it into gas, and then making electricity out of the gas.

For States such as Ohio, where the Presiding Officer is from, or Tennessee, where I am from, and where we struggle with air pollution problems, it gets rid of the sulfur air pollution problems and gets rid of nitrogen and mercury and just leaves carbon. If we can advance our research and development for carbon sequestration--that is, capturing that carbon and putting it in the ground--then we will have for ourselves and for the world a transformed way of producing electricity that will provide a low-cost, reliable supply of American-produced clean energy in the amounts we need.

Finally, we need to produce energy in a way that as much as possible clears our air of sulfur, of nitrogen, of mercury, and of carbon. This should all add up to an American Clean Energy Act of 2005, legislation that puts our country on the path toward an adequate, low-cost supply of reliable, American-produced clean energy.

To accomplish this goal we must have aggressive changes in policy--and many of those are in this legislation as it is reported to this committee--aggressive energy efficiency and conservation, aggressively transforming the way we produce electricity, such as advanced nuclear or coal gasification and carbon sequestration, aggressively researching for new domestic supplies of energy, aggressively importing for the time being liquefied natural gas and aggressive research and development into new forms of energy.

I believe we were fortunate we could not pass an energy bill last year because circumstances have changed, and they have made this a better piece of legislation more likely to reach the broad goals I just mentioned. Specifically, high natural gas and oil prices this year make the situation more urgent.

Next, because of this urgency, perhaps we better understand the threat to our jobs from the growing demand for energy in India and China and other parts of the world. Next, because of the time we have spent in hearings and debates--and Senator Craig and I and Senator Martinez and Democrat members, Senator Domenici, Senator Bingaman, we have had long hearings on coal, long hearings on nuclear, long hearings on gas--we have a better understanding of the new technology and what the emerging consensus is in this country, especially regarding nuclear and coal gasification and carbon sequestration.

I think, in our committee, we have a near consensus about the direction in which we ought to go on this very new way of going. That is an important development. We also see more clearly the essential relationship between a clean Energy bill, which this is, and clean air legislation. So we come to the floor for debate not only with a better clean Energy bill, but, as Senator Cantwell from Washington said at the end of our marking up of the committee bill, with a cleaner process.

Everyone on the committee has had his or her say. Now, not all of us got our way, but all of us had our say. And we had many votes. As Senator Bingaman said, they were almost never party-line votes. But they reflected the different opinions and different regions of the members of the committee. As a result, we come to this floor with only one dissenting vote in the committee of 22.

This bipartisanship, which has been mentioned many times, is the result of a lot of hard work and patience by the chairman and ranking member of our committee, Senator Domenici and Senator Bingaman. They have shown patience, they have shown tolerance, they have swallowed hard sometimes, and they deserve a lot of thanks for this legislation. They have led us down a very good path.

Now we have a chance to make the bill even stronger. The Finance Committee will recommend to us later this week tax incentives to further our goals. We will debate those. Then there are some important issues to be resolved about which we have some very different opinions, such as the Senator from North Dakota said we need to get rid of our addiction to foreign oil. Some people like CAFE standard increases. Some people like, as I do, incentives for hybrid cars, the efficient dispatch of natural gas; meaning encouraging States to send out of the most efficient natural gas plants, first, the gas we use. The committee did not adopt that, but I still think it is a good idea. We may hear from it again, maybe in an amended form.

A proposed renewable portfolio standard: The Senator from New Mexico, Senator Bingaman, may propose that or others may. He thinks it is a good idea. I think it is a bad idea. I think it is a tax on lots of people around our country who will not be building windmills and who do not need to pay higher taxes. They cannot afford it. I think it is an unnecessary Federal rule, when we have 17 States which, in their own ways, already have renewable portfolio standards. But we will have a chance to debate that and vote on it and come to a conclusion.

We will be talking about carbon and global warming. There are a great many ideas afloat within this Senate about that. I think it is fair to say there is a growing consensus about needing to produce carbon-free or low-carbon energy. There is not a consensus yet on what to mandate or what to order. There is a debate about the proper allocation of resources to encourage renewable energy. Renewable fuel is about 2 percent of all the fuel we use in the United States. Renewable energy, other than hydro dams--water over dams--is about 2 percent of all that we use. It is not going to be that much more. So we need to make sure that, within the renewable fuels, we equitably allocate the dollars that are spent as between geothermal and solar, for example, or solar and wind, for example, and that we make sure we are spending scarce dollars for programs and policies and incentives that will produce the largest amount of carbon-free or low-carbon energy.

So I am confident we can deal with these issues and create an even stronger bill as we go to conference with the House of Representatives.

It is fashionable and correct to say these days that to help us get a bill through our committee to meet our energy needs, we need every kind of energy. I suppose if somebody proposed subsidizing building bonfires in the front yard to heat our house, we would probably put it in just to get a consensus in trying to move it all the way through.

But it is also correct, and I believe more important, especially when we are challenged, as we are today, economically, to say we need priorities. So let me say, briefly, after participating in these 2 years of discussions and hearings, what this one Senator believes our priorities ought to be if we really want to have an adequate, reliable supply of American-produced clean energy so we can keep our jobs and our high standard of living and a more competitive world marketplace.

