[Congressional Record Volume 147, Number 59 (Thursday, May 3, 2001)]
[Senate]
[Pages S4235-S4237]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            VICE PRESIDENT'S TORONTO SPEECH ON ENERGY POLICY

  Mr. BINGAMAN. Mr. President, on Monday of this week, the Vice 
President gave a speech in Toronto laying out some of the broad themes 
of the Administration's developing energy policy.
  Some of the points made by the Vice President were valid. I want to 
comment on some of those. I obviously realize that we are now in the 
middle of the debate on the Elementary and Secondary Education Act. I 
intend to come back to the floor either later today or next week to 
talk about that legislation and to commend the sponsor of it and the 
Democratic ranking member, Senator Kennedy. Senator Jeffords and 
Senator Kennedy have done yeoman's work in putting that legislation 
together.
  I want to take the opportunity this next week to go through that in 
some detail. But today I wanted to take a few minutes to talk about 
energy issues since the Vice President is clearly focused on this and 
is speaking out strongly on it.
  I agree with much of what the Vice President has said.
  For example:

       I agree with him that we face some serious long-term issues 
     in national energy policy.
       I agree with him that our response must have comprehensive 
     and long-term focus.
       I agree with him that we are very dependent on coal and 
     nuclear power for electricity generation, and this dependence 
     will probably continue into the future.

  There are a number of other points, however, where I fear he may have 
overstated a particular point of view or missed the mark. Let me just 
cite some of those.
  The Vice President seemed to equate energy conservation with 
rationing for something like rationing. I don't know of anyone 
advocating energy conservation who supports rationing. He also stated 
that ``some groups are suggesting that government step in to force 
Americans to consume less energy.''
  That is certainly not any proposal I have made or seen here in the 
Congress.
  What I think would be helpful to the discussion is perhaps to 
identify the questions that need to be asked about energy policy as we 
proceed over the next few weeks with consideration of the energy 
policies that the administration is going to recommend as well as those 
that have been introduced here in the Congress.
  Let me cite essentially five questions and elaborate on them 
slightly.
  The first question that I believe should be asked is whether the 
energy policy, the one that the Vice President is going to advocate, or 
that any of us here are advocating, adequately recognizes the enormous 
differences between energy markets in the 1970s and 1980s and those 
that we face today.
  Back in the 1970s, there was a lot of talk about eliminating our 
dependency on foreign imports with increased domestic production 
through ``Project Independence.'' Electricity markets were local, 
electricity suppliers were largely confined within State boundaries and 
regulated by State public utility commissions. Because a State public 
utility commission could guarantee its utilities fixed rates of return 
on their investments in infrastructure, such as large nuclear power 
plants, there was a market for them.
  We now face a very different situation. Electricity markets have 
become regional, and increasingly they are beyond the ability of State 
public utility commissions to regulate. The nationwide electrical grid 
is being called upon to transmit large amounts of electrical power 
across enormous distances, something it was not really designed to do. 
State regulation of electricity has given way to a system that relies 
more on market forces, even though electricity markets are far from 
perfect ones. The old model of a protected and regulated monoply 
environment for utility investments in new generation has been 
transformed into a ``wild wild west'' of decentralized generation by a 
welter of new actors.
  No where do the changes in energy markets manifest themselves more 
clearly than in the situation facing energy infrastructure. Attempts to 
blame Federal environmental regulations for the difficulties of siting 
and building energy infrastructure are severely off the mark. The most 
serious obstacle to building new energy infrastructure has been not at 
the Federal level, though, but at the local level and in capital 
markets. For example, the Vice President and other Administration 
officials have often observed over the last several weeks that it has 
been 20 years since a large refinery has been built in the United 
States. But the main reason has not been the Clean Air Act. It has been 
the low rates of return on capital in the refining sector and the 
refining overcapacity that existed up to a few years ago. You are not 
going to build a new refinery when there are already too many to serve 
the market, and up until recently, that was the case.
  The need for energy infrastructure has provoked serious local concern 
and opposition. One example, which has been in the news, is the 
Longhorn pipeline from the Gulf Coast to El Paso, Texas. It has been 
tied up for nearly 5 years addressing community opposition to its 
construction. If the energy industry can't build pipelines in Texas, I 
don't think we should assume it will be any easier to build them 
anywhere else.
  The result of these factors--economic and local--have been cited at a 
hearing before the Energy and Natural Resources Committee last week by 
a witness from ExxonMobil, who testified that our largest U.S.-based 
oil company does not believe that any new refineries will be built in 
the United States. He predicted that the only additions to U.S. 
refining capacity would come from expansions at existing facilities. 
Expanding that capacity will not be easy regardless of federal 
policies. Most refineries are located in heavily industrialized areas 
with significant environmental issues regulated at the State and local 
levels of government.

