[Congressional Record (Bound Edition), Volume 160 (2014), Part 3]
[Senate]
[Pages 4473-4474]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         ADDITIONAL STATEMENTS

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                           OUR ENERGY FUTURE

 Mr. ALEXANDER. Madam President, I ask that a copy of my 
remarks to the National Association of Regulatory Utility Commissioners 
be printed in the Record.
  The remarks follow.

        National Association of Regulatory Utility Commissioners

       Five years ago, all the talk in the United States was about 
     a cap-and-trade program and deliberately raising the price of 
     energy as a way of achieving clean energy independence. Two 
     years ago, I visited Germany--a country that has adopted such 
     a policy--and what I found was an energy mess.
       The Germans are subsidizing wind and solar, and closing 
     their nuclear plants--but because they are a big 
     manufacturing country they still need nuclear, coal and 
     natural gas for reliable electricity. So to meet those needs, 
     the Germans are buying nuclear power from France, and gas 
     from an unreliable partner, Russia. They're even building 
     their own new coal plants in order to have enough reliable 
     electricity.
       The end result of this bizarre policy is that Germany has 
     among the highest household electricity prices in the 
     European Union. When I asked an economic minister what he 
     would say to a manufacturer concerned about energy costs in 
     Germany, he said, ``I would suggest he go somewhere else.''
       This concern in Germany is spreading across Europe. A 
     recent headline in the New York Times reads ``Europe, Facing 
     Economic Pain, May Ease Climate Rules.'' The accompanying 
     article stated that ``the European Union proposed an end to 
     binding national targets for renewable energy production 
     after 2020.''
       Europeans may end some of their climate targets to avoid 
     throwing a big, wet regulatory blanket over their economies. 
     The point is: in a competitive world, energy policies have a 
     lot to do with a country's economic well-being.
       When you compare our country's energy needs with the 
     example of Germany, you can see that we are at a fork in the 
     road on our national energy policy. Which path we take will 
     help determine how well the United States competes in a 21st-
     century economy.
       The surest path toward cheap, clean, reliable energy is to 
     end Washington's obsession with wasteful energy subsidies and 
     to instead rely on free enterprise and government-sponsored 
     research.
       Or, we can take the path of Germany, which is where we are 
     headed if we continue to waste tax dollars on subsidies that 
     prop up one type of energy over another.
       In the United States today, production of electricity from 
     natural gas has grown to 28 percent of total production. This 
     is at the expense of coal, which is down to 39 percent. 
     Nuclear power holds relatively steady at 19 percent. Hydro is 
     7 percent. Wind, solar, biomass and geothermal make up only 6 
     percent, of which 4 percent is wind.
       In Washington and in state capitols, there are debates 
     about whether to push this 6 percent of electricity by 
     renewables to a much higher number by forcing a so-called 
     national renewable energy standard, or by further subsidizing 
     an energy source because it's deemed ``clean,'' or by 
     implementing carbon regulations even though Congress has 
     never approved carbon regulations. To avoid the path of 
     Germany and maintain our competiveness, I suggest four grand 
     principles for the United States' energy future: 1) cheaper, 
     not more expensive, energy; 2) clean, not just renewable, 
     energy; 3) research and development, not government mandates; 
     and 4) free market, not government picking ``winners and 
     losers.''
       The first step on the right path to our energy future--and 
     a prime example of how to apply these principles--is to not 
     extend the massive wind production tax credit that expired on 
     January 1. I believe energy companies basically should enjoy 
     the same tax benefits non-energy companies receive, which is 
     largely the case today with traditional forms of energy.
       I believe that through tax reform we should simplify the 
     tax code and eliminate most preferences for specific types of 
     energy production. This would save a lot of money, which 
     could be better spent on doubling energy research and 
     reducing the federal debt.
       The worst culprit for wasteful energy subsidies is Big 
     Wind. Under current law, the wind production tax credit will 
     have provided an estimated $22 billion to wind producers 
     between 1992 and 2022, according to the Congressional 
     Research Service. And that doesn't include the $12.9 billion 
     that wind received from President Obama's federal stimulus 
     bill.
       I've been fighting against this subsidy for years because I 
     think it is a bad deal for American taxpayers, a bad deal for 
     rate payers, and a bad deal for U.S. competitiveness. And if 
     we want to see what the result of those policies would be 
     let's look again at Germany, and other parts of Europe.
       Just last week energy expert Daniel Yergin wrote that one 
     of the biggest themes at this year's World Economic Forum in 
     Davos was ``competitiveness.'' ``This particular rivalry 
     [competitiveness] pits the United States head-on against 
     Europe,'' he said.
       Yergin says that energy is one way to measure 
     competitiveness, and that was the focus at Davos. He went on 
     to say, ``European industrial electricity prices are twice as 
     high as those in some countries and are much higher than 
     those in the United States. To a significant degree, this is 
     the result of a pell-mell push toward high-cost renewable 
     electricity (wind and solar), which is imposing heavy costs 
     on consumers and generating large fiscal burdens for 
     governments.'' A January 2014 New York Times article entitled 
     ``German Energy Official Sounds a Warning'' reports that, 
     ``The minister, Sigmar Gabriel, in his first major policy 
     speech, said at an annual energy conference organized by the 
     publication Handelsblatt in Berlin that annual consumer costs 
     for renewables of about 24 billion euros, or about $32.5 
     billion, were already pushing the limits of what the German 
     economy, Europe's most powerful, could handle.'' In a BBC 
     News article, ``Can Germany afford its energy bender' shift 
     to green power?'' a minister for economics in Germany says 
     that

