President Bush’s Energy Plan

Energy Basics

• America faces the most serious energy shortage since the oil embargoes of the 1970s.
• A fundamental imbalance of supply and demand had led to this crisis.  Our future energy needs far outstrip present levels of production.
• Over the next 20 years, U.S. oil consumption will rise by 33 percent, natural gas consumption will grow by more than 50 percent, and demand for electricity will rise by 45 percent.
• If America continues to produce energy at the same rate we did in the 90s, we will face an ever-increasing gap between supply and demand.
• To meet projected demand over the next 20 years, America must have in place between 1,300 and 1,900 new electric plants – more than one per week for the next two decades.
• We now rely on foreign imports for almost 60 percent of our oil.  On our present course, we will have to import two of every three barrels of oil 20 years from now.
• We have let our energy infrastructure deteriorate.  Our current outdated network of generators, transmission lines, refineries and pipelines is in critical need of repair and modernization.
• Not a single major oil refinery has been built in nearly a generation, causing the kind of bottlenecks that lead to sudden spikes in gasoline prices.
• An antiquated and inadequate transmission grid prevents us from routing electricity over long distances and thereby avoiding regional blackouts, such as in California.

How Energy Impacts Real People

• Last winter, heating bills for many families tripled.  Average natural gas heating costs in the Midwest rose by 73 percent last winter.  New Englanders’ heating bills jumped by 27 percent.
• Millions of Americans are dealing with rolling blackouts or brownouts, threatening their homes, businesses and families – and their own personal safety.
• Low-income Americans and seniors have been hardest hit.  While energy costs typically represent only 4 percent of a middle-class household budget, last winter, costs for the average low-income household were 14 percent of the household budget.
• Drivers across America are paying higher and higher gasoline prices.  In 2000, fuel prices on average rose 30-40 cents a gallon from a year earlier.  This summer, in some parts of the nation, gasoline prices may skyrocket to $3.00 per gallon.
• High fuel costs are also destroying jobs.  For example, trucking company bankruptcies are at an all-time high.
• Businesses and factories are being forced to lay off workers and curtail production.  In the Pacific Northwest, for example, high energy costs forced Georgia-Pacific’s paper mill to close, forcing 800 workers out of their jobs until diesel generators could be installed.  The company has seen its average power costs soar from $1.2 million to $10 million.
• Farm production costs are spiking sharply because of higher energy prices, while farm income remains low.  Surging natural gas prices have increased the price of fertilizer by 90 percent since 1998.
• Rising energy costs are dampening business prospects.  For example, in California, 43 percent of small businesses surveyed in February 2001 said the power problem had dimmed their views about California as an attractive place for doing business.  More than 31 percent said they will probably or definitely cut back on planned investment, and nearly 20 percent are exploring a move to another state.

Actions Taken by The President To Address Short-Term Energy Challenges

• Since taking office, the Bush Administration has actively helped California minimize the risk of blackouts and lower electricity costs by removing obstacles to supply and conserving electricity use.  Governor Davis has thanked President Bush for his assistance.
• One day after being sworn into office, the President directed the Energy Secretary to call Governor Davis to offer the Administration’s full support to minimize the risk of power shortages.
• Three days after taking office, at Governor Davis’ request, the Bush Administration extended the emergency electricity and gas orders to give California time to develop legislation aimed at maintaining electricity supplies.
• In February, also at the request of Governor Davis, President Bush issued an executive order directing Federal agencies to expedite permits relating to construction of new power plants in California.  In response to the President’s directive and through their own initiatives, federal agencies have been regularly and actively working with state and local officials to remove obstacles to new supply.  (A detailed list of specific actions to remove obstacles to new supply by federal agencies follows).
• Following up on a meeting with Governor Davis, Secretary Abraham issued a letter indicating that the Administration did not oppose the State’s proposed purchase of the California utility transmission systems, conditioned on the adherence to open access requirements
• President Bush and the Energy Secretary have engaged in discussions with the Government of Mexico about increasing electricity imports from Mexico.  DOE is also working expeditiously to approve several cross-border electricity expansions between California and Mexico that should be approved later this year.
• In early March, at the behest of Governor Davis, Secretary Abraham sent a letter to the Federal Energy Regulatory Commission (FERC) asking that the agency act on his request for an extension of the waiver for qualifying facilities from certain fuel requirements.
• On March 29, Secretary Abraham met with a group of California energy suppliers to impress upon them that the next several months should not be viewed as "business as usual," and to ask for their help to avoid foreseeable disruptions in supply.
• On April 4, Secretary Abraham met with a group of electricity experts to discuss the California electricity crisis and to explore actions that could be taken by the federal government and State to increase supply or reduce demand.
• On May 3, President Bush directed federal agencies in California and other regions where electricity shortages are likely to reduce electricity use by the maximum extent, particularly during peak demand use periods.  Agencies will report to the President within 30 days on specific conservation actions taken.
• On May 3 the President announced that the Department of Defense would reduce its electricity demand in California this summer during peak demand periods.  The reduction will be achieved by a combination of energy conservation, energy efficiency investments and power generation.  This initiative augments ongoing energy conservation efforts that have resulted in a 23 percent decrease in energy consumed per square foot in Department of Defense buildings nationwide since 1985.