  Instead of looking for ways to blame the Federal Government for an 
energy infrastructure problem which has not been of the Federal 
Government's making, I think we need to look for creative new ways to 
respond to the challenges of working with State and local communities 
on these siting issues. Effective mechanisms for greater regional 
cooperation are critical to ensure adequate infrastructure investments 
are made on a timely basis to meet energy demand. Coordinated regional 
efforts on energy infrastructure can reduce the impact on communities 
by optimizing infrastructure use and reducing price volatility.
  If the Vice President's energy policy recognizes this complex reality 
and starts to address it, then it will be helping the country to make a 
positive step forward. If the answer from the Vice President's study is 
simply to try to pit energy needs against environmental protection, 
then we won't be looking at a comprehensive and balanced energy policy.
  The second question to ask of the Vice President's comments this week 
is how this so-called energy policy that we are envisioning will 
connect planned actions related to energy with climate change policy.
  Science has been developed showing fairly clearly today that there is 
a connection between human activity and climate change. We may not be 
able to prove the exact amount of human causation in the global warming 
that we see, or to model its precise regional impacts. But we know 
enough now to realize that our ever-increasing emissions of greenhouse 
gases pose substantial risks both to critical and fragile ecosystems 
around the world and to future generations of humans. The world will 
have to deal with the issue, and the United States must be a leading 
contributor to negotiations on any international framework to address 
global warming. A leadership role for the United States is required not 
only because we are a major emitter of greenhouse gases, but also 
because we have the leading capability to harness science and 
technology both to understand climate change and to respond to it.
  We, as a country, need to have a climate change policy. We need to 
put in

[[Page S4236]]

place some actions to deal with this new science. One part of the 
positive contributions that the United States has made to international 
climate change negotiations has been our success in getting flexible, 
market-based mechanisms and recognition of carbon sinks incorporated 
into the developing international framework. U.S. industry, 
particularly in the energy sector, has indicated that these provisions 
are essential to holding down the eventual energy costs of responding 
to human- induced climate change. But without the United States as an 
active insider in the international negotiations, these important 
flexibility mechanisms will be lost. The decision of the new Bush 
administration to back away from the Kyoto protocol may doom the 
flexibility that we have won in the discussions to date. It could also 
spur other countries to erect new obstacles to American firms wishing 
to expand into international energy markets, in retaliation for the 
President's retreat on CO2.
  While negotiations on an international framework to address global 
warming continue for the next several years, our domestic industry will 
have to make significant investment decisions on new energy 
infrastructure. We have no domestic framework on greenhouse gas 
emissions that would guide or even inform these investment decisions. 
Addressing these issues up front would reduce business costs and risks. 
Maintaining our present course would increase the probability of future 
economic losses and waste in the energy sector.
  For these reasons, we need to integrate energy policy and climate 
change policy. They are inextricably linked--to do one is, by 
implication, to do the other. U.S. industry deserves to know how we are 
going to address greenhouse gas emissions before it invests billions of 
dollars in new energy infrastructure. If the Vice President's answer is 
that we will do energy policy now and worry about climate change later, 
then we don't have a truly comprehensive and balanced energy policy.
  Mr. President, I do not pretend to have the exact answer for what our 
global climate change policy should be, but I know we need to have one. 
We cannot continue to look the other way and pretend that the issue 
does not exist. So I look forward to seeing what the Vice President 
recommends in his energy recommendations and how it relates to this 
climate change issue.
  The third question is to ask what kind of balance is being made 
between increasing production and increasing efficiency. I know there 
has been some rhetoric in that connection to the effect there needs to 
be an adequate balance. I do not believe any of the concrete proposals 
I have seen coming out of the administration or suggested by people 
from the administration have in them the necessary balance. We know 
that the Vice President is all for increasing energy supplies, and most 
people would agree that increasing supply is one essential part of the 
big national energy picture. The Senate Democratic energy bill contains 
numerous measures to improve energy supplies across the entire 
spectrum--coal, oil and gas, renewables, and nuclear. The other 
essential part of the energy picture, though, is increasing efficiency. 
If we use energy more wisely to attain the same amount of economic 
output, we improve our economy and reduce the burden that energy 
infrastructure imposes on local communities.
  Since the 1970s, new technologies have increased our nation's 
productivity in many ways, including our use of energy. Technologies 
that increase energy efficiency have allowed the U.S. economy today, 
compared to 20 years ago, to produce the same output with 30 percent 
less energy. Even greater savings are possible in the future, with 
appropriate federal leadership.
  Consumers really benefit when they get goods and services at cheaper 
prices because less energy is required to produce them. With that in 
mind, I was surprised and saddened by the decision at the Department of 
Energy last month to roll back the proposed efficiency standard for new 
central air conditioning systems. The rationale given was that the 
higher standard wasn't cost effective. But the cost-benefit analysis 
Department of Energy relied upon used average electricity costs from 5 
years ago. It is surprising to see the administration, on the one hand, 
insist that this summer's high electricity costs in the West be passed 
along to consumers to control peak loads, while in the next breath 
state that its efficiency policies should be based on the lower 
electricity costs that prevailed 5 years ago in this country. And if 
the administration is really worried about the need to build 1300-1900 
new power plants, it should realize that its rollback of air-
conditioning standards just added 43 more big power plants to whatever 
number will be needed by 2020.

