[Senate Prints 116-45]
[From the U.S. Government Publishing Office]




                                                                       
116th Congress  }                                            {    S. Prt.
                             COMMITTEE PRINT                     
2d Session      }                                            {    116-45
_______________________________________________________________________

 
  
 
                    THE STRATEGIC ENERGY IMPERATIVE

                               __________

                        A MAJORITY STAFF REPORT

                      prepared for the use of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES

                          UNITED STATES SENATE

                     One Hundred Sixteenth Congress

                             Second Session

                           September 15, 2020
                           
                           

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                       Printed for the use of the
               Committee on Energy and Natural Resources
               
               

        Available via the World Wide Web: http://www.govinfo.gov
        
        
        
                          ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
41-357              WASHINGTON : 2020         

        
        
               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       MARIA CANTWELL, Washington
STEVE DAINES, Montana                BERNARD SANDERS, Vermont
BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
JOHN HOEVEN, North Dakota

                      Brian Hughes, Staff Director
                      Lucy Murfitt, Chief Counsel
   Tristan Abbey, Senior Professional Staff Member and Senior Policy 
                              Advisor for
                          Strategy & Economics
                 Renae Black, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                
                            C O N T E N T S

                              ----------                              
                                                                   Page
Letter of Transmittal............................................     V
Prologue.........................................................     1
Introduction.....................................................     1
Background.......................................................     2
Oversight Study..................................................     3
Findings.........................................................     4
Recommendations..................................................     5
Conclusion.......................................................     6
Acknowledgments..................................................     7
References.......................................................     8

                               Appendices

Appendix I.--With Powers So Disposed.............................    11
Appendix II.--Text of the ``Japan-United States Strategic Energy 
  Partnership (JUSEP)'' and the ``Australia-U.S. Strategic 
  Partnership on Energy in the Indo-Pacific''....................    18
Appendix III.--Various Letters...................................    20
Appendix IV.--CRS Memo on Strategic Petroleum Reserve............    31

                     LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                 Committee on Energy and Natural Resources,
                                Washington, DC, September 15, 2020.
    Dear Colleagues: Energy is the foundation of our economy 
and our society. It is, all at once, a finished product, a 
feedstock, a raw material, an input, an output, a value-added 
good, a natural resource, a tradable commodity, and a precious 
asset. It is critical infrastructure and emergency reserves, 
financial collateral and competitive exports, and a source of 
high-paying and high-skilled jobs. It helps us project military 
force, enables other sectors of the economy, and provides heat 
in the winter and cooling in the summer.
    As the senior Republican member of the Committee for more 
than a decade, I view the centrality of energy as a reason to 
formulate energy policy in strategic terms. Just as lifting the 
ban on oil exports reshaped global energy markets, so will 
investing in zero-emission advanced nuclear technology change 
the game. The most optimistic alternative scenarios of our 
energy future depend on taking action today.
    I call your attention to the findings and recommendations 
contained in this report, prepared by the Committee's Majority 
Staff. It makes the case that tools of ``strategic energy'' are 
imperative during this time of geopolitical competition, 
exacerbated by the COVID-19 pandemic and its associated 
economic distress.
      Sincerely,
                                            Lisa Murkowski,
                                                          Chairman.


                    THE STRATEGIC ENERGY IMPERATIVE

                              ----------                              


                                Prologue

    On February 18, 2020, U.S. Government representatives met 
in Tokyo with officials from a major Japanese trading company. 
This company boasts of energy projects across Asia and invests 
in major U.S. energy-related projects. Its multibillion-dollar 
book of business spans commodities of all kinds. The American 
delegation asked these Japanese energy businessmen whether they 
had ever competed against the United States.
    The answer was simple and clear: ``No.''

                              Introduction

    As Chairman (since 2015) and Ranking Member (from 2009 to 
2014) of the Senate Energy and Natural Resources Committee, 
Senator Lisa Murkowski has built the case for developing 
national energy policy through a strategic lens.1 
The State of Alaska's experience--with innovative development 
techniques and technology, oil and gas exports, and critical 
pipeline infrastructure--presaged many of the major issues 
associated with the present century's North American energy 
renaissance.2
    Chief among these issues are the role of the Federal 
Government in domestic energy markets and the wisdom of 
enabling U.S. engagement in global energy markets through 
commodity trade. To assist in her oversight duties, Senator 
Murkowski directed Committee senior professional staff member 
Tristan Abbey to visit Australia and Japan in February 2020. 
The purpose of the staff delegation, supported by the 
Department of State and the Congressional Research Service, was 
to examine the progress and efficacy of ``strategic energy 
partnerships'' signed between the United States and key U.S. 
allies. Two executive agreements, in particular, served as the 
foci for the trip:

  --the Japan-United States Strategic Energy Partnership, 
        announced on November 6, 2017; and
  --the Australia-U.S. Strategic Partnership on Energy in the 
        Indo-Pacific, announced on February 23, 2018.3

    This report summarizes the findings of the staff 
delegation's oversight study. Its recommendations also reflect 
events that transpired after the trip, including the oil price 
dispute between Russia and Saudi Arabia, the coronavirus 
disease (COVID-19) pandemic, actions proposed and taken by the 
Trump Administration, and the Senate passage of major 
Committee-originated legislation.