First, energy efficiency and conservation. Coming from the Republican side of the aisle, someone might say: That sounds a little odd. Maybe you don't really mean that. Maybe you are just saying that to make Democrats feel better. No. Energy efficiency and conservation is the best strategy for immediately moderating natural gas prices and stabilizing longer term markets. In other words, if we really want to lower the price of natural gas from $7, the place to start is conservation and energy efficiency. It will do it quicker and faster than anything else.

For example, the appliance efficiency standards in this legislation, which are twice as strong as last year's bill, should avoid the building of 45 natural gas power plants of 500 megawatts each and will save consumers and businesses more than $57 billion through 2030, according to the American Council for an Energy-Efficient Economy. So 45 natural gas power plants avoided.

The legislation also includes a 4-year national consumer education program that, when used in California, helped produce a 10-percent cut in peak demand, the equivalent of power produced by another 11 500-megawatt power plants. If we were to strengthen the bill by adding a provision to encourage utilities to use first the electricity most efficiently produced from natural gas, we could save even more.

The oil savings amendment in this legislation will encourage the savings of 1 million barrels of oil per day--per day--by the year 2015, about the amount of energy produced by the projected drilling in ANWR. It is also about the same amount of oil produced in onshore drilling in the State of Texas. It is my hope that the tax incentive provisions recommended by the Finance Committee will include the proposal of the National Commission on Energy Policy, which Senator Bingaman has talked about, to encourage the purchase of hybrid and advanced low diesel vehicles with a $2,000 tax deduction, as well as tax incentives to encourage the retooling of plants in the United States to build those vehicles, which would add another 39,000 auto manufacturing jobs.

In other words, we do not want to create an incentive to build hybrid vehicles and have them all built in Japan. We would like to have those 39,000 manufacturing jobs in Minnesota and Tennessee and other States.

A second priority would be increased supply of domestic natural gas. The next section of this legislation that would have the most immediate impact on natural gas prices is the section streamlining the permitting of facilities for bringing liquefied natural gas, LNG, from overseas to the United States. It gives the Federal Energy Regulatory Commission, FERC, we call it, the authority for siting and regulating these liquefied natural gas terminals.

It preserves States' authorities under the Coastal Zone Management Act and other acts. This would make it easier to import, for the time being, LNG from overseas, which is then added to our pipelines. To do this, requires large terminals in which to temporarily store the gas. We only have four such terminals. There are nearly three dozen applications pending for more terminals--some onshore, some offshore--but the application process is laborious. This legislation accelerates the decision-making process, while preserving a proper amount of input from local governments about the location of these terminals.

In addition, I believe it is time to explore, where appropriate, more of the vast natural gas reserves that we have offshore. This can be done in ways that do not harm the coastlines or the landscapes. Drilling rigs can be put far offshore so they cannot be seen. States can be given the option of deciding whether they will permit such drilling and, in the process, collect some of the revenues.

I see the Senator from Florida waiting to speak. I saw his map a little earlier, and I know he is likely to talk about this subject. My feeling about this is that if Virginia or North Carolina or Florida agree that they would like to put oil and gas rigs so far offshore they cannot see them, and use some of those revenues to build up their universities or lower their property taxes, I think they should be able to. But if the State of North Carolina or Florida does not want to see those things and does not want them at all, I think they should have that option as well.

Those are a number of things that would increase the supply of natural gas.

After conservation, after increased supply of LNG and domestic gas, my third priority would be a new generation of nuclear power. This legislation needs to include $2 billion for research and development and loan guarantees to help start at least two new advanced technology nuclear power plants. The Senator from Idaho is a leader in this work. So are both Senators from New Mexico. After conservation and increased supplies of natural gas, expanding and building new nuclear power plants stands virtually alone as America's best option for an immediate, substantial, and reliable supply of American-produced clean energy.

Why is that? One hundred and three nuclear power plants today produce 20 percent of America's energy, almost 70 percent of our carbon-free electricity. This is a technology we invented. Since the 1950s, the U.S. Navy has operated dozens of reactors--does so today--without ever a single incident, regularly docking at ports on our coasts. France is today 80 percent powered by nuclear power. Japan is adding a nuclear power plant a year. Yet the Tennessee Valley Authority's Browns Ferry plant is the first substantial nuclear startup since the 1970s.

If we are talking about carbon-free electricity, nuclear power is already 70 percent of our carbon-free electricity. In an economy this big, after we get through with conservation, after we import more LNG, nuclear power stands alone as our best option to have large amounts of carbon-free electricity, and we need to get on with it.

Fourth, waiting in the wings is coal gasification and carbon sequestration. It is often said that America is the Saudi Arabia of coal. We have a 500-year supply. Some say 400; some say 500. We have a lot. We have the technology to turn the coal into the gas and then burn the gas to make electricity in a way that eliminates most of the nitrogen, sulfur, and mercury. That would put every county in Tennessee in compliance with Federal clean air standards. The Smoky Mountains would still be smoky, but they wouldn't be smoggy. It would clean the air.