Actions Taken By The President To Remove Obstacles To New Generation in California And Minimize Blackouts

In response to the President’s Directive and federal agencies’ initiatives, the following expediting actions have been taken:

• Expediting major power plant construction.  Since the President issued his directive on February 15, the Environmental Protection Agency (working cooperatively with the State of California) has issued final construction permits for four new power plants totaling 2,450 megawatts (MW) of new energy supplies (Elk Hills, 500 MW; High Dessert, 700 MW; Pastoria, 750 MW; Midway Sunset 500 MW).
• Expediting small, “peaker” power plant construction.  Working cooperatively with the State of California and local air quality boards, EPA has issued Administrative Orders on Consent (AOCs) that allowed immediate and expedited construction of peaking power plants.
• On April 9th and 10th, EPA issued AOCs to Wildflower Energy for two simple cycle power plants – its Larkspur (90 MW) and Indigo (135 MW) facilities in the San Diego and South Coast Air Districts, respectively.  The plants are expected to be in operation early this summer.
• On April 30th, EPA issued an AOC to Alliance Colton for two 40 MW facilities to be built at their Drew and Century substations in the South Coast Air District.  Both facilities are expected to be in operation by mid·summer.
• EPA expects additional requests for AOCs for new peaker power plants, although none have yet been received.

• Providing flexibility for existing peaker plants, emergency generators, and emissions enforcement:

• Peaker plant flexibility:  Working cooperatively with the State of California and local air quality boards, EPA issued an AOC to Mirant for its Potrero (San Francisco) peaking turbines on April 6.  These turbines are fired on distillate oil, and had taken a limit of 870 hours per year to avoid a NOx control requirement.  Due to January’s emergency, the ISO required Mirant to run the turbines almost continuously, and it is now close to exceeding its hour limit on some of the turbines.  EPA’s order, which only applies this calendar year, anticipates exceedence of the limit.
• The order is paired with one from the Bay Area Air Quality Management District.  The District’s order additionally collects $20,000/ton to be used for emissions reductions in the area of the Potrero plant. Each of the three turbines subject to the order has a capacity of 52 MW.  California executive order D-24-01 ordered local air quality management districts to modify limits on the hours of operation of power plants, provided the operators pay a mitigation fee for all excess emissions to fund pollution offset projects.