                               Background

The United States in Global Energy Markets
    In 2019, the United States switched its status from ``net 
energy importer'' to ``net energy exporter,'' according to the 
U.S. Energy Information Administration (EIA).4 The 
nation accomplished this feat of basic accounting economics by 
producing more energy, importing less energy, and exporting 
more energy.
    As recently as its Annual Energy Outlook (AEO) 2014, EIA 
projected in its Reference Case that exports would not exceed 
imports at any point through the year 2040. This projection 
steadily evolved in an optimistic direction. In AEO 2015, EIA 
projected a long period of oscillation between net imports and 
net exports from 2029 to 2040. In AEO 2016, EIA projected 
sustained net exports, without oscillation, from 2029 to 2040. 
In AEO 2017, EIA projected net exports from 2026 to 2047, 
switching to net imports until 2050, the end of a new and 
longer projection period. In AEO 2018, EIA projected sustained 
net exports from 2022 to 2050. In AEO 2019 and AEO 2020, EIA 
projected sustained net exports from 2020 to 2050.5
    Essentially, the most widely referenced energy 
futures scenario (i.e., the EIA Reference Case) did not project 
an imminent switch to net energy exports until the approximate 
year it occurred. This curious situation in no way should be 
interpreted as a criticism of the EIA. Projection is not 
prediction. Rather, the point illustrates the intensity and 
depth of the American energy expansion, which has caught the 
world by surprise.
Committee Activity
    Though chiefly concerned with domestic policy, the 
Committee has held numerous hearings on the topic of the United 
States in global energy markets.6 Dr. Fatih Birol, 
executive director of the International Energy Agency, has 
presented the World Energy Outlook to the Committee on three 
occasions: in January 2018, February 2019, and March 2020. The 
Committee held hearings on general energy and resource markets 
in April 2015, January 2016, and February 2019; on evolving 
natural gas markets in January 2015, September 2018, and July 
2019; on global oil markets in December 2015 and July 2018; on 
U.S. crude oil exports in January 2014 and March 2015; on North 
American resources in July 2017; and U.S. leadership in nuclear 
energy in May 2016 and April 2019; on critical minerals, which 
are inextricably linked to energy markets, in January 2014, May 
2015, March 2017, July 2018, May 2019, and September 2019; and 
on the Strategic Petroleum Reserve (SPR) in October 2015 and 
October 2019.7
    The Committee has developed key pieces of legislation 
related to enhancing the U.S. position in global energy 
markets. In January 2015, the Senate passed the bipartisan 
Keystone XL Pipeline Approval Act (S. 1, 114th Cong. (as passed 
by Senate, Jan. 29, 2015)), which would have provided federal 
approval to a significant oil pipeline project crossing the 
border with Canada; it was vetoed by President Obama. Chairman 
Murkowski championed the legislative repeal of the de facto ban 
on U.S. crude oil exports, which was achieved December 2015 
(Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, 
129 Stat. 2242 (2015)). In September 2018, the Nuclear Energy 
Innovation Capabilities Act (Pub. L. No. 115-248, 132 Stat. 
3154 (2018)) was enacted into law.
    In April 2016, the Senate passed the Energy Policy 
Modernization Act (EPMA; S. 2012, 114th Cong. (as passed by 
Senate, Apr. 20, 2016)). This bipartisan bill included 
provisions Sec. Sec.  2201-2203 (Id. at Sec. Sec.  2201-2203) 
to expedite Department of Energy (DOE) authorizations to export 
liquefied natural gas (LNG) from the United States, publicly 
disclose the destinations of those cargoes, and foster greater 
collaboration on energy data with Mexico and Canada. As passed 
by the Committee, EPMA included a provision to require DOE to 
notify Congress prior to any future test sales from the SPR and 
provided for modernization of the SPR itself. The test sale 
provision was enacted into law in November 2015 as part of the 
Bipartisan Budget Act (Pub. L. No. 114-74, 129 Stat. 584, 588 
(2015)), which also created the SPR's Energy Security and 
Infrastructure Modernization Fund. In August 2019, the 
Committee passed the Small Scale LNG Access Act of 2019 (S. 
816, 116th Cong. (as reported by S. Comm. on Energy and Natural 
Resources, July 16, 2019)).
    Most recently, the Committee passed the bipartisan American 
Energy Innovation Act (S. 2657, 116th Cong. (as reported by S. 
Comm. on Energy and Natural Resources, Nov. 19, 2019)), which 
is pending on the Senate calendar. This bill includes 
provisions from the Nuclear Energy Leadership Act (S. 903, 
116th Cong. (2019)), which passed the Senate in July 2020 as an 
amendment to the National Defense Authorization Act for Fiscal 
Year 2021 (S. 4049, 116th Cong. 2020)), and from the American 
Mineral Security Act (S. 1317, 116th Cong. (2019)).