We are on the edge of being able also to recapture the carbon produced in this process and store it underground. If we can add this clean coal process to nuclear power, one, we will lower natural gas prices for farmers, homeowners, and blue-collar workers because it will not be as necessary to use natural gas to make electricity; and, two, we will have an adequate supply of low-cost, carbon-free energy that is much less dependent on foreign sources.

If we want to do as the Senator from North Dakota indicated earlier--get rid of our addiction to foreign oil--we know the way to do it. A lot of the provisions are in this bill: First, conservation and efficiency; second, increased supplies of natural gas, which is clean; third, nuclear power; and fourth, coal gasification and sequestration. If we did that, we would transform the way we produce energy, and we would have a true American clean energy bill.

Coal gasification and carbon sequestration would clean the air of major pollutants and, importantly, show the rest of the world how to do it. A point I learned not long ago was that some of the major environmental groups support a coal strategy to clean the air. Because if the United States perfects coal gasification and sequestration, then China and India and Singapore and others will do it. If we do not, they will go ahead building conventional coal plants which are dirtier. If we are really interested in clean air, in carbon-free air around the world, this is the strategy we will follow.

It is my hope that the loan guarantees and tax incentives in this legislation will include $2 billion in tax incentives for the deployment of six coal gasification plants by 2013 and loan guarantees for industrial site commercial applications. For carbon capturing sequestration from coal plants, we need $1.5 billion in research to demonstrate commercial-scale carbon recapture and geologic sequestration at a variety of sites. Substantially, these provisions are in the legislation Senator Johnson of South Dakota and I offered which we called the Natural Gas Price Reduction Act of 2005, and many of the provisions are in this bill.

I have a couple of more priorities, and then I will be glad to yield the floor. I see others waiting.

Fifth, research and development--if we are to transform the way we make electricity, we have to accelerate research and development of these projects. Developing advanced nuclear reactors with a lower construction cost should be the first priority, if we really want carbon-free electricity. Next should come demonstration projects for large-scale carbon sequestration because if it succeeds, it could transform clean energy not just here but everywhere. Accelerated research into hydrogen production, as Senators Dorgan, Akaka, and others have advocated, should come next, keeping in mind that it is several years down the road. It will require nuclear or coal or natural gas power plants to produce the hydrogen. Then for the longer term should come fusion.

Finally, a word on renewable fuels and energy as a final priority. About 2 percent of fuel for our vehicles is renewable fuel, chiefly from corn-based ethanol. About 2 percent of our electricity is produced by non-hydro renewable energy, chiefly biomass, which we burn, wind, solar, and geothermal, hot air coming out of the ground. Our objective should be to encourage R&D and breakthroughs that help these small numbers become bigger so that renewables make greater contributions. This legislation includes authority for such research. For example, new advances in solar technology suggest that solar shingles on house tops and businesses may have significant potential.

It is important to make our financial subsidy for these renewable sources equitable among themselves. For example, the renewable production tax credit in the Federal Tax Code today has already committed billions over the next 5 years--I believe the accurate figure is about $2 billion for the next 5 years--almost all to wind power, almost nothing to solar. That is not right. We should have advances in solar. And to the extent we want to put money behind renewable energy, solar and geothermal, as well as wind, should have an opportunity to succeed. Hopefully, this legislation will correct that by creating a new investment tax credit for solar energy such as the one Senator Johnson and I introduced earlier this year which would make it available to homes and businesses and would cost $380 million over 5 years.

We also need to make sure that these tax dollars are spent for renewables to help launch new technologies, not permanently subsidize them, and that the amount of money spent bears some relationship to our total energy. For example, extending the production tax credit for 3 more years, as it is written, would mean taxpayers would be spending a total of about $3 billion over the next 5 years building huge windmills that when the wind blows provide little more than 1 percent of our electricity needs.

By comparison to that $3 billion over 5 years, the Budget Committee has told us we can only spend $11 billion on the entire Energy bill. I would suggest we seriously consider instead of allocating $3 billion to windmills, we might spend $500 million to extend the $2,000 tax deduction for the purchase of a million new hybrid and advanced diesel vehicles, provide $750 million for retooling the plants in which to make the vehicles and make sure they are here in the United States. That is 39,000 new auto manufacturing jobs, according to the National Commission on Energy Policy. We might provide a half a billion dollars for carbon sequestration demonstrations, and we might have $1.25 billion left over to launch advanced nuclear reactors and a new generation of clean coal gasification plants.

There are many ways to add up these dollars. We need to make sure the numbers I am talking about are exactly right. But basically that is $3 billion for windmills. I am suggesting we might be able to spend it more effectively if we really want carbon-free electricity.

These are one Senator's priorities for producing an American Clean Energy Act of 2005. Only steps like these will produce adequate conservation and an adequate supply of reliable, low-cost, American-produced clean energy. Only steps like these will lower natural gas prices, which we can and must do, reduce the growth of our dependence on oil, and save the United States from the next big surprise, the surprise to our pocketbooks if we fail to prepare for the oncoming energy crisis.

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