DEMS Fail To End Oil Subsidies; GOP Fails In Call For More Drilling

May 17: As expected, the Senate Democrats' effort to end the tax subsidies for the five big oil companies -- the Close Big Oil Tax Loopholes Act, S. 940 -- was defeated by a 52-48 vote due to the Senate rule that required a 60-vote majority to move the bill forward [See WIMS 5/17/11]. Two Republicans, Snowe (R-ME) and Collins (R-ME) voted with the Democrats; while three Democrats -- Begich (D-AK), Landrieu (D-LA) & Nelson (D-NE) -- voted with Republicans to defeat the measure.

    Senator Majority Leader Harry Reid (D-NV) issued a brief statement saying, "Republicans would rather cut college scholarships, slash cancer research and end Medicare than take away taxpayer-funded giveaways to oil companies that are raking in billions in profits. That tells you everything you need to know about their priorities. We could have cut our deficit by $20 billion today, but Republicans defended oil companies instead. This is exactly the kind of wasteful spending we should be cutting. Democrats are not going to stop trying to end these wasteful taxpayer giveaways. I hope next time my Republican colleagues will put America's seniors, students and middle-class families ahead of oil companies."

 

    The White House Press Secretary issued a statement following the vote saying, "It is disappointing that at a time when oil companies are posting near record profits, Republican Leadership in the Senate led an effort to protect billions of dollars in tax breaks for the oil and gas industry that even oil and gas CEO's in the past have admitted are unwarranted and unnecessary. The bottom line is that there are more responsible ways to spend tens of billions of federal dollars, including investments that will help protect American consumers from high gas prices. The vote today -- with support from over half the U.S. Senate -- is an important step towards repealing these unwarranted subsidies for the oil and gas industry. The Administration will continue to pursue this important reform."

 

    Democrats indicated the battle over ending oil company subsidies was not over and vowed to make it part of the upcoming debate over raising the U.S. debt ceiling. Senator Robert Menendez (D-NJ)the sponsor of S.940 said following the vote, "A bipartisan majority of the Senate has spoken. If we are going to reach a deal on raising the debt ceiling, cutting wasteful oil subsidies needs to be on the table. We cannot reduce the deficits on the backs of working class Americans alone.  Even the most wealthy and powerful among us must pay their fair share."

 

    Senate Republican Leader Mitch McConnell (R-KY) delivered a speech on the Senate floor this morning discussing the vote on S.940 last evening and in support of the upcoming vote this afternoon on S.953, the Offshore Production & Safety Act of 2011, which he sponsored with 22 cosponsors. Like the Democrats' bill, the Republican bill was also defeated for a lack of 60 votes. The final vote on the bill, which was just completed at about 2:55 PM today was 42-57. The details of the roll call vote will be posted in about an hour (see link below).

 

    Sen. McConnell said, "Last night, Senate Democrats put forth a plan to raise taxes on American energy that, in their own words, would have done nothing to lower the price of gas at the pump. As the Chairman of the Finance Committee put it, `That's not the issue.' Well, I think that for most Americans high gas prices actually is the issue. . . Americans are struggling. My constituents in Kentucky are hurting. They want relief. And all they're getting from Democrats in Washington is a dog and pony show. . .

    "They spent a week vilifying the energy industry and another week trying to punish them. The legislation they proposed yesterday would have done three things: destroy jobs, send American jobs overseas, make us more dependent on foreign sources of oil. And Democrats themselves admit it wouldn't lower gas prices by a penny. . . I would suggest that Democrats spend a little bit more time looking at the price of gas at their local gas stations than at the latest polling numbers about class warfare rhetoric. . .

    "Our plan has three objectives: "First, to restore American offshore production. Second, to improve safety. Third, to require bureaucrats in Washington to get to work on the permitting process, to make a decision one way or the other. And it would have three corresponding effects: First, and most importantly, our plan would help reduce the price of gas at the pump. By unlocking our own domestic resources, and speeding up the permitting process, our plan would actually do something to increase supply, putting downward pressure on price. . . And it would create thousands of energy jobs in America, instead of sending them overseas, which is why this bill has the support of both the National Association of Manufacturers and the U.S. Chamber of Commerce. . ."

    Senator McConnell said that S.953 would directs the Secretary of the Interior to conduct previously scheduled offshore lease sales in the Western and Central Gulf of Mexico, Virginia, and Alaska. In addition, the plan will extend lease terms by one year for Gulf leases which were suspended under the 2010 Obama Moratorium. The bill establishes a public/private task force on oil spill response and mitigation, and orders a study on Federal response to oil spills by the Comptroller General to examine capabilities and legal authorities related to spill prevention and response to clarify appropriate Federal roles. Finally, the bill puts time limits on the review of and decision on drilling permits, providing for 30