                            Oversight Study

    ``Strategic energy'' is defined in this report as the 
imperative for the United States to enhance national economic 
security by ensuring that American energy thrives in global 
markets.8
Strategic Energy Partnerships
    There is no formal definition of ``strategic energy 
partnership.'' It is essentially a memorandum of understanding, 
typically unfunded, generally non-binding, undeniably 
optimistic, and highly principled. (Such agreements are 
reminiscent of bilateral ``strategic energy dialogues'' between 
the United States and a range of nations, including Brazil, 
Egypt, the United Arab Emirates, Ukraine, Poland, Saudi Arabia, 
and India. Both partnerships and dialogues tend to be broader 
than memoranda of understanding and/or cooperation focused on 
energy-related research and development.)9 The 
administration in office at any particular time determines the 
extent to which the United States will ``engage'' with a 
specific partnership. Some whither, some prosper, and some 
simply disappear.10
    In sum, strategic energy partnerships are malleable 
instruments of the executive branch, not mandated creatures of 
statute.
    The staff delegation traveled to conduct oversight on two 
such partnerships: (1) the Japan-United States Strategic Energy 
Partnership, signed on November 6, 2017; and (2) the Australia-
U.S. Strategic Partnership on Energy in the Indo-Pacific, 
signed on February 23, 2018.11
Itinerary
    In Tokyo (on February 17-18, 2020), the staff delegation 
met with representatives of the Ministry of Economy, Trade and 
Industry; the Agency for Natural Resources and Energy; the 
Japan International Cooperation Agency; the Japan Bank for 
International Cooperation; the New Energy and Industrial 
Technology Development Organization; the Ministry of Foreign 
Affairs; the Japan Oil, Gas and Metals National Corporation; 
and several commercial and academic entities.
    In Canberra (on February 20-21, 2020), the staff delegation 
met with representatives of the Department of the Prime 
Minister and Cabinet; the Department of Foreign Affairs and 
Trade; Department of Industry, Science, Energy, and Resources; 
Geoscience Australia, the Department of the Treasury; the 
Department of Defence; the Office of National Intelligence; and 
several commercial entities.

                                Findings

    This oversight study supports the following findings:

  1. Strategic energy partnerships, in practice, fall short of 
            their theoretical potential. Despite robust 
            politico-economic foundations anchored by enduring 
            security alliances, U.S. strategic energy 
            partnerships with Australia and Japan exist 
            primarily in the ethereal form of papers and 
            conferences. Officials could not identify a 
            significant project developed under either 
            agreement. The recent bilateral agreement allowing 
            Australia to purchase 1.5 million barrels of U.S. 
            crude oil for storage in the Strategic Petroleum 
            Reserve, in order to comply with its International 
            Energy Agency obligations, is a positive 
            development, but is mostly an accounting 
            matter.12 Prospective projects with 
            Japan in Southeast Asia, including fostering 
            ``rules-based electricity markets'' in the Lower 
            Mekong region and the prospect of a regasification 
            terminal to facilitate LNG imports into Vietnam, 
            remain aspirational and speculative.

  2. The dearth of concrete results emerging from strategic 
            energy partnerships can be attributed primarily to 
            an imbalance between lofty aspirational vision and 
            paltry functional resources. Federal agencies have 
            few tools to assist U.S. energy companies with 
            accessing global markets. Commercial advocacy, 
            feasibility studies, market analysis, and reverse 
            trade missions are useful instruments, but lack the 
            heft of direct lending, loan guarantees, and 
            insurance that can be provided by export credit 
            agencies and development finance institutions. 
            Though most often unfavorably compared to China's 
            well-resourced Belt and Road Initiative, 
            constrained U.S. official financing capabilities 
            are also surpassed by those of Italy, Germany, 
            India, the United Kingdom, France, and South 
            Korea.13

  3. Congressional action is required to operationalize 
            ``strategic energy'' as a concept and to ensure the 
            success of strategic energy partnerships. Executive 
            branch agencies are largely favorably disposed, in 
            theory, to advancing strategic energy. In practice, 
            however, there exists a fundamental tension between 
            minimizing risks and maximizing returns, on the one 
            hand, and undertaking strategic projects that 
            present greater risk over a longer period of time, 
            on the other. Legislative re-direction will be 
            required. Congress has led the way before. For 
            example, Chairman Murkowski's efforts to repeal the 
            outdated prohibition on exporting U.S. crude oil 
            enabled the record-breaking levels of oil exports 
            described in the background section of this report, 
            building on incremental executive actions allowing 
            exports of processed condensate.14 
            Bipartisan and bicameral pressure on the U.S. 
            International Development Finance Corporation 
            succeeded in reversing its outdated policy 
            prohibiting support to civil nuclear energy 
            projects, following enactment into law of a 
            provision allowing it to support energy projects in 
            upper-middle-income and high-income Eurasian 
            economies (beyond its low-income remit).15 
            Even the Department of Energy's new rule to 
            expedite small-scale LNG exports also emerged first 
            in Congress.16

