Ending the Energy Stalemate: A Bipartisan Strategy To Meet America’s Energy Challenges

Presentation at the National Academies 2008 Energy Summit, Washington, D.C.

John P. Holdren provides the context for and an overview of the recommendations made by the National Commission on Energy Policy its 2004 and 2007 reports to the President and Congress of the United States.

The Commission's overarching objective is to develop recommendations that can ensure ample, clean, reliable, and affordable energy for the United States in the 21st century while responding to growing concerns about the nation's energy security and the risks of global climate change; and command the bipartisan support necessary to be break the long-running energy-policy stalemate in the Congress and be enacted.

The 2004 and 2007 recommendations together cover the breadth of issues facing energy policy in the United States: oil security, climate change, coal, nuclear, biofuels and renewable energy, energy efficiency, and energy technology innovation. This presentation touches on the specific recommendations and looks at current energy- and climate-related legislation in Congress.

Here is Holdren's overview of the 2007 recommendations. The full presentation, which includes the 2004 recommendations and other important information, can be accessed below.

National Commission on Energy Policy 2007 Recommendations:

Oil Dependence:

4%/yr target for CAFE improvement
With National Highway Traffic Safety Administration authorized to modify up or down and encouraged to reform for greater cost-effectiveness, responsiveness to competitiveness concerns; and
Targeted consumer & manufacturer incentives to promote advanced automotive technologies
Other cost-effective reductions in transport energy
Heavy-truck fuel economy
Efficiency standards for light-duty-vehicle replacement tires

Climate Change:

"Adopt legislation this Congress to implement a mandatory, market-based program to limit economy-wide U.S. greenhouse gas emissions"...

Targeted at return to 2006 levels by 2020 and 15% below those levels by 2030, and with
Initial "safety-valve" price of $10 per ton of CO2, escalating at 5%/yr in real terms, upstream point of regulation
Initially distributing ~50% of permits to affected industries, with the rest auctioned and used to increase incentives for advanced technologies & reduce impacts on the poor.

(Incentives for coal carbon capture and sequestration via bonus allowances to be at least equal in value to renewable production tax credits.)

Create stronger incentives for comparable action on the part of key trading partners by:

Providing technical & financial resources for low-C tech transfer,
Signaling determination to address trade, competitiveness concerns
Linking future commitments to international progress

Efficiency:

Enhance and extend tax incentives for efficiency investments introduced under the Energy Policy Act of 2005
Ensure DOE follows through on issuing efficiency standards for 22 categories of appliances and equipment to capture technically feasible & cost-effective energy savings.

Renewables:

Extend eligibility period for federal production tax credits in 5-year rather than 1-or 2-year increments.
Adopt a federal renewable portfolio standard (RPS) that increases the share of electricity generated by renewable resources nationwide to at least 15 percent by 2020.

Natural Gas and Coal:

Follow through on Energy Policy Act of 2005 commitments re Alaska pipeline, LNG infrastructure, market transparency, and permitting & leasing.
Condition eligibility for public funding or subsidies on actual inclusion of CCS with any new advanced coal projects.
Ensure that new coal plants built without CCS are not "grandfathered" under future greenhouse gas regulations.
Include CCS from the outset in any taxpayer supported efforts to develop coal-to-liquids technology.
Ensure that EPA completes a rigorous, formal public process to formulate effective regulatory protocols governing long-term carbon storage as soon as possible.

Nuclear:

Amend the Nuclear Waste Policy Act to:

Align its requirements with human engineering & scientific capabilities while adequately protecting health, environment
Require DOE to site and operate consolidated national or regional interim storage options
Codify that interim storage & federal responsibility for disposal of nuclear waste is sufficient to satisfy the NRC's waste confidence requirement
Require DOE to take possession of and/or remove fuel from reactor sites that have been, or are in the process of being fully decommissioned
Require R&D on alternatives to geologic disposal of once-through spent fuel

Biofuels:

Re-evaluate ethanol subsidies & tariffs in light of current fuel mandates and rationalize existing policies to direct a greater share of public resources to more promising options, such as cellulosic ethanol. biobutanol, & clean diesel fuel from organic wastes.
Address other hurdles to biofuels deployment, including deployment of critical supporting infrastructures and compatible vehicle technologies.
Take steps to ensure that policies aimed at reducing U.S. oil dependence do not promote environmentally unsustainable fuel alternatives.

Energy Technology Innovation:

Reiterated Dec 2004 recommendations to...

Double real annual direct federal expenditures on energy-technology RD&D, with increases emphasizing public-private partnerships, international cooperation, technologies offering high potential leverage against multiple challenges.
Within this increase, triple funding for international cooperation on energy-technology research, development, demonstration, deployment.