• Backup generator flexibility:  In response to a request from the California Environmental Protection Agency, EPA sent a March 9 letter to California’s Environmental Protection Agency allowing the use of emergency backup generators to avert blackouts where such blackouts are imminent.  This authority will expire October 31, 2001
• RECLAIM program flexibility:  On April 6, EPA issued a letter to the South Coast Air Quality Management District (SCAQMD) outlining EPA concurrence with several District proposals to add flexibility to its RECLAIM program (SCAQMD’s program that allows trading to comply with CAA emissions requirements) by: 1) allow power producers to operate at high capacity this summer and make up credit shortfalls for 2001·2003 NOx exceedances in the second compliance year; 2) permit California to provide three years of NOx offsets obtained from diesel truck engine retrofits for peaker units operating this summer, and; 3) permit the District to use as offsets credits generated from categories of sources currently being expanded through the District’s rulemaking process.
• The result of EPA’s concurrence on these points will be to permit the District to expand the pool of NOx credits available for use this summer by all power generators and, to the extent that NOx credits are not sufficient, allow offsets to be made up in a subsequent year.
• Expediting natural gas infrastructure expansion to increase electricity generation.  In response to a request from the State of California, and working cooperatively with the Mojave Desert Air Quality Management District, EPA issued an AOC to Williams Co. to allow immediate construction of a compressor turbine at the existing compression station of their Kern River Gas Transmission Co. facility in Daggett, CA.  The new compressor turbine will come online July 1, 2001, and increase gas flow in the pipeline by about 20 percent. On April 6, FERC approved construction of a new natural gas facility in only three weeks.  The Executive Director of the California Energy Commission noted the Bush Administration was moving at “lightning speed.”
• Expediting the review of operating permits.  EPA has reduced its review of state·issued Clean Air Act operating permits from the statutorily·allowed 45 days to 5·10 days for emissions control projects associated with power generation.  This is an EPA initiative not tied to any specific executive order issued by Governor Davis.
• On March 14, FERC issued a series of orders designed to expedite energy supplies to California, including streamlining regulatory procedures for wholesale power sales, expediting natural gas pipelines, and urging hydropower licensees to assess the potential for increased hydropower generation.
• The Army Corps of Engineers initiated discussions with power generators and concluded that 25 of the 32 first-tier priority power sites identified by the California Energy Commission do not require Department of the Army permits.  The Corps is prepared to work with the remaining seven power generators on any permits that may be required.
• Expediting expansion of electricity transmission.  Within 24 hours of receipt of a request, the Defense Department concurred on April 5 on an application from San Diego Gas & Electric to amend a Presidential Permit to connect a new 510-megawatt Otay Mesa power plant to an existing 230,000-volt electrical transmission line and to double the number of conductors on this line.  This upgrade will result in additional generation becoming available in Southern California.

Modernize Conservation

• President Bush believes it is important to encourage conservation.  That’s why his strategy will apply 21st Century technologies to promote energy conservation and energy efficiency.  The National Energy Policy calls for action to:
  • Direct federal agencies to responsibly conserve energy use at their facilities – especially during periods of peak demand.
  • Increase funding for renewable energy and energy efficiency research and development programs that are performance-based and cost-shared.
  • Create a consumer income tax credit for the purchase of hybrid and fuel cell vehicles to promote fuel-efficient vehicles.
  • Help consumers save money by increasing the number of products and appliances that are rated for energy efficiency under the “Energy Star” labeling program.  Also promote more use of energy efficient materials and systems in schools, businesses, and homes by extending the “Energy Star” program to these facilities.
  • Fund innovative federal R&D programs like the Intelligent Transportation Systems program, the fuel cell powered transit bus program, and the Clean Buses program.
  • Provide a tax incentive and streamline permitting to accelerate the development of clean and highly efficiency Combined Heat and Power technology.
  • Direct the Secretary of Transportation to review and provide recommendations on establishing Corporate Average Fuel Economy (CAFE) standards with due consideration to the National Academy of Sciences study of CAFE standards to be released in July 2001.

Critics say the Administration’s energy proposals lean too heavily on producing more energy instead of encouraging greater energy conservation and renewable energy development.

• They are wrong.  Here’s why:

  • More than one half of the domestic recommendations in the report are targeted to conservation, environmental protection, renewable and alternative energy, and measures aimed at helping consumers deal with rising energy costs.
  • The plan calls for a consumer income tax credit for the purchase of new high efficiency hybrid (gasoline/electric) or fuel cell vehicles.
  • It promotes combined heat and power (CHP) technologies units that are both highly efficient and have low emissions.
  • It directs federal agencies to responsibly conserve energy use at their facilities – especially during periods of peak demand.
  • It calls for increased funding for energy efficiency research and development programs that are performance-based and cost-shared.
  • It would extend the EPA’s and DOE’s “Energy Star” efficiency program to include schools, retail buildings, health care facilities, and homes and extend the “Energy Star” labeling program to additional products and appliances.
  • It would fund the federal government’s Intelligent Transportation Systems program, the fuel cell powered transit bus program, and the Clean Buses program.
  • It directs the Secretary of Transportation to review and provide recommendations on establishing Corporate Average Fuel Economy (CAFE) standards with due consideration to the National Academy of Sciences study of CAFE standards to be released in July, 2001.