[[Page 4474]]

     Germany's ``law on renewable energy will not only lead to 
     increased electricity prices, but it is also a non-market, 
     planned system that endangers the industrial base of'' the 
     German economy.
       This doesn't sound like the path down which America should 
     go to build a 21st-century economy. And yet, forces in 
     Congress are preparing to renew the expired wind subsidy and 
     continue to take us down the path that's currently causing 
     problems in Germany. The problem here is not being ``for or 
     against renewable'' energy or just wasting taxpayers' tax 
     dollars. The problem is that these huge subsidies are 
     propping up renewable energy at the expense of reliable 
     energy. In the case of wind, this increases the occurrence of 
     negative pricing.
       Government subsidies are so generous that in some markets 
     wind developers can give away electricity and still make a 
     profit. Such negative pricing rewards expensive, unreliable 
     power like wind and undercuts and punishes cheap, reliable 
     power from nuclear and coal plants. This is a growing problem 
     in the U.S. The more wind we subsidize and the more we build, 
     the bigger the problem becomes. For a snapshot of where we 
     are going, let's take another look at Europe.
       A Wall Street Journal opinion piece by Rupert Darwall 
     entitled ``Europe's Stark Renewables Lesson'' reports that 
     ``the European Commission acknowledges that, because member 
     states over-incentivized investment in renewables, they 
     compounded the challenges'' posed by non-dispatchable 
     electricity generation like wind.
       The same threat applies to some markets here in the U.S., 
     according to the Center for Strategic and International 
     Studies. Negative pricing' caused by wind power tied to 
     energy subsidies undercuts the operation of nuclear plants 
     and could contribute to closing as many as 25 percent of our 
     nuclear plants by 2020.
       So, these subsidies are putting at risk our largest source 
     of clean, cheap, reliable electricity--nuclear--and more 
     importantly, putting at risk energy diversity.
       This audience understands more than most the importance of 
     energy diversity to help reduce price spikes and have a more 
     reliable grid.
       The recent polar vortex cold wave reminded us of the 
     importance of diversity. When natural gas prices spiked, and 
     demand was unusually high, nuclear and coal generations saved 
     the day. You can't put a price on diversity, but when you 
     need the lights to come on and the heater to kick in, 
     diversity can be lifesaving, and wind subsidies are 
     threatening that.
       We need to go down a path to cheap, clean, reliable 
     electricity.
       That path would provide a pro-growth, pro-jobs energy 
     policy that puts us more firmly on the path toward a 
     competitive future and protects households and business 
     across the country, especially during extreme conditions.
       To start, the best way to achieve cheap, clean, reliable 
     energy is through market-driven solutions. Some will say, 
     well what about oil and gas, what about nuclear subsidies? 
     The president in his State of the Union address called for an 
     end to tax policy that gives ``$4 billion a year to fossil 
     fuel industries.'' To begin with, fossil fuels contribute 67 
     percent of our electricity. ``Big Wind'' received $1.4 
     billion through the wind production tax credit last year but 
     only produces 4 percent of America's electricity.
       The president often likes to cite the billions of dollars 
     in subsidies for the oil and gas industry. But here's the 
     catch: many of these ``Big Oil'' subsidies the president 
     likes to highlight are the same or similar to tax provisions 
     that benefit other industries.
       For example, Xerox, Microsoft and Caterpillar all benefit 
     from tax provisions like the manufacturing tax credit, 
     amortization, or depreciation of used equipment that the 
     president is counting as ``Big Oil'' subsidies. And, of 
     course, wind energy companies also benefit from many similar 
     tax provisions--but the production tax credit for wind is in 
     addition to regular tax code provisions that benefit many 
     companies.
       We should end wasteful, long-term special tax breaks, both 
     for ``Big Oil'' and ``Big Wind.'' We should use the money we 
     save from ending wasteful subsidies to reduce the federal 
     debt and double energy research. Then we can let the free 
     market determine the course forward, rather than the 
     government picking ``winners and losers.''
       In addition to supporting research, I believe it is 