                         Recommendations

    Informed by the findings described above, the oversight 
study also recommends the following legislative and executive 
actions:
Legislative Actions
  1. Pass into law the Nuclear Energy Leadership Act (S. 903), 
            the American Mineral Security Act (S. 1317), and 
            the American Energy Innovation Act (S. 2657).
   2. Codify in statute that the U.S. International Development 
            Finance Corporation may support civil nuclear 
            energy projects (and consider codifying a permanent 
            national security exception to permit support for 
            civil nuclear and critical mineral projects not 
            strictly located in low-income countries) and that 
            the Department of Energy may expedite 
            authorizations to export small volumes of natural 
            gas.17
  3. Reconcile mandatory drawdowns from the Strategic 
            Petroleum Reserve with global economic slowdown and 
            persistent threats to energy security, and 
            prioritize funding for maintenance and 
            modernization of the reserve's infrastructure.
  4. Reconfigure the federal apparatus surrounding export 
            credits, including by repealing the Department of 
            Treasury's statutory mandate to negotiate an end to 
            export credits and by facilitating Export-Import 
            Bank financing of strategic energy projects.18
  5. Expand federal efforts to address critical minerals 
            scarcity and import dependence, including by 
            amending the law to allow the Department of 
            Energy's Loan Guarantee Program to support critical 
            minerals projects in refining and recycling and by 
            adopting the June 2019 recommendations published in 
            a Department of Commerce report.19
Executive Actions
  6. Pursue multiple civil nuclear energy cooperation (``123'') 
            agreements concurrently and deemphasize nuclear 
            cooperation memoranda of understanding (NCMOUs), 
            which carry essentially zero force of law.20
  7. Deprioritize discussions of trilateral (between the 
            United States, Australia, and Japan) and 
            quadrilateral partnerships (with India) until 
            bilateral agreements bear fruit.
  8. Recognize that U.S. and Australian energy producers and 
            exporters are competing in the same markets and 
            focus the bilateral partnership on producing and 
            refining critical minerals for energy purposes.
  9. Recognize that U.S. and Japanese engineering, technology, 
            and construction firms are competing in the same 
            markets and ensure the bilateral partnership 
            consists of more than U.S.-origin molecules being 
            piped through Japanese-constructed infrastructure.
 10. Prioritize on-budget and on-schedule modernization of the 
            Strategic Petroleum Reserve.

                               Conclusion

    Two significant events occurred in the days immediately 
following the staff delegation trip to Japan and Australia: the 
onset of the oil pricing dispute between Russia and Saudi 
Arabia and the pandemic declaration in March 2020. Both events 
matter significantly to ``strategic energy'' because the former 
increased global energy supply and the latter decreased global 
energy demand. The twin-shock of these events was historic and 
threatened U.S. energy security. A strong domestic energy 
industry is the sine qua non of a nation that is prepared to 
lead strategic energy partnerships.
    Chairman Murkowski joined with Senate colleagues in 
successfully pressing for an end to the Saudi-Russian oil 
pricing dispute.21 The Committee recently held 
hearings on the impact of COVID-19 on the energy industry (June 
16, 2020), on mineral supply chains (June 24, 2020), on U.S. 
territories (June 30, 2020), and on users of public lands, 
forests, and national parks (July 23, 2020).22
    The Department of the Treasury and Department of 
Energy separately proposed purchasing crude oil to refill the 
Strategic Petroleum Reserve as part of the COVID-19 economic 
stimulus package. Absent appropriations to purchase significant 
quantities of crude oil, DOE's Office of Fossil Energy was 
limited to two creative and commendable initiatives: (1) 
providing temporary storage to U.S. producers facing 
oversaturated storage; and (2) purchasing a small quantity of 
crude oil by repurposing existing funds.23 Congress 
may consider clarifying SPR-related authorities to avoid future 
confusion over the limits of DOE's crude oil remit.
    Another DOE proposal to create a special lending facility 
under the CARES Act to support U.S. energy companies ultimately 
was not adopted by the Treasury Department. Such companies are 
eligible for CARES Act financing under the same criteria as 
companies in other sectors of the economy, as Chairman 
Murkowski insisted in a letter to Secretary of the Treasury 
Steven Mnuchin.24
    Though both events significantly and deleteriously 
impacted global energy markets, they do not alter the findings 
and recommendations of this report. Strategic energy 
partnerships should still be pursued by the United States even 
in a world of decreased energy demand and slower economic 
activity.
    In testimony before the Committee in March 2020, Dr. Birol 
described the United States as ``a cornerstone of global energy 
security.'' Despite the onset of the COVID-19 crisis, Dr. Birol 
concluded his opening remarks as follows:

