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| Creating a National Energy Policy |
April 30, 2001 |
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National Energy Policy
Remarks by Congresswoman Heather Wilson
Santa Fe, New Mexico
April 30, 2001
Until a year ago, America had become complacent about the availability of low cost, reliable energy. An entire generation has grown up that has no memory of lines at gas pumps, let alone ration stamps or the wonders of rural electrification.
Think about what your house and place of business was like in the early ‘70s and how much has changed in the interim. Most of you have computers at work and probably at home. The PC wasn’t invented until 1982. 90% of Americans – although only about 70% of New Mexicans have access to cable television. Others have satellite dishes. Most kitchens have microwaves and bigger refrigerators. More of you have more than one phone line to your home in addition to the cell phone many of you carry. More women work outside the home. The standard is now two car garages. Getting a second family car was a big deal for my parents. Now it is standard equipment even on homes for “first time buyers” and, while they are more fuel efficient vehicles inside, the word “SUV” meant as much as “internet” to people in the ‘70s.
The last year has been a wake up call for Americans and a reminder that we do need a national energy policy. We haven’t had one for more than a decade.
California has faced almost daily power alerts. Natural gas prices have hurt consumers with bills that are double or triple last winter`s. We are importing more foreign oil than the height of the energy crisis – 55% of consumption is imported. A gallon of gas approached $2.00 most places last summer and exceeded it in some places.
It’s true that we still have it better than most. My brother wrote to me last summer that he has little sympathy for people driving around in their Suburbans, drinking bottled water and complaining to their friends on their cell phones about gas prices that are less than half of what Europeans pay.
I’ve heard similar expressions of lack of sympathy for Californians who have gotten themselves into a situation where rolling blackouts are almost inevitable this summer. While we can roll our eyes at Californians wanting to have their growth and not have power plants, the energy crunch is hurting all Americans in the pocket book—the crunch has slowed growth in the economy and, by some estimates, resulted in a drop of 2% in our GDP.
The average family (in CA) will pay $750 more this year in energy costs ($ 400 direct, $350 indirect). The demand for natural gas is up and so is the price – including for New Mexicans. America needs a comprehensive energy policy, and we are beginning to craft one.
Some planning assumptions
In moving forward with developing a comprehensive energy policy we need to acknowledge certain parameters.
First, even under the best case scenarios for conservation, demand for energy will increase. In particular, the demand for electricity and natural gas will be huge. In the past five years we have seen the demand for electricity grow by 12 % while the demand for natural gas has risen 20 %, in part because of the increased reliance on natural gas for electricity generation. Economic growth is fueled by energy and we have an energy intensive economy. That’s not going to change. While price rises and conservation incentives might change some consumer behavior, the response of Californians to the crunch has been instructive. Even the threat of rolling blackouts has not had an appreciable immediate impact on consumption.
Second, we have infrastructure constraints that impact supply and price of energy. The last major electricity transmission line to go into the west was in 1980. We have not built a new refinery in America in years. Over the last decade, California increased its consumption of electricity by 10,000 megawatts while only building 800 megawatts of generation capacity.
Third, we have a regulatory system at the federal and state levels that often works against ensuring adequate energy supplies. The Department of Interior and the Environmental Protection Agency have missions and authority to take actions without considering what impact those decisions will have on energy supply.
For example, some of the localized price spikes in gas last summer were driven by new EPA regulations on multiple types of gas that had to be sold at the pumps. There weren’t enough pipelines to meet the new requirements in some midwest urban areas, creating a local shortage supply that drove up prices.
What’s Happening in Washington?
Shortly after the President took office, he created an energy policy task force chaired by Dick Cheney. Their initial report is due in mid-May. This report will provide a framework of policy guidance that Congress, States, and industry can work with to develop and implement an energy policy.
While we will work with the administration when they release their report, the Congress has not waited to start laying the groundwork for legislation. We’ve held a series of hearings on energy sources and developments in the energy industry. While not widely covered, they’ve been some of the best hearings I’ve participated in over the last three years. I expect we will draft comprehensive energy policy legislation by the end of this summer.
Our Energy and Air Quality Subcommittee will markup legislation this week to address the immediate crunch. While nothing will save California from shortages this summer, the legislation will give the Department of Energy Governors of States with electric emergencies added authority to ensure that all generation capacity available is used.
Toward a New National Energy Policy
The national energy policy we develop this summer is only beginning to emerge. There are several elements that will be critical to its success.