  Another area of energy efficiency that cannot be ignored is vehicle 
fuel efficiency. The Vice President has alluded to the dangers of our 
increasing dependence on imported oil. Yet that dependence is directly 
related to our increasing consumption of oil in the transportation 
sector. The only realistic solution to this problem is to couple 
efforts to increase domestic production with a concerted effort to 
reduce fuel use by light duty vehicles--cars, trucks and SUV's. 
Incentives for hybrid and high efficiency vehicles could be part of a 
more comprehensive program, but are not adequate by themselves. The 
Federal fleet, through its choice of vehicles, should be a leader in 
reversing this trend. All regulatory and non-regulatory mechanisms 
should be employed to stem demand growth to a level we can management 
as a society.
  If the Vice President's energy policy does not take a fresh look at 
the need to improve energy efficiency through forward-looking 
standards, then it is probably not a truly balanced and comprehensive 
energy strategy.
  A fourth question is to ask of the Vice President's energy policy--
and all of these policies floating around in Congress--is whether one 
of the greatest national resources we have in Ameria--that is, our 
capacity for scientific and technological innovation--is being 
stimulated and engaged to solve our energy problems. So far, the 
administration, in my view, at least, has failed badly on this score. 
The 2002 research and development budget proposed by the President for 
the Department of Energy contains severe cuts for a variety of advanced 
energy technologies, even in areas, like nuclear energy research, that 
one would expect would be favored by this administration. There has 
never been a time when increased investments in energy research and 
development were more needed, or showed more promise for solving some 
of our problems. I hope very much that will be changed in the 
deliberations that result in the task force's report. We need to be 
increasing these investments across the board--in coal, in nuclear, in 
renewables, in oil and gas, in energy efficiency, and in the basic 
science that underpins all of those. If the Vice President's energy 
policy does not dramatically turn around the cuts being proposed for 
both energy R&D at the Department of Energy, and find additional funds 
from outside the Department, then we don't have a truly comprehensive 
and balanced energy strategy.
  The PRESIDING OFFICER. The Senator has used his 10 minutes.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent I be yielded an 
additional 2 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  A final question I believe we all need to ask is whether the 
proposals address the pressing energy crises that are brewing for this 
summer and are going to be on the front page of every newspaper.
  California and western electricity issues: Problems in the West and 
projected troubles in other parts of the country--one example, of 
course, is New York City itself; where shortages are forecast for the 
summer, meaning that pressure to do something about electricity is 
mounting. As the market imperfections in California become more and 
more apparent, a pro-active role for the Federal Energy Regulatory 
Commission is increasingly indicated. I do believe we need to have 
action from the Federal Energy Regulatory Commission in the very near 
future. We should have acted before now to deal with those very real 
crisis situations around the country. To date, the response of FERC has 
been a disappointment. More effort has seemed to be expended on blaming 
California elected officials for their problems than on effectively 
policing the market. The Federal Government must play a key role

[[Page S4237]]

in promoting reliable electricity supplies through FERC and by ensuring 
wholesale markets are transparent and functioning efficiently.
  A second immediate issue that needs attention is the LIHEAP program, 
the Low Income Home Energy Assistance Program. High energy prices this 
past winter have left many working families unable to pay their heating 
bills and are having their utility service cutoff. The Senate has acted 
to increase the authorization for the Low Income Home Energy Assistance 
Program but the President's support and action is needed if we are 
going to put additional funds in this program. I hope it will be 
addressed by the Vice President's task force. Summer cooling bills will 
be arriving soon and the states have no funds left to help with those 
costs either.
  Fuel specifications is another issue. The President could act 
immediately to help sort out the welter of gasoline specifications 
around the country that has balkanized the fuel market and rendered 
regions highly vulnerable to shortages of gasoline if a piece of the 
local energy infrastructure goes down. We saw gasoline price spikes in 
the Midwest and West Coast last summer because of this problem, and we 
will likely have similar problems again this summer.
  If the Vice President's answer on these specific, pressing needs is 
that nothing much can be done about these problems this year, and that 
folks who are unfortunate enough to live in California, or folks who 
live in a region that is experiencing a gasoline price spike due to 
lack of availability of the right blend of gasoline, or working class 
families who cannot pay the high electricity bills for air 
conditioning, will just have to do without while we are working on some 
long-term energy fix, then we don't have a truly comprehensive and 
balanced energy strategy.
  In conclusion, there has been a lot of interaction within the 
administration, perhaps, on this issue, but there has not been 
interaction between the administration and the Congress, at least that 
I am aware of, on what the Vice President is getting ready to 
recommend. By contrast, the Senate is now engaged in discussing an 
education bill where we did have very intense bipartisan discussions 
with the administration and among ourselves. Energy, in my view, is 
important in this country, just as education is important. There are 
real opportunities for bipartisan progress on the issue of energy as 
well as in the area of education.
  I hope the administration sees this and puts away some of the hot 
button issues that are not likely to command support in the Senate, 
such as the opening of ANWR. They should put those away in favor of 
proposals that will command broad bipartisan support.
  In the end, that may be the strongest indication of whether the 
administration wants to pursue a consensus bipartisan energy policy 
which will serve the interests of the country.

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