  With its boundless human ingenuity, rich resources and track 
    record of successful innovation and commercialization of 
    new technologies, the United States is extremely well 
    placed to continue to lead the world in the development and 
    deployment of energy technologies that can help ensure a 
    secure, affordable and sustainable supply of energy for 
    decades to come.25

    The oversight study conducted by the Committee staff 
delegation to Japan and Australia found bilateral strategic 
energy partnerships to hold enormous promise. Unfortunately, 
they are presently under-delivering. By considering the 
findings of this report and adopting its recommendations, the 
legislative and executive branches would help crystallize 
strategic energy partnerships into productive agreements that 
build tangible projects and secure durable trading 
relationships, while complementing efforts to safeguard the 
environment and reduce carbon dioxide emissions. The true test 
of these partnerships will be whether or not they leave their 
mark on global energy markets in the decades ahead.

                            Acknowledgments

    Committee staff would like to thank all Japanese and 
Australian representatives for their time and insights. 
Particular gratitude is due to the Department of State for its 
support of the delegation's travel, especially Justin Tull of 
Embassy Tokyo and Patrick Koucheravy and Hugh Green of Embassy 
Canberra. In Washington, sustained and direct support provided 
by Phillip Brown and Michael Ratner of the Congressional 
Research Service was essential and invaluable.
    In the United States, subject-matter experts--too many to 
name--at the Export-Import Bank, the U.S. International 
Development Finance Corporation, the U.S. Trade and Development 
Agency, the Department of State, the Department of the 
Treasury, the Department of Commerce, and the Department of 
Energy (including the U.S. Energy Information Administration) 
also contributed time, wisdom, and data, in some cases over the 
course of several years, in support of this project and others 
upon which it rests. Further thanks are due to Shayerah Ilias 
Akhtar, Lynn Cunningham, Rachel Eck, Heather Greenley, Mark 
Holt, Marc Humphries, Paul Parformak, Raj Gnanarajah, Andres 
Schwarzenberg, Keri Stophel, and Martin Weiss of the 
Congressional Research Service.
------------
References:

  1 Most recently, see Senator Lisa Murkowski, ``With Powers 
        So Disposed'': America and the Global Strategic Energy 
        Competition (July 11, 2019), available in Appendix I. See also 
        Senator Lisa Murkowski, Energy 20/20: A Blueprint for America's 
        Energy Future (February 4, 2013), and the series of white 
        papers that followed: The Narrowing Window: America's 
        Opportunity to Join the Global Gas Trade (August 6, 2013), 
        Powering the Future: Ensuring That Federal Policy Fully 
        Supports Electric Reliability (February 11, 2014), The Energy-
        Water Nexus: Interlinked Resources That Are Vital For Economic 
        Growth and Sustainability (May 6, 2014), A Signal to the World: 
        Renovating the Architecture of U.S. Energy Exports (July 7, 
        2014), and, with Senator Tim Scott, Plenty at Stake: Indicators 
        of American Energy Insecurity (September 18, 2014).

  2 For example, the Trans-Alaska Pipeline System--
        explicitly authorized by Congress and President Nixon in 1973--
        is the quintessential embodiment of ``critical 
        infrastructure.'' The Kenai LNG export facility, the first of 
        its kind constructed in the United States, was approved by the 
        now-defunct Federal Power Commission in 1967 (37 F.P.C. 777). 
        Innovative drilling techniques have been employed for decades 
        on the North Slope, ``well'' before their adoption in the 
        continental ``Lower 48'' states, in places such as the Alpine 
        and Kuparuk fields. Thanks are due to Phillip Brown and Paul 
        Parformak of the Congressional Research Service and David 
        Houseknecht of the U.S. Geological Survey.

