A Seasoned Voice in Energy Debate

In an attempt to overcome a stalemate blocking development of a national U.S. energy policy, a 16-member commission released a detailed and wide-ranging series of policy recommendations last month. The commissioners hope the 148-page report will serve as a template to help guide Congress members and the President as they debate energy legislation this year.

The National Commission on Energy Policy was created three years ago. It is funded by the William & Flora Hewlett Foundation and several partner foundations. The commissioners say they intend to lobby the Administration and Congress to support their views.

Commission members include top electric utility and business officials, academics, politicians, and former government officials. Among them are William K. Reilly, former Environmental Protection Agency administrator; John W. Rowe, president and chief executive officer of the energy giant Exelon Corp.; R. James Woolsey, former director of the Central Intelligence Agency; John P. Holdren, professor of environmental policy at Harvard University; and Mario J. Molina, Massachusetts Institute of Technology chemistry professor and Nobel Laureate.

The policy recommendations address almost every energy issue--climate change, greenhouse gas emissions, U.S. oil use and security, energy efficiency, and energy and electricity supply infrastructure--as well as energy sources--coal, natural gas, nuclear power, and renewable energy.

Generally, the commission's strategy charts a path between the energy-production-driven perspective of the Bush Administration and its congressional and industrial allies and the views of clean-energy advocates who press for greater efforts for conservation, efficiency, and renewable energy.

For instance, the group's recommendations support continued coal use by increasing the Administration's spending on advanced coal technologies and carbon dioxide sequestration to $7 billion over 10 years, more than 10 times today's levels. In particular, the commission wants to see more research and incentives for deployment of coal-based integrated gasification combined-cycle (IGCC) technologies. It also recommends $2 billion in spending for nuclear power research and deployment.

On the clean-energy-conservation side, the commission recommends increasing federal R&D spending for renewable electricity generation by $3.6 billion over 10 years, expanding federal efficiency standards for appliances and buildings, and spending $3 billion over 10 years in manufacturer and consumer incentives to increase sales and use of hybrid and advanced-diesel vehicles.

The commission also recommends tax credits and other financial incentives to encourage investment in the electric grid, use of cleaner energy sources, as well as development and deployment of renewable energy sources.

THE STRATEGY would double current federal spending on energy R&D to $17 billion, expand financial support needed to bring advanced technologies to the marketplace to $14 billion, and triple spending for international joint energy research to $5 billion. In all, the commission estimates that its program would cost $36 billion over 10 years. However, commissioners say their strategy is revenue neutral because the government would recoup its investment through federal income from the annual auction of greenhouse gas emissions permits, a key part of its approach to dealing with climate change.

The proposal calls for implementation by 2010 of a mandatory, economy-wide tradable permit system, including a declining cap on greenhouse gas emissions. The cap would be based on greenhouse gas intensity--tons of emissions per dollar of gross domestic product--rather than a numerical emissions limit like those imposed by the Kyoto protocol.

The Bush Administration has called for a declining intensity cap of 1.8% per year, but the commission's recommendation is a 2.4% reduction in greenhouse gas emissions each year. And the commission's emissions cap would be mandatory--not voluntary, as in the Administration's plan.

The proposal would set aside a small amount of permits available for new businesses to buy into the emissions reduction program and would establish an initial price of $7.00 per ton of CO₂-equivalent emissions permits. The commission envisions that these auctioned permits would fund the federal program.

In 2015 and every five years thereafter, Congress would review and reassess the greenhouse gas reduction program and evaluate if it is working, if it is fair, and whether other nations are making similar efforts.

The commission estimates that by 2020, its program would reduce CO₂-equivalent emissions by 540 million metric tons per year. It also believes that reduction would result in only a 5 to 8% increase in electricity prices.

Another important area covered by the commission is oil and gas supplies. To ease demands on vehicle fuel, the commission says the government should provide $1.5 billion over 10 years to increase domestic production of nonpetroleum renewable transportation fuels, specifically ethanol and biodiesel fuels made from waste products and biomass. It also recommends higher vehicle-fuel-efficiency standards. Altogether, the commission estimates that its program could reduce U.S. oil consumption by 10 to 15% by 2025.

"We want to help the Administration and Congress get the best bill possible. We hope to act as a resource and are not wedded to every i and t in the report."

CONCERNING THE NATION'S natural gas shortage, the report recommends provisions to ease siting of liquefied natural gas terminals as well as infrastructure and public incentives for construction of an Alaska natural gas pipeline. However, the commissioners avoided addressing one of the nation's most thorny energy issues--drilling in Alaska's Arctic National Wildlife Refuge--saying they were unable to reach agreement on an approach.

The report has received endorsement and criticism from many quarters. Federal and state politicians from coal states and the United Mine Workers of America backed the gradual approach to reducing greenhouse gases and the increased funding for IGCC and sequestration technologies. The National Association of Manufacturers and other industry groups supported the focus on increased energy production but strongly opposed mandatory caps on greenhouse gas emissions.

Renewable energy advocates supported the proposed R&D funding increases for solar and other renewable energy sources as well as expanding tax credits for renewables. But they opposed the jump in nuclear energy support as well as the clean-coal research funding increase.

The environmental group Public Citizen accused the commission of having too much of an energy-industry bias, pointing to its cochairmen, John Rowe of Exelon, the nation's largest nuclear power plant operator, and Archie Dunham, the chairman of ConocoPhillips.

Coal-based utility groups disapproved of the commission's strategy for its support of mandatory greenhouse gas reductions.

The Natural Resources Defense Council, which had a representative on the commission, criticized the report for not going far enough or fast enough toward ending U.S. oil dependence or curbing global warming, but said it was a major step forward compared to the "one-sided congressional and White House energy policies."

Paul W. Bledsoe, the commission's communications director, says reactions among members of Congress and staff have been good. "We want to help the Administration and Congress get the best bill possible. We hope to act as a resource and are not wedded to every i and t in the report."

Both House and Senate members have discussed holding new hearings on energy legislation this year, not simply reintroducing a modified version of last year's bill, which was written by Republicans and failed to get enough support from Democrats to clear the Senate.

Bledsoe says the commission members have met with members of Congress, and he hopes the commission will play a key role in that debate.