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Senate Committee Approves Energy Bill; Now to the Floor

The Senate Energy & Natural Resources Committee wrapped up its work on the energy bill, approving it by a bipartisan vote of 21–1.

It appears to be more aggressive than its counterpart from the House in a number of areas such as appliance efficiency standards and building codes. Although tax-incentive provisions that could further reduce consumption are not yet in the bill, an analysis by the American Council for an Energy-Efficient Economy calculated that energy savings resulting from the Senate bill in its current form would reduce energy use in 2020 by 3.0 quads (quadrillion BTUs of energy), compared to projected savings from the House version of 1.4 quads.

The savings from the Senate bill work out to about a 2.4% reduction in energy use compared to the baseline projections of 127.92 quads of consumption for 2020. (The 127.92 quads in 2020 represents a 31% increase from the 97.72 quads consumed in 2002. Figures from the EIA Annual Energy Outlook 2004.)

The most aggressive single conservation proposal in the bill is a directive to the President to develop and implement measures to save 1 million barrels of oil per day by 2015. Since there is no enforcement mechanism proposed as part of this measure, however, ACEEE for one discounts the savings to 600K per day (if that). (A similar proposal in the House version did not survive committee, and at some point, the Senate and House bills need to be reconciled into one.)

The bill contains a number of provisions on LNG terminals, offshore oil and gas production, and nuclear power that are certain to stir controversy.

Specifically on the transportation side, the bill does not strengthen fuel efficiency rules (earlier post). It does:

  • Set an 8-billion gallon renewable fuels standard (RFS) by 2012

  • Strengthen the requirement that federal vehicle fleets use alternate fuels in those vehicles that are capable of using such fuels and requires the Secretary of Energy report to the congress on the use of alternative fuels.

  • Sunset the alternate fuel vehicle requirements for covered vehicle fleets in 2015. The program was originally conceived as a means of reducing petroleum consumption by substituting alternative fuels in large fleets of vehicles in large fleets.

  • Authorize appropriations for implementation and enforcement of federal fuel economy standards.

  • Establish a program to promote the reduction of engine idling in heavy vehicles to reduce fuel consumption and air emissions.

  • Direct the Secretary of Energy to develop a program to encourage energy conservation through the use of bicycles as a substitute for vehicular transportation.

  • Create a federal/industry research partnership to improve railroad engine fuel efficiency and environmental performance.

  • Establishes a program to encourage the purchase of stationary and vehicular hydrogen fuel cell systems.

Hydrogen programs receive support from a number of angles. The language in the bill:

  • Directs the Secretary to conduct a broad-based research program supporting private sector efforts in hydrogen and fuel cell development, including production, storage, distribution and use of hydrogen; and fuel cell applications for transportation and stationary uses.

  • Sets a goal of enabling the private sector to make a commercialization decision on fuel cell vehicle production hydrogen for transportation by 2015.

  • Requires enhanced public education and university research in fundamental sciences, application design and systems concepts, including materials, subsystems, manufacturability, maintenance and safety.

  • Directs the Secretary to transfer critical hydrogen and fuel cell technologies to the private sector and to foster the exchange of non-proprietary information.

  • Establishes demonstration programs for hydrogen technologies and fuel cell vehicles for light-duty and heavy-duty vehicles.

  • Supports the timely development of safety codes and standards related to fuel cell vehicles, hydrogen energy systems, and stationary fuel cells.

Energy production received a great deal of attention, some of it already controversial.

The bill affirms that FERC will have siting control over LNG terminals. Already a bipartisan group of governors is pushing to at least have a say in the process.

Nuclear power is revitalized as a permanent component of the energy mix in the bill, which also contains provisions requiring that DOE propose a permanent waste solution to Congress.

The bill directs the Interior Department to study how much natural gas is contained in the outer continental shelf—a controversial step toward lifting the federal moratorium on offshore energy drilling. Senators are jockeying for an increase in royalties that would flow to their states in return for lifting the moratorium.

The bill provides the possibility of the suspension of royalties paid by companies producing from offshore rigs in Alaska “to promote increased production and encourage production of marginal resources.” Increasing the financial reward, in other words, to continue to produce from difficult or depleting reserves.

The bill also moves ahead with provisions supporting the development of oil shale and tar sands resources.

The provisions in the bill will be debated and amended as it moves into consideration by the full Senate. Later in the summer, the Senate bill and the House bill will need to be reconciled.


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