  3 The text of these agreements is available in Appendix 
        II.

  4 Energy Information Administration, Monthly Energy 
        Review, Table 1.4c Primary Energy Net Imports by Source.

  5 All Annual Energy Outlooks are available on the EIA 
        website.

  6 The National Nuclear Security Administration's budget 
        comprises roughly half of total DOE funding. Its Defense 
        Nuclear Nonproliferation programs, which are focused largely 
        overseas, received approximately $2.2 billion in enacted FY 
        2020 appropriations, a sum that dwarfs DOE ``non-defense'' 
        international activities by nearly two orders of magnitude. 
        DOE's Office of International Affairs received approximately 
        $27 million in enacted FY 2020 appropriations. Various 
        government-owned, contractor-operated DOE laboratories, 
        including the Pacific Northwest National Laboratory, National 
        Renewable Energy Laboratory, Idaho National Laboratory, and 
        Argonne National Laboratory, maintain international affairs 
        offices. As may be expected, the Department of the Interior's 
        global footprint is relatively small in comparison. 
        Nonetheless, DOI's Office of Insular Affairs carries out 
        federal responsibilities in U.S. territories (American Samoa, 
        the U.S. Virgin Islands, and the Commonwealth of the Northern 
        Mariana Islands) and freely associated states (Federated States 
        of Micronesia, the Republic of the Marshall Islands, and the 
        Republic of Palau). The U.S. Geological Survey routinely 
        publishes data and analysis on global minerals markets and 
        resources. The Bureau of Ocean Energy Management and the Bureau 
        of Safety and Environmental Enforcement periodically engage 
        with international counterparts. The Fish & Wildlife Service, 
        which deploys personnel overseas, received approximately $19 
        million in enacted FY 2020 appropriations for combating 
        wildlife trafficking and other missions. Even the National Park 
        Service received approximately $1.9 million in enacted FY 2020 
        appropriations for international activities, including border 
        security, historic preservation, and conservation.

  7 See The Domestic and Global Energy Outlook from the 
        Perspective of the International Energy Agency: Hearing Before 
        the S. Comm. on Energy and Nat. Res., 115th Cong. (2018) 
        (statement of Dr. Fatih Birol, Executive Director, 
        International Energy Agency); IEA's World Energy Outlook: 
        Hearing Before the S. Comm. on Energy and Nat. Res., 116th 
        Cong. (2019) (statement of Dr. Fatih Birol, Executive Director, 
        International Energy Agency); Energy Outlook of the U.S. from 
        the Perspective of IEA: Hearing Before the S. Comm. on Energy 
        and Nat. Res., 116th Cong. (2020) (statement of Dr. Fatih 
        Birol, Executive Director, International Energy Agency); The 
        Energy Information Administration's Annual Energy Outlook for 
        2015: Hearing Before the S. Comm. on Energy and Nat. Res., 
        114th Cong. (2015); The Near-Term Outlook for Energy and 
        Commodity Markets: Hearing Before the S. Comm. on Energy and 
        Nat. Res., 114th Cong. (2016); Outlook for Energy and Minerals 
        Markets in the 116th Congress: Hearing Before the S. Comm. on 
        Energy and Nat. Res., 116th Cong. (2019); S. 33, The LNG 
        Permitting Certainty and Transparency Act: Hearing on S. 33 
        Before the S. Comm. on Energy and Nat. Res., 114th Cong. 
        (2015); The Role of U.S. Liquefied Natural Gas in Meeting 
        European Energy Demand: Hearing Before the S. Comm. on Energy 
        and Nat. Res., 115th Cong. (2018); Important Role of U.S. LNG 
        in Evolving Global Markets: Hearing Before the S. Comm. on 
        Energy and Nat. Res., 116th Cong. (2019); Terrorism and the 
        Global Oil Markets: Hearing Before the S. Comm. on Energy and 
        Nat. Res., 114th Cong. (2015); Factors Impacting Global Oil 
        Prices: Hearing Before the S. Comm. on Energy and Nat. Res., 
        115th Cong. (2018); Crude Oil Exports: Hearing Before the S. 
        Comm. on Energy and Nat. Res., 113th Cong. (2014); U.S. Crude 
        Oil Export Policy: Hearing Before the S. Comm. on Energy and 
        Nat. Res., 114th Cong. (2015); The Status and Outlook for U.S. 
        and North American Energy and Resource Security: Hearing Before 
        the S. Comm. on Energy and Nat. Res., 115th Cong. (2017); The 
        Status of Advanced Nuclear Technologies: Hearing Before the S. 
        Comm. on Energy and Nat. Res., 114th Cong. (2016); U.S. 
        Leadership in Nuclear Energy and To Receive Testimony on NELA: 
        Hearing on S. 903 Before the S. Comm. on Energy and Nat. Res., 
        116th Cong. (2019); Critical Minerals Policy Act: Hearing on S. 
        1600 Before the S. Comm. on Energy and Nat. Res., 113th Cong. 
        (2014); S. 883, the American Mineral Security Act of 2015: 
        Hearing on S. 883 Before the S. Comm. on Energy and Nat. Res., 
        114th Cong. (2015); The United States' Increasing Dependence on 
        Foreign Sources of Minerals and Opportunities To Rebuild and 
        Improve the Supply Chain in the United States: Hearing Before 
        the S. Comm. on Energy and Nat. Res., 115th Cong. (2017); The 
        Department of the Interior's Final List of Critical Minerals 
        for 2018 and Opportunities To Strengthen the United States' 
        Mineral Security: Hearing Before the S. Comm. on Energy and 
        Nat. Res., 115th Cong. (2018); Mineral Security and Related 
        Legislation: Hearing on S. 1052 and S. 1317 Before the S. Comm. 
        on Energy and Nat. Res., 116th Cong. (2019); Minerals For Clean 
        Energy Technologies: Hearing Before the S. Comm. on Energy and 
        Nat. Res., 116th Cong. (2019); The Potential Modernization of 
        the Strategic Petroleum Reserve and Related Energy Security 
        Issues: Hearing Before the S. Comm. on Energy and Nat. Res., 
        114th Cong. (2015); Strategic Petroleum Reserve: Hearing Before 
        the S. Comm. on Energy and Nat. Res., 116th Cong. (2019). 
        Thanks are due to Rachel Eck of the Congressional Research 
        Service.

