[Budget of the United States Government]
[V. Investing in the Common Good: Program Performance in Federal Functions]
[14. Energy]
[From the U.S. Government Publishing Office, www.gpo.gov]
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14. ENERGY
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Table 14-1. Federal Resources in Support of Energy
(In millions of dollars)
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Estimate
Function 270 1999 -----------------------------------------------------------
Actual 2000 2001 2002 2003 2004 2005
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Spending:
Discretionary Budget Authority.......... 2,863 2,569 2,943 3,342 3,142 3,219 3,311
Mandatory Outlays:
Existing law.......................... -2,217 -4,473 -3,759 -3,924 -3,699 -4,012 -3,971
Credit Activity:
Direct loan disbursements............... 1,128 1,719 1,623 N/A N/A N/A N/A
Guaranteed loans........................ 16 133 176 N/A N/A N/A N/A
Tax Expenditures:
Existing law............................ 1,880 1,930 1,940 1,955 1,305 1,350 1,380
Proposed legislation.................... ........ ........ 198 371 652 1,143 1,561
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N/A = Not available.
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Federal energy programs contribute to energy security, economic
prosperity and environmental protection. Funded mainly through the
Energy Department (DOE), they range from protecting against disruptions
in petroleum supplies, to conducting research on renewable energy
sources, to cleaning up DOE facilities contaminated by years of nuclear-
related research activities. The Administration proposes to spend $2.9
billion for these programs. In addition, the Federal Government
allocates about $1.9 billion a year in tax benefits, mainly to encourage
development of traditional and alternative energy sources.
The Federal Government has a longstanding and evolving role in energy.
Most Federal energy programs and agencies have no State or private
counterparts and clearly involve the national interest. The federally-
owned Strategic Petroleum Reserve, for instance, protects against supply
disruptions and the resulting consumer price shocks, while Federal
regulators protect public health and the environment and ensure fair,
efficient energy rates. DOE's applied research and development (R&D)
programs in fossil, nuclear, solar/renewable energy and energy
conservation speed the development of technologies, frequently through
cost-shared partnerships with industry. The programs not only open new
opportunities for American industry, but reach beyond what the
marketplace demands today, putting the Nation in a better position to
meet the demands of tomorrow.
Energy Resources and R&D
Strategic Petroleum Reserve (SPR): DOE maintains SPR and invests in
R&D to protect against petroleum supply disruptions and reduce the
environmental impacts of energy production and use.
SPR was authorized in 1975, in response to the oil embargoes of the
early 1970s. The Reserve now holds 567 million barrels of crude oil in
underground salt caverns at four Gulf Coast sites. SPR helps protect the
economy and provide flexibility for the Nation's foreign policy in case
of a severe energy supply disruption.
In 2001, DOE will maintain its capability to reach a SPR
drawdown rate of about four million barrels a day within 15
days and to maintain that rate for at least 90 days.
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Applied R&D: DOE's energy R&D investments cover a broad array of
resources and technologies to make the production and use of all forms
of energy--including solar and renewables, fossil, and nuclear--more
efficient and less environmentally damaging. These investments not only
lay the foundation for a more sustainable energy future but also open
major international markets for manufacturers of advanced U.S.
technology and enhance our nation's energy security.
DOE's energy efficiency, renewable energy, and electric energy systems
programs form a major part of the Administration's Climate Change
Technology Initiative, which is intended to find ways to reduce
emissions of carbon dioxide and other greenhouse gases in ways that
benefit our economy rather than constrain it. (For more details, see
Chapter 5, ``Promoting Research.'')
Energy Conservation
Energy conservation programs, for which the budget proposes $851
million, are designed to improve the fuel economy of various
transportation modes, increase the productivity of our most energy-
intensive industries, and improve the energy efficiency of buildings and
appliances. They also include grants to States to fund energy-efficiency
programs and low-income home weatherization. Each of these activities
benefits our economy and reduces emissions of carbon dioxide and other
greenhouse gases, and many rely on partnerships with the private sector
for cost-sharing and commercialization.
