Commission Recommends National Energy Policy

Energy security for the United States is an issue that is split between the need to diversify the country’s energy resources and the reality that the nation’s infrastructure is built around fossil fuel consumption. Two years ago the independent National Commission on Energy Policy was formed to research and review the energy needs of the U.S., and their findings were released in the consensus strategy “Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges.”

After talking to people in industry and government, and reading over 30 original research studies on energy issues, members of the commission are ready to take their ideas from the report and advocate before Congress, the Administration, the States and industry for an end to the energy stalemate. The report contains detailed policy recommendations for addressing oil security, climate change, natural gas supply, the future of nuclear energy, and other long-term challenges. “The near-term key to reducing oil price shocks is curbing U.S. demand and increasing world supply,” said Commission Co-chairman William K. Reilly, who is the former Environmental Protection Agency administrator. “We have to do both. We also have to make big investments in alternatives like bio-fuels made from domestic crops and agricultural waste? We are proposing programs that can work in the real world.” Renewable energy doesn’t take a complete back seat to oil issues. Efforts suggested by the commission to promote renewable energy technologies would focus on research and development in the areas of solar power, geothermal power, and new hydropower generation. Federal funding for those technologies should be held steady at USD 360 million annually, and should be targeted at overcoming key hurdles in cost competitiveness and early deployment for the technologies. Biomass would have its own 10-year funding program of USD 1.5 billion that would support an increase in domestic production of non-petroleum transportation fuels. The commission also recommended extending the Production Tax Credit (PTC) from 2006 to 2009, and including next generation nuclear and advanced fossil fuel generation with carbon capture as technologies eligible for the PTC. “The Commission’s renewable energy proposals are aimed at finding ways to reduce costs and bring competitive sources to market,” said Reilly. “Any scenario for tackling climate change and developing clean domestic energy resources must involve expanded use of renewable power.” The Commission noted that investments by both the private and public sectors in energy research, development, demonstration, and early deployment have been falling short of what is likely to be needed to meet the energy challenges confronting the nation and the world in the 21st century. Energy issues also covered in the commission’s report include; enhancing oil security in the U.S., reducing risks from climate change, improving the energy efficiency of the U.S. economy, increasing the U.S. energy supply, strengthening the energy supply infrastructure and promoting the development of improved energy technologies. Recommendations from the commission to enhance oil security in the nation could reduce U.S. oil consumption up to 15 percent by 2050, according to the report. Achieving that goal would mean increases in world oil production, improvements to fuel economy standards, reforms to the Corporate Fuel Economy program, and USD 3 billion in incentives for production and sales of non-petroleum transportation fuel alternatives. There are some tricky diplomatic situations that could arise from the commission’s recommendations, and the commission members recognize that by stating that U.S. economic sanctions may be limiting investment in foreign energy markets. But a focus on world oil supplies through reducing vulnerability to high oil prices and supply disruptions is a more meaningful, and ultimately achievable, policy goal than a misplaced focus on energy independence, the commission said. Energy supply doesn’t come exclusively from outside of the nation, however. Natural gas, advanced coal technologies and nuclear power are all supplies that can be found at “home”. Coal, in particular, is an abundant native resource. To enable the nation to continue to rely upon domestic supplies of coal while addressing the climate risks associated with greenhouse gas emissions, the Commission recommended an incentive deployment of USD 4 billion over 10-years for integrated gasification combined cycle coal technology. An additional USD 3 billion for the same time frame would cover public incentives to demonstrate commercial-scale carbon capture and geologic sequestration. “Coal’s abundance in the United States, and in major developing countries like China and India, makes finding clean ways to use it among our highest priorities,” said Reilly. “Coal gasification, when combined with carbon sequestration, has the potential to revolutionize energy production.” While dependence on oil is an unavoidable fact for the commission, that doesn’t mean there shouldn’t be a focus on how the fuel affects the climate. Recommendations for reducing the risks of climate change include; implementing a mandatory, economy-wide tradable-permits system in 2010 that is designed to curb future growth in the nation’s emissions of greenhouse gases. At the same time a cap on initial costs to the U.S. economy of USD 7 per metric ton of carbon dioxide-equivalent should be implemented. U.S. actions to reduce emissions should continually be linked to efforts taken by other nations, the commission stated, and a 5-year Congressional review of program efficacy should start in 2015. “The Commission believes the United States must take responsibility for addressing its contribution to the risks of climate change,” said John W. Rowe, who is the co-chairman of the Commission and CEO of Exelon Corp. “But we must do so in a manner that recognizes the global nature of the challenge and does not harm the competitive position of U.S. businesses internationally.” Responsibility to improve the energy efficiency of the U.S. economy would fall partly to electric and gas utilities, and the industrial sector of the national energy market. Efficiency improvements suggested for buildings and industry complement the commission’s efficiency recommendations for the transportation sector, according to the report. Improvements would include fuel-saving opportunities in the heavy-duty truck fleet, which is responsible for roughly 20 percent of transportation energy consumption but is not subject to fuel economy regulation. All of the recommendations included in the commission’s report add up to an intimidating task for 2005. There are long standing tensions between industry interests and political motivations, and a move away from the status quo could take longer than people in the renewable energy industry are comfortable with. “Political and regional polarization has produced an energy stalemate, preventing America from adopting sensible approaches to some of our biggest energy problems,” said John W. Rowe, Commission co-chair and CEO of Exelon Corp. “Our Commission reached consensus on effective policies because of a willingness to take on cherished myths from both right and left. We believe that this package of recommendations can be of value to Congress and the Administration in energy legislation next year and beyond.” The National Commission on Energy Policy was founded in 2002 by the William and Flora Hewlett Foundation, and its partners — The Pew Charitable Trusts, the John D. and Catherine T. MacArthur Foundation the David and Lucile Packard Foundation, and the Energy Foundation.

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