     appropriate for the government to jumpstart new technologies 
     to allow time for the free enterprise system to take the 
     reins, but these should be narrowly defined and temporary.
       For example: Unconventional gas benefited from government 
     research and a temporary tax credit--that expired in 1992. 
     The full tax credit for plug-in electric cars was capped at 
     200,000 vehicles per manufacturer. The government provided 
     research and licensing support for small modular reactors--
     but that ends after five years. There is a production tax 
     credit for nuclear power plants but it's limited to 6,000 
     megawatts.
       On the other hand, we have the temporary wind production 
     tax credit that was enacted in 1992 to jumpstart an industry, 
     and according to the Congressional Research Service will cost 
     taxpayers a total of $22 billion from 1992 through 2022. The 
     most recent one-year extension--which gives wind developers 
     10 years of subsidies--would cost $12 billion over 10 years, 
     according to the Joint Committee on Taxation. This is for 
     what President Obama's former energy secretary called a 
     ``mature technology'' that produces only 4 percent of our 
     electricity and only works when the wind blows.
       President Reagan used to say ``the nearest thing to eternal 
     life we'll ever see on this Earth is a government program'' 
     and that's too often the case with energy subsidies. The most 
     glaring example is the more than 20-year-old subsidy for wind 
     power, a technology that has matured. The United States uses 
     20 percent of all the electricity produced in the world for 
     our computers, our businesses, our homes and our national 
     defense. To rely on unreliable wind power when nuclear, coal 
     and natural gas are available is the energy equivalent of 
     going to war in sailboats. Those who oppose the path I am 
     suggesting like to say that nuclear and coal aren't clean 
     forms of electricity.
       While this path isn't without its challenges, I'll take 
     that argument on. Nuclear power is our largest source of air-
     pollution-free electricity, 60 percent. Then people opposing 
     nuclear power will say, ``what about the waste?'' This is an 
     issue of great concern to many of you. To address this 
     challenge, I have cosponsored legislation with Senators 
     Wyden, Murkowski and Feinstein that would implement the 
     recommendations of the Blue Ribbon Commission on America's 
     Nuclear Future.
       The bill would create a new federal agency to oversee the 
     nuclear waste program, and ensure that progress on 
     consolidated storage sites and repositories moves along 
     parallel tracks. The federal government should not be 
     collecting fees without keeping its promise to dispose of the 
     nuclear waste now sitting in your states. The D.C. Court of 
     Appeals opinion in your case has made this point clear.
       The Senate Energy and Natural Resources Committee has held 
     two hearings on the legislation, and we are working toward 
     having the committee hold a markup and favorably report the 
     bill so it can move to the Senate floor.
       We know how to control mercury, smog and soot, and many 
     utilities are leading the way in installing these 
     technologies, including the Tennessee Valley Authority.
       So in order to burn coal in a clean way, the only remaining 
     obstacle is carbon emissions from coal plants. The best way 
     to solve that problem is not through a cap-and-trade system, 
     which would raise prices, but instead through research and 
     development, which could lower them. Finding a way to capture 
     carbon from coal plants and turn it into a product that can 
     be sold is the Holy Grail of energy research--and we are 
     working on solutions that will do just that.
       ARPA-E, a small energy research agency, is working with 
     private companies to take the carbon from coal plants and 
     feed it to microbes that with electricity can produce liquid 
     transportation fuels. Such a solution might even make coal 
     cheaper than it is today.
       When you think about it that way, this crossroads I'm 
     talking about--this fork in the road between clean, cheap, 
     reliable energy and the mess of Germany and other European 
     countries--is not just a challenge, but an opportunity.
       It's true that our energy needs are great, and that there 
     are obstacles to meeting them. But we also have an 
     opportunity to get Washington out of the way and to liberate 
     our free enterprise system. If we do, the path toward cheap, 
     clean, reliable energy is full of possibility.

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