The most controversial National Commission on Energy Policy recommendation: The greenhouse gas emissions "safety valve"

If safety-valve price is reached in market, the government sells as many additional permits as demanded at that fixed price. In effect, cap-and-trade turns into a carbon tax at indicated price if safety valve is triggered.
It finesses argument between optimists & pessimists concerning availability of affordable reduction options.
Pessimists are assured there's a limit to the program's cost.
Optimists believe targets will be met without triggering safety valve.
This feature was essential to bipartisan consensus in Commission on mandatory, economy-wide program; might be essential to same in Congress.

More on safety valve controversy:

Safety valve has been sharply criticized by some in environmental community as
unduly weakening the program,
sacrificing assurance of reaching target,
compromising market principle with "price controls".
Counter arguments:
Key issues are safety-valve trigger price and rate of escalation over time, in relation to target.
Getting it right means low chance it will be triggered. In any case, Congress can adjust it over time.
What's so bad about a carbon tax as the "worst case"?
Getting started soon with a mandatory, economy-wide program is crucial to global progress. Insisting on an uncompromising form that can't get enough votes is folly.

The December 2007 Energy Legislation:

Key provisions of 2007 Energy Independence & Security Act:

CAFE standards ramp up to 35 mpg for combined fleet of cars & light trucks by model year 2020.
Renewable Fuels Standard (RFS) modified to start at 9 billion gallons in 2008, rising to 36 billion gallons by 2022 (of which 21 billion gal from "advanced biofuels").
New Energy Efficiency Equipment Standards include lighting, residential refrigerators, freezers, refrigerator-freezers, and commercial walk-in coolers & freezers.
Repeal of two (but not most) oil & gas subsidies in order to pay for implementation of CAFÉ provisions.

Among many other provisions, the legislation also...

Expands DOE's RD&D on CCS; directs DOE to engage NAS to review program;
Directs DOE to work with NAS to develop interdisciplinary graduate-degree programs in geologic sequestration science; establishes university-based R&D grant program to study CCS with types of coal;
Creates new energy efficiency & conservation block grants, funded at $2B/yr for 5 years.

"Funding is to supplement, not replace, funding provided by DOE under the Weatherization and State Energy programs"(which, however, the FY2009 Bush budget request zeroes out).

Provisions of H.R. 6 not included in the enacted law:

A Renewable Portfolio Standard (RPS). Last House version, stripped out by Senate, called for 15% by 2020, of which 1/4 could be met by efficiency measures.
Other incentives for energy efficiency & renewables. Items stripped out by Senate included a 4-year extension of the renewable electricity production tax credit.
Repeal of most oil & gas subsidies. House version called for repeal of $22 billion/year in tax subsidies for oil & gas, in order to pay for efficiency & renewables incentives and CAFE implementation; Senate version repealed only $1 billion worth (just enough to pay for CAFE).
Senate's excuse was the threatened veto.

The fiscal year 2006 federal budget request:

A few relevant ingredients:

Federal Railroad Administration budget falls ~33% from FY2008, FY2007 levels; grants to Amtrak fall from $1.3 billion to $0.8 billion.
Weatherization Assistance Program ($227M) eliminated.
Energy-technology RD&D would go up 6% (real) compared to FY2008, 44% above the FY2006 low.
But, within this, energy-efficiency RD&D would go down 2.5% and renewable-energy RD&D down 28% compared to FY2008.

Climate Bills in the 110th Congress:
Source: Pew Center and Vicky Arroyo AAAS talk

Senate:

Lieberman-Warner: economy-wide, offsets, funds for technology, adaptation, and mitigating impacts. Approximately 63% below total U.S. 2005 emissions levels by 2050
Bingaman-Specter: offsets, "safety valve" of $12/ton rising 5%/year above inflation, funds and bonus allowances for tech R&D. Aspires to ≥60% below current by 2050. Requires aggressive external policies to avoid safety valve
Lieberman-McCain: economy-wide, offsets, technology title. 60% below 1990 in 2050
Sanders-Boxer: economy-wide, cap & trade permitted but not required, offsets not specified, other sectoral standards. 80% below 1990 in 2050
Feinstein-Carper: electricity sector only, some offsets, funds for tech R&D. 25%below 1990 in 2050
Kerry-Snowe: economy-wide, offsets and cost-control not specified, other sectoral standards, funds for tech R&D. 62% below 1990 in 2050

House:

Olver-Gilchrest: economy-wide, offsets, 60% below 1990 in 2050
Waxman: economy-wide, cap & trade permitted but not required, offsets not specified, funds for tech R&D, other sectoral standards. 80% below 1990 in 2050

Additional materials related to the Energy Summit can be accessed via the National Academies website, including an audio file and webcast of Holdren's presentation.