Past Results: Energy-efficiency technologies that have already come to
market include heat-reflecting windows, high-efficiency lights,
geothermal heat pumps, high-efficiency electric motors and compressors,
and software for designing energy-efficient buildings. These five
technologies alone have saved consumers and industry over $33 billion in
energy costs. In 1999, commercialization efforts were completed for
geothermal heat pumps, and full-size electrochromic windows (which
darken electrically) and spectrally-selective windows (which block
ultraviolet and infrared light) were demonstrated.
In 2000:
Daimler-Chrysler, Ford, and General Motors have recently
shown the concept cars that represent the first major results
of the Partnership for a New Generation of Vehicles.
In 2001:
The Federal Energy Management Program (FEMP) will exceed the
original Energy Policy Act of 1992 goal of a 20-percent
reduction in the Government's energy use per square foot of
office space (relative to 1985) by reaching a 22-percent
reduction. (In 1999 FEMP nearly reached that goal a year ahead
of schedule, achieving a 19.6 percent reduction.)
Industry will produce 45,000 vehicles that incorporate light-
weight materials whose development was supported by DOE's
Office of Transportation Technologies.
Alcohol-fuel companies will produce six million gallons of
cellulose-derived ethanol, based on DOE technologies.
The Office of Industrial Technologies will see 10 of their
technologies commercialized, bringing the total to 144. Annual
energy savings to the U.S. economy from technologies they have
supported will reach 170 trillion Btu, with another 90
trillion Btu saved annually from their industry assessment and
technology-transfer programs.
Local recipients of DOE grant funds will weatherize 76,000
low-income homes.
Solar and Renewable Resources: Solar and renewable resources programs,
for which the budget proposes $334 million, focus on technologies that
will help the Nation use its abundant renewable resources such as wind,
solar, and biomass to produce low-cost, clean energy that contributes no
net carbon dioxide to the atmosphere. The United States is the world's
technology leader in wind energy, with a growing export market and
production costs that have fallen dramatically. In addition,
photovoltaics are becoming more useful in remote power applications, and
new biofuels plants are being constructed. DOE also is coordinating the
President's Million Solar Roofs initiative, whose goal is to facilitate
the installation of one million solar roof installations
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(a mixture of solar heat/hot water and photovoltaics) by 2010. Two
programs that were formerly presented as part of Solar and Renewable
Energy are now presented separately: electric energy systems ($48
million) and hydrogen R&D ($23 million). Departmental energy management
is a new line-item ($5 million).
Past Results: The DOE wind energy program developed a new generation
of airfoil designs for wind turbine blades, which have been incorporated
into U.S.-made wind turbines in the 1990s, resulting in up to 30 percent
better efficiency. The cost of wind-generated electricity has dropped
from 35 cents per kilowatt-hour (kWh) in 1980 to less than five cents
per kWh in 1999. (The program has set a very ambitious goal of reducing
those costs to 2.5 cents by 2002.) From 1990 to 1999, the production
cost per watt of photovoltaic (PV) panels has dropped by a factor of
six, and shipments of PV panels have roughly tripled. The cost of
geothermal electricity dropped by half from 1980 to 1990 (from 12 to six
cents per kWh), and has dropped another one-third between 1990 and 1999,
to less than four cents per kWh. States, cities, and Federal agencies to
date have pledged 912,000 ``solar roofs'' over the next eight years,
including 200,000 new pledges in 1999.
In 2001, DOE's Solar and Renewable Resources program will:
support the President's Million Solar Roofs initiative
through partnerships and technical assistance so that at least
40,000 solar roofs will be installed in 2001 (51,000
installations have been completed, an increase of 26,400 in
1999).
aid in the expansion of non-hydropower renewable energy
capacity in the U.S. to 10.9 gigawatts.
continue pushing the technological state-of-the-art:
-- achieve 14 percent stable efficiency in a thin-film
photovoltaic module;
-- complete a second commercial-scale test of co-firing
switchgrass with coal; and,
-- reduce the cost of geothermal power from ``binary'' plants
to 3.5 cents/kWh.
Electric Energy Systems: The budget proposes $48 million for these
activities, which in previous years have been described as part of the
solar and renewable energy budget. These programs focus on technical
advances in electricity transmission and storage and on the efficiency
and reliability of the nation's electrical grid. The largest activity is
in high-temperature superconductivity R&D, which can greatly increase
the efficiency of generators and heavy electrical machinery, and which
can dramatically increase the carrying capacity of high-voltage
transmission lines.