1. We must have a diverse electricity generation capacity.
There is a strong trend toward natural gas-fired electric generation. While cleaner than other options and sometimes less costly, it would be a mistake to rely solely on natural gas for expanded generation.
o Coal, oil, and natural gas—expand use of clean technologies
o Hydro—don’t waste what we have optimize utilization
o Distributed Generation technologies-new technologies at the user, fuel cell, micro turbines.
I have introduced legislation, HR 1045, that removes some of the barriers to distributed generation by setting interconnection standards, tax incentives, and research and development. I expect that this legislation will be adopted in the comprehensive energy legislation being prepared by the House.
2. It’s time to rethink nuclear power.
There are 104 nuclear plants operating in the United States, providing some 20% of our electric power while keeping our air clean. Over the last decade, power produced by existing nuclear plants has increased by 30% -- roughly equivalent to building 23 new power plants – while, by every measure, safety has improved markedly during the same period.
The cost to produce nuclear power is less than 2 cents per kilowatt-hour compared with coal at 2.08 cents per kilowatt-hour and natural gas at 3.52 cents.
Yet, with demand for electricity growing every year, no new nuclear plants are projected to come on line by 2020 and nuclear power is projected to decline to only 11% of the nation’s electricity generation by 2020.
But things are changing.
Since the incident at Three Mile Island, expanding reliance on nuclear power has been a non-starter in America. It`s been in the ‘too hard’ column. In the context of rolling black outs, high prices, growing demand for power and continued concern for environmental protection and global warming, America is taking a second look at nuclear power. And we should.
A new national energy policy will have to balance competing interests -- in this case, the need to protect the environment and public health with the need to make sure America`s energy needs are met.
We are trying to craft an energy policy for America that will reduce dependence on foreign oil, make sure adequate power is available at a reasonable price, protect the public health, promote conservation and minimize impact on the environment.
Every source of energy presents risks and benefits. Where there are risks, we have a responsibility to mitigate them – whether by investing in research on clean coal technology or improving the safety designs of nuclear reactors.
Research and New Designs
One of the barriers to increasing nuclear power capacity is the capital cost of plants, which is higher than natural gas and coal. But there is some indication that this may change with new reactor designs. South Africa’s state-owned utility, with foreign investment – including by U.S. firms – is building a demonstration project of small modular design (110 megawatt) reactors that incorporates passive safety features and very high efficiency. The capital cost is estimated to be about $1000 per kilowatt compared with $1730 per kilowatt for advanced passive reactor designs. This would make the capital cost of a nuclear plant competitive with $1020 to $1220 per kilowatt for coal-fired units.
Research in new designs and improved efficiencies can change the economics of nuclear power.
Honing our Technological Edge
Most of the technologies we see in nuclear plants around the world were developed in America, through the Navy nuclear program or for the commercial nuclear power industry. America lost its technological edge in nuclear power and we need to regain it.
Our energy portfolio must include nuclear power and nuclear power must be addressed in any national energy policy that Congress crafts.
It`s time to take nuclear energy out of the ‘too hard’ column.
3. We must address the problems of transmission and infrastructure.
While there is justified reluctance to undermine state and local decisionmaking about licensing and siting, we are going to have to solve the electricity transmission problems we face, particularly in the west. I am not sure what form this will take, but, unless we do, expanded generation will not be able to get to people who need power.
4. We need to establish mechanisms in statute that require interagency federal cooperation on matters affecting the supply of energy.
The 1947 national security act established structures for integrating defense and foreign policy so that no one agency – the state department or the defense department or the CIA – could take action without the consent of the others or the decision or direction of the President.
The amazing thing is that, while it could have created gridlock, the system actually works and is facilitated by the national security council staff at the White House.
We need a similar kind of structure for energy so that the BLM cannot rule a new natural gas find in Otero County, New Mexico off limits to development or the EPA can’t tell Chicago to sell more different kinds of fuel without taking into account the need for energy.
I expect to take a lead role in crafting this part of the energy policy.
5. We must include a balanced approach to conservation, clean technologies and renewable energy resources that includes significant research and development.
While renewables, even at best estimates, will be no more than 3% of energy supply in 2020, 3% would keep California from being dark this summer. People want reliable, low cost energy, but we also want to conserve the air, land and water we enjoy. And we have made great progress in that regard. We need better R&D; roadmaps on technologies for energy efficiency and environmental protection, and we must pursue that research vigorously.
Over the summer we will seek to establish the first comprehensive national energy policy we have had in over a decade. It is an important task and will impact the course of your industries for the next 20 years. I look forward to participating in the effort.
Thank you. |
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