  8 There is no universally accepted definition of 
        ``strategic energy.'' In contrast, ``strategic minerals'' 
        (commonly referred to as ``critical minerals'') are generally 
        understood. ``Strategic energy management,'' a business 
        practice term, refers to certain processes related to energy 
        performance, usage, and efficiency, and is quite distinct from 
        the concept of ``strategic energy'' developed in this report. 
        Strategic energy should be understood as both an organizing 
        principle and as a motivating principle. It is fundamentally 
        concerned with the capabilities of the United States to engage 
        successfully in international economic competition and should 
        not be reduced to, or confused with, the related but distinct 
        concepts of critical infrastructure, cybersecurity, and grid 
        reliability.

  9 Bilateral memoranda abound across the Federal 
        Government. The Department of Energy's Office of Fossil Energy, 
        for example, maintains memoranda of understanding with 
        Australia, Canada, the European Commission, Japan, India, 
        Indonesia, Mexico, Norway, Saudi Arabia, South Korea, the 
        United Arab Emirates, and the United Kingdom. The Office of 
        Nuclear Energy maintains memoranda of understanding with China, 
        the Czech Republic, the European Atomic Energy Community 
        (Euratom), France, Italy, Japan, Jordan, Mongolia, Russia, 
        South Africa, South Korea, Spain, and the United Kingdom.

 10 More idiosyncratic incarnations also exist, such as the 
        U.S.-Israel Energy Center (established by Pub. L. No. 113-296, 
        128 Stat. 4075 (2014)).

 11 In the interest of full disclosure, Committee 
        professional staff member Tristan Abbey helped draft these two 
        agreements while assigned, in a previous capacity, to the 
        National Security Council.

 12 In any event, the Australia-U.S. agreement does not 
        explicitly mention strategic petroleum stocks as an action 
        item.

 13 Export-Import Bank of the United States, Report to the 
        United States Congress on Global Export Credit Competition, 
        June 2020, p. 38.

 14 See also the following reports prepared by the 
        Republican staff of the U.S. Senate Energy and Natural 
        Resources Committee: Cross Currents: Iranian Oil and the U.S. 
        Export Ban (June 23, 2015); Rendering Vital Assistance: 
        Allowing Oil Shipments to U.S. Allies (June 9, 2015); A Ban for 
        One: The Outdated Prohibition on U.S. Oil Exports in Global 
        Context (June 26, 2014); Crude Pro Quo: The Use of Oil 
        Exchanges to Increase Efficiency (May 22, 2014); License to 
        Trade: Commerce Department Authority to Allow Condensate 
        Exports (April 2, 2014); and Past is Precedent: Executive Power 
        to Authorize Crude Oil Exports (March 3, 2014).

 15 For the Eurasian energy project exception, see Pub. L. 
        116-94 (22 U.S.C Sec. 9563).

 16 Department of Energy, 10 CFR Part 590, Small-Scale 
        Natural Gas Exports, 83 Fed. Reg. 35106 (July 25, 2018).

 17 U.S. International Development Finance Corporation, 
        Modernizing DFC's Nuclear Energy Policy: Conclusion of 30-day 
        Public Notice and Comment Period, July 23, 2020. Senator 
        Murkowski's letter to the DFC about this topic is available in 
        Appendix III.

 18 Export credit rulemaking is facilitated by the 
        Organization for Economic Cooperation and Development (OECD). 
        The authority vested in the President by Section 11 of the 
        Export-Import Bank Reauthorization Act of 2012 (12 U.S.C. 
        Sec. 635a-5), as amended, to negotiate an end to export credit 
        financing is delegated to the Secretary of the Treasury. Thanks 
        are due to Raj Gnanarajah of the Congressional Research 
        Service.

 19 As reflected in the active statutes (42 USC Sec. 16511 
        et. seq.), eligible projects must (1) avoid, reduce or 
        sequester air pollutants or anthropogenic emissions of 
        greenhouse gases; and (2) employ new or significantly improved 
        technologies as compared to commercial technologies in service 
        in the United States at the time the guarantee is issued. These 
        two requirements would have to be met before a critical 
        minerals project could be considered for a loan guarantee. 
        Statutes also include a list of eligible project categories 
        (Sec. 16513(b)). Critical minerals are not specifically 
        included in the project category list. Thanks are due to 
        Phillip Brown of the Congressional Research Service. The 
        interagency report, A Federal Strategy to Ensure Secure and 
        Reliable Supplies of Critical Minerals, is available on the 
        Department of Commerce website.