In 1999, for the first time in the world, a high-temperature
superconducting cable provided commercial grid electricity to a
manufacturing plant--enough electricity to power a small town.
In 2001, DOE will make available ``second generation'' high-
temperature superconducting wires in continuous lengths.
Fossil Energy R&D: Fossil fuel energy R&D programs, for which the
budget proposes $376 million, help industry develop advanced
technologies to produce and use coal, oil, and gas resources more
efficiently and cleanly. Federally-funded development of clean, highly-
efficient gas-fired and coal-fired generating systems aim to reduce
greenhouse gas emission rates, while reducing electricity costs compared
to currently available technologies. These programs also include efforts
to discover effective, efficient, and economical means of sequestering
carbon dioxide. The programs also help boost the domestic production of
oil and natural gas by funding R&D projects with industry to cut
exploration, development, and production costs.
Past Results: In 1999, DOE demonstrated a more efficient and less
costly drilling and completion technology that could ultimately add six
trillion cubic feet (TCF) of domestic gas reserves; demonstrated four
advanced oil production enhancement technologies that contributed to
adding 46 million barrels of incremental domestic oil reserves; and
began full-scale component testing of two advanced, utility-scale
turbines that are more efficient and less polluting than current
technologies.
In 2001, DOE will:
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Demonstrate the feasibility of effectively separating
hydrogen and CO2 from synthetic gas using both high-
temperature hydrogen separation membranes, and low-temperature
CO2 hydrate technology to meet the long-term goals of
providing low-cost hydrogen for high-efficiency fuel cells and
for concentrating CO2 into forms that can be ``sequestered,''
e.g., buried or otherwise kept out of the atmosphere;
Complete evaluation of the results of an international
collaborative research project on CO2 injection into deep,
unmineable coal seams for sequestration; and
The advanced research materials program will test a high gas
flux oxygen separation device that promises more efficient,
less expensive gas separation techniques that can improve
powerplant efficiency, and can aid carbon sequestration
efforts.
Nuclear Energy R&D: Nuclear fission power is a widely used technology,
providing about 19 percent of the electric power consumed in the United
States and about 17 percent worldwide without generating greenhouse
gases. If fossil plants were used to produce the amount of electricity
generated by these nuclear plants, more than 300 million additional
metric tons of carbon would be emitted each year. Continued R&D
addressing the issues that threaten the acceptance and viability of
nuclear fission in the United States will help determine whether nuclear
fission can continue to supply increasing amounts of economically-price
energy while reducing greenhouse emissions.
In 2001, DOE will:
complete identification of feasible and important new reactor
and fuel cycle concepts to help improve the cost, performance,
safety, or proliferation-resistence of civilian nuclear power
for continued development;
maintain the advanced radioisotope power system program and
facility operations and capabilities for current and future
space and national security missions;
complete the National Environmental Policy Act review of the
environmental impacts of returning the Fast Flux Test Facility
(FFTF) at Hanford to operation and issue a record of decision;
and,
initiate design of two facilities for processing depleted
uranium hexafluoride (DUF6) at Paducah, Kentucky and
Portsmouth, Ohio.
Environmental Quality
Environmental Management: In the Non-Defense Environmental Management
and Uranium Enrichment Decontamination and Decommissioning Fund, the
budget proposes $589 million to manage the Nation's most complex
environmental cleanup program, the result of more than five decades of
research and production of nuclear energy technology and materials. (For
information on DOE's Defense Environmental Management program, see
Chapter 11, ``National Defense.'') This will reduce environmental risk
and manage the waste at: (1) sites run by DOE's predecessor agencies;
(2) sites contaminated by uranium and thorium production from the 1950s
to the 1970s; (3) DOE's inactive uranium processing plant; and, (4) the
gaseous diffusion plants operated by the now-private United States
Enrichment Corporation.
Past Results: In 1999, DOE completed remediation of three sites: Ames
Laboratory in Iowa, Sandia National Laboratory in California, and
Princeton Plasma Physics Laboratory in New Jersey. Through 1999, a total
of 69 sites have completed remediation.
In 2000:
DOE plans to complete remediation of two geographic sites.