Modernize Our Energy Infrastructure

• Outdated regulations have frozen America into an antiquated energy supply network that can’t meet out needs.  The President’s plan help create a new high-tech energy delivery network by doing the following:
• Direct agencies to improve pipeline safety and streamline the process for building much-needed pipelines.
• Make it easier to build power plants in an environmentally sound manner by better coordinating federal, state, and local approvals.
• Create a more reliable electric transmission grid by working with Congress to obtain authority to obtain rights-of-way for electricity transmission lines, similar to the authority that already exists for natural gas pipelines and highways.
• Enact comprehensive electricity legislation that promotes competition, encourages new generation, protects consumers, enhances reliability, and promotes renewable energy and energy efficiency.
• Improve the reliability of the interstate transmission system and enact legislation to enforce electricity reliability standards.
• Expand the Energy Department’s research and development on transmission reliability and superconductivity.

Increase Energy Supplies

• America faces the worst energy supply crisis since the 1970s.  President Bush wants to advance new, 21st Century technologies to increase energy supplies while protecting the environment.  His plan will:
• Open a small fraction of the Arctic National Wildlife Refuge to environmentally regulated exploration and production using leading-edge technology.
• Promote research into alternative and renewable energy resources – such as wind, solar, biomass, and geothermal – by earmarking $1.2 billion of bid bonuses from the environmentally responsible leasing of ANWR.
• Expand existing alternative fuels tax incentives to include landfills that capture methane gas emissions for electricity generation.
• Promote clean and renewable resources such as wind and biomass through tax incentives.
• Provide $2 billion over 10 years to fund clean coal technology research and a new credit for electricity produced from biomass co-fired with coal.
• Promote clean and renewable hydropower by streamlining the current cumbersome and costly relicensing process.
• Promote the use of advanced nuclear energy technologies to produce safe, clean and cheap electricity for America and establish a national geologic repository for nuclear waste based on sound science.
• Direct all federal agencies to consider the impact on energy supplies in any regulatory action they take.

ANWR

Critics say oil and gas exploration in ANWR would harm wildlife and wouldn’t help our current crisis because the oil won’t be available for a decade.

• Here’s why they’re wrong:
• We need to increase our domestic production and lessen our reliance on foreign oil.  America’s dependence on foreign oil has risen sharply in recent years, going from 39% in 1988 to 56% today.
• In 2020, if trends continue, we will import 2 of every 3 barrels of oil.
• We are proposing to open only a small fraction – 8 percent – of ANWR for oil and gas exploration.
• Between six and 16 billion barrels of oil exist in ANWR.  The mean estimate (10 billion barrels) would make ANWR the largest oil field discovered in the world in the last 40 years.
• The expected output of oil would equal 30 years of oil imports from Saudi Arabia and almost 60 years of Iraqi oil imports.
• 21st century technologies like horizontal drilling, 3-D seismic mapping and ice roads can help us minimize the production footprint to only 2,000 acres out of the 19 million acres in ANWR.  That is equivalent to four average American family farms in an area the size of South Carolina.
• The Clinton Administration opened up more than twice as much acreage in Alaska’s coastal plain for supplies estimated to be only one-fifth as large.
• Oil and gas development has successfully coexisted with wildlife in Alaska’s arctic for over 30 years.  The Central Arctic Caribou Herd at Prudhoe Bay has grown from 3,000 in 1970 to 27,000 today – a nine-fold increase.

Renewable Energy

Critics say the Administration isn’t doing enough to promote renewable energy generation.  Here’s why they’re wrong.

• The President’s energy plan includes a wide range of recommendations aimed at promoting more renewable energy development.  For example, it calls for action to:
• Extend and broaden tax incentives for wind and biomass energy.
• Provide tax credits to individuals who install solar energy systems in their homes.
• Make it easier to locate and build renewable geothermal power plants near existing geothermal resources.
• Increase funding of renewable research and development programs.
• Provide a tax credit for landfills that capture and use methane gas emissions to produce power and cut greenhouse gas emissions.
• Promote more purchases of renewable power by companies and individual consumers.
• Further increase funding of renewable research and development by earmarking an estimated $1.2 billion of bid bonuses from the environmentally responsible leasing of ANWR for this purpose.

Nuclear Energy

Critics say the U.S. should abandon nuclear power as an energy supply option because it is unsafe, expensive and produces dangerous waste for which we have no long-term disposal plan.

• Here’s why they’re wrong

• Breakthroughs in new technologies for nuclear power make it one of the cheapest, cleanest and safest ways to produce electricity and protect our environment.
• Average production costs at nuclear power plants in 1999 was less than two cents per kilowatt-hour.
• New nuclear technologies have advanced the state of the art considerably.  These technologies promise smaller, safer and more efficient generation … much of which can be developed by slightly expanding existing plants.
• Nuclear plants do not produce greenhouse gas emissions like other conventional technologies, and thus help us combat global warming.
• Countries such as France realized the environmental benefits of nuclear power years ago.  Today, more than 80 percent of France’s electrical generation is from nuclear energy.  Their success with this technology is something we examine as we look at options for producing more power and protecting the environment.
• The federal government has not granted a single new nuclear power permit in more than 20 years, and many existing plants are expected to shut down.  If we’re serious about environmental protection, then we must seriously question the wisdom of backing away from what is, as a matter of record, a safe, clean, and very plentiful energy source.

Protecting The Environment

• As an avid outdoorsman, President Bush has made protecting the environment a priority.  He knows that we do not have to choose between more energy and a cleaner environment.  To accomplish both of these goals, the National Energy Policy will:
• Establish mandatory caps on harmful emissions by electric power plants of three dangerous pollutants:  sulfur dioxide, nitrogen oxides, and mercury.
• Enhance land conservation efforts by earmark potentially billions of dollars in royalties from new oil and gas exploration on federal lands to fund land conservation efforts.
• Promote greater use of clean and renewable energy sources for electricity generation, such as from solar, wind, geothermal, biomass and hydropower resources
• Provide tax credits to individuals who install solar energy systems in their homes.
• Make it easier to locate and build renewable geothermal power plants near existing geothermal resources.
• Enhance funding of renewable research and development programs.
• Provide a tax credit for landfills that capture and use methane gas emissions to produce power and cut greenhouse gas emissions.
• Promote more purchases of renewable power by companies and individual consumers.
• Promote greater use of high tech Combined Heat and Power technologies, which significantly enhance energy efficiency, reduce air emissions and can increase the use of renewable fuels.
• Increase exports of environmentally friendly U.S. technologies that generate a clean environment and increase energy efficiency.
• Critics say the Administration’s energy plan doesn’t do enough to protect the environment.  Here’s why they’re wrong:
• More than one half of the domestic recommendations in the report are targeted to conservation, environmental protection, renewable and alternative energy, and measures aimed at helping consumers deal with rising energy costs.
• The National Energy Policy would establish mandatory caps on harmful emissions by electric power plants of three dangerous pollutants – sulfur dioxide, nitrogen oxides, and mercury.  This is a far-reaching proposal that will break new ground in environmental protection.
• The National Energy Policy promotes the use of new, 21st Century technologies to increase energy efficiency and conservation.
• The Policy promotes greater use of clean and renewable energy resources, which help minimize environmental impacts of energy generation.

Increase Energy Independence

• The President wants to protect consumers from wild fluctuations in energy prices and supply uncertainty in America.  We must increase America’s energy independence.  The National Energy Policy will:
• Increase U.S. energy independence and reduce our over-reliance on foreign energy by promoting the production of more American energy from American resources.
• Dedicate new funds to the Low Income Home Energy Assistance Program by funneling a portion of oil and gas royalty payments to LIHEAP when oil and natural gas prices exceed a certain amount.
• Double funding for the Department of Energy’s Weatherization Assistance Program, increasing funding by $1.4 billion over 10 years.
• Direct the Federal Emergency Management Administration to prepare for potential energy-related emergencies.
• Support a North American Energy Framework to expand and accelerate cross-border energy investment, oil and gas pipelines, and electricity grid connections by streamlining and expediting permitting procedures with Mexico and Canada.  Direct federal agencies to expedite necessary permits for a gas pipeline route from Alaska to the lower 48 states.