 20 Section 123 of the Atomic Energy Act of 1954, as amended 
        (P.L. 83-703; 42 U.S.C. Sec. 2153), prohibits significant U.S. 
        nuclear cooperation with other countries without the 
        implementation of a peaceful nuclear cooperation agreement (a 
        ``123'' agreement). Nuclear Cooperation Memoranda of 
        Understanding (NCMOUs) are the products of a State Department 
        diplomatic initiative designed to ``develop strategic civil 
        nuclear cooperation relationships'' with other countries and 
        potentially lay the groundwork for 123 agreements. NCMOUs do 
        not by themselves allow for the transfer or export of special 
        nuclear materials or reactors and components. The State 
        Department notes that ``while 123 agreements are legally 
        binding and are shaped by legal requirements, NCMOUs are not 
        legally binding and can be more flexible and strategic in their 
        content.'' Thanks are due to Mark Holt of the Congressional 
        Research Service.

 21 Senator Murkowski's letters to the Saudi Crown Prince 
        Mohammad bin Salman, Secretary of State Mike Pompeo, and 
        Secretary of Commerce Wilbur Ross are available in Appendix 
        III.

 22 Official prints of these hearings are not yet available.

 23 The temporary storage program secured 21 million 
        barrels, or 70 percent, of its 30 million barrel availability. 
        Of an initial solicitation to purchase 1 million barrels, DOE 
        purchased 126,000 barrels.

 24 Senator Murkowski's letter to Secretary Mnuchin is 
        available in Appendix III. For the CARES Act provisions, see 
        Section 4003 of Title IV, Subtitle A of P.L. 116-136, 
        Coronavirus Economic Stabilization Act of 2020.

 25 Energy Outlook of the U.S. from the Perspective of IEA: 
        Hearing Before the S. Comm. on Energy and Nat. Res., 116th 
        Cong. (2020) (statement of Dr. Fatih Birol, Executive Director, 
        International Energy Agency).
        
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APPENDIX II.

Text of the Japan-United States Strategic Energy Partnership (JUSEP)
Leaders of Japan and the United States launched the Japan-
United States Strategic Energy Partnership (JUSEP) within the 
framework of the Japan-United States Economic Dialogue.

1. Core principles:

  (1) Open and competitive energy markets are indispensable to 
            ensuring secure energy supply; and
  (2) Universal access to affordable and reliable energy is 
            needed to help eradicate poverty, fuel economic 
            growth, and increase global security.

2. Priorities for the 2017-2018 JUSEP work plan:

  (1) Promotion of advanced nuclear technologies that are safer 
            and more proliferation resistant;
  (2) Deployment of highly efficient, low emissions (HELE) coal 
            technologies, including CCUS;
  (3) Development of a global market for natural gas; and
  (4) Energy infrastructure development in the developing world 
            that promotes regional integration; adheres to 
            principles of good governance, respect for the 
            interests of all stakeholders, and transparency in 
            bidding and financing; and expands access to the 
            global energy market.

3. Important geographic regions, including:

  (1) Southeast Asia
  (2) South Asia
  (3) Sub-Saharan Africa

[Announced on November 6, 2017.]

Text of the Australia-U.S. Strategic Partnership on Energy in the Indo-
        Pacific
Leaders of Australia and the United States to launch an 
Australia-U.S. Strategic Partnership on Energy in the Indo-
Pacific. The partnership aligns the goals of Australia's 
Foreign Policy White Paper and the U.S. National Security 
Strategy, including to promote regional infrastructure and 
energy cooperation, open and competitive energy markets and 
improved rules and standards in the Indo-
Pacific.

Core Principles

   Open and competitive energy markets are 
        indispensable to ensuring secure energy supply.
   Universal access to affordable and reliable energy 
        from a variety of sources is needed to help eradicate 
        poverty, fuel sustainable economic growth, and increase 
        global security.

Priorities for the 2018-2019 Work Plan for the Partnership

   Energy infrastructure development in the Indo-
        Pacific, including a focus on the developing world, 
        that promotes regional integration; adheres to 
        principles of good governance, respect for the 
        interests of all stakeholders, and transparency in 
        bidding and financing; and expands access to the global 
        energy market.
   Deployment of low emissions technologies which 
        support the secure, reliable, affordable and 
        sustainable supply of energy in the Indo-Pacific.
   Strengthening the development of open and rules-
        based global markets for natural gas.

Important Geographic Regions

   Southeast Asia
   South Asia
   Southwest Pacific

[Announced on February 23, 2018.]


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