In 2001, DOE will:
complete remediation at three geographic sites;
increase the total number of geographic sites completed to 74
of 113; and,
fill five canisters with high-level waste at the West Valley
Demonstration Project in New York for long-term storage.
Radioactive Waste: DOE's Civilian Radioactive Waste Management Program
oversees the management and disposal of spent nuclear fuel from
commercial nuclear reactors and
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high-level radioactive waste from Federal cleanup sites. In 2001, DOE
will:
conduct public hearings on the Secretary's consideration of
the possible recommendation of the Yucca Mountain, Nevada site
for development as a repository;
complete a review of the Site Recommendation Report that will
provide the technical bases for a Site Recommendation
Statement;
complete a Site Recommendation Statement for the Secretary to
submit to the President and then the Congress, if the
Secretary and the President decide to recommend the site; and,
if the President and Congress approve the Site
Recommendation, work on completing a License Application to
the Nuclear Regulatory Commission.
Energy Production and Power Marketing
Power Marketing Administrations: The Federal Government is reshaping
programs that produce, distribute, and finance electric power. The four
Federal Power Marketing Administrations, or PMAs, (Bonneville,
Southeastern, Southwestern, and Western) market electricity generated at
127 multi-purpose Federal dams and manage 33,000 miles of federally-
owned transmission lines in 34 States. The PMAs sell about five percent
of the Nation's electricity, primarily to preferred customers such as
counties, cities, and publicly-owned utilities. The PMAs face growing
challenges as the electricity industry moves toward open, competitive
markets.
In 2001, each PMA will operate its transmission system to
ensure that service is continuous, reliable, and balanced--
that is, that the system achieves a ``pass'' rating each month
under the North American Electric Reliability Council
performance standards. Each PMA received a ``pass'' rating
every month during 1999. These measures are used industry-wide
and indicate the reliability and quality of power provided by
utilities.
Tennessee Valley Authority (TVA): TVA is a Federal Government
corporation and the Nation's single largest electric power generator. It
generates four percent of the electric power in the country and
transmits that power over its 17,000 mile transmission network to 159
municipal utilities and rural electric cooperatives that serve some
eight million customers in seven States.
TVA is responding to changes that are bringing greater competition to
the electric power industry by taking steps to maintain its ability to
supply power at competitive prices. The agency is now engaged in a major
effort to cut its debt. TVA has cut its debt by $1.3 billion in the past
three years.
In 2001, TVA will reduce its debt by over $750 million.
(For information on TVA's non-power activities, see Chapter 19,
``Community and Regional Development.'')
Rural Utilities Service: In 2001, the Agriculture Department's Rural
Utilities Service (RUS) will make $1.6 billion in direct loans to rural
electric cooperatives, public bodies, nonprofit associations, and other
utilities in rural areas for generating, transmitting, and distributing
electricity. Its main goal is to finance modern, affordable electric
service to rural communities. Included within this funding amount is
$400 million for private sector guarantees, which will help rural
utility borrowers position themselves to be viable in a competitive,
deregulated environment. RUS borrowers continue to provide service in
the poorest counties in rural America and to the majority of counties
suffering the most from population out- migration.
In 2001, RUS will upgrade 169 rural electric systems, which
will benefit over 1.8 million customers and create or preserve
approximately 40,250 jobs.
Energy Regulation
The Federal Government's regulation of energy industries is designed
to protect public health, achieve environmental and energy goals, and
promote fair and efficient interstate energy markets.
Appliance Efficiency Rules: DOE improves the Nation's use of energy
resources through its appliance energy efficiency pro
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gram, which specifies minimum levels of energy efficiency for major home
appliances, such as water heaters, air conditioners, and refrigerators,
and for commercial-scale heating and cooling components. The initial
efficiency standards were established in legislation, and DOE
periodically issues rules to revise those standards or to create
standards for new categories of equipment.
Past Results: In 1999, DOE issued six new proposed rules. In previous
years DOE has issued eight final rules. As a result of the appliance
efficiency rules that DOE administers, consumers are saving
approximately $4.7 billion annually in reduced energy costs. In 2001:
DOE will issue one final rule and three proposed rules and
determinations on different categories of appliances.
Federal Energy Regulatory Commission (FERC): FERC, an independent
agency within DOE, regulates the transmission and wholesale prices of
electric power, including non-Federal hydroelectric power, and the
transmission of oil and natural gas by pipeline in interstate commerce.
FERC promotes competition in the natural gas industry and in wholesale
electric power markets. Recent FERC reforms to give consumers
competitive choices in services and suppliers will cut consumer energy
bills by $3 to $5 billion per year.
In 2001, FERC, in order to promote competitive, well-functioning
energy markets, will measure the response of prices to external
conditions in natural gas and electricity, the level of price volatility
and changes in price volatility in electricity and gas, and the
correlation of commodity prices across regions.
DOE Corporate Management
Program and contract management at DOE is a Priority Management
Objective of the Administration because more than 90 percent of the
Department's budget is spent on contracts to operate its facilities (see
Chapter 31, ``Improving Government Performance through Better
Management.'')
All DOE programs may be affected by a proposed consolidation of its
security activities within one departmental budget account. The
Administration anticipates transmitting a budget amendment to propose
this consolidation in early 2000.
Nuclear Regulatory Commission (NRC)
NRC, an independent agency, regulates the Nation's civilian nuclear
reactors and the medical and industrial use of nuclear materials and
their safeguards, and the disposal of nuclear waste in order to ensure
public health and safety and to protect the environment. NRC
international activities also promote adequate protection of U.S.
interests in nonproliferation and the safe and secure use of nuclear
materials in other countries. To meet the challenges of a restructured
and deregulated electric utility industry, NRC is committed to adopting
a more risk-informed and performance-based approach to regulation. This
regulatory framework will focus NRC and licensee resources on the most
safety-significant issues, while providing flexibility in how licensees
meet NRC requirements.
Past Results: In 1999, NRC and the U.S. nuclear industry achieved the
same goals as listed below for 2001: zero radiation-related deaths or
illnesses from the operation of civilian reactors or the use and
disposal of nuclear materials, and zero significant adverse impacts on
public health and safety and the environment from the recovery, cleanup,
and disposal of radioactive wastes.
In 2001:
NRC's nuclear reactor safety goal is for there to be zero
radiation-related deaths and illnesses in connection with the
operation of civilian reactors.
NRC's nuclear materials safety goal is for there to be zero
radiation-related deaths and illnesses in connection with the
use of nuclear materials.
NRC's nuclear waste safety goal is for there to be zero
significant adverse impacts to the current and future public
health and safety and the environment from radioactive wastes.
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Tax Incentives
Federal tax incentives are mainly designed to encourage the domestic
production or use of fossil and other fuels, and to promote the vitality
of our energy industries and diversification of our domestic energy
supplies. The largest incentive lets certain fuel producers cut their
taxable income as their fuel resources are depleted. An income tax
credit helps promote the development of certain non-conventional fuels.
It applies to oil produced from shale and tar sands, gas produced from a
number of unconventional sources (including coal seams), some fuels
processed from wood, and steam produced from solid agricultural
byproducts. Another tax provision provides a credit to producers who
make alcohol fuels--mainly ethanol--from biomass materials. The law also
allows a partial exemption from Federal gasoline taxes for gasolines
blended with ethanol.
The direct funding in the Climate Change Technology Initiative is
complemented by a $4 billion, five-year package of tax incentives that
will help reduce greenhouse gas emissions by spurring the purchase of
energy-efficient products and the use of renewable energy. For homes and
buildings, the incentives provide tax credits for the purchase of new
energy-efficient homes; for purchase of highly energy-efficient
equipment like heat-pump water heaters, natural-gas heat-pumps, and fuel
cells; and, for purchases of rooftop photovoltaic and solar hot-water
systems. For vehicles, the incentives extend the current tax credit for
electric and fuel-cell vehicles, and create a new system of tax credits
for hybrid vehicles. To promote renewable energy, the provisions extend
the current tax credits for power produced from wind and ``closed loop''
biomass, and create new credits for certain ``open loop'' biomass
projects, methane from landfills, and co-firing of biomass with coal in
existing powerplants. To encourage more industrial use of distributed
power generation, a uniform 15-year cost-recovery period is proposed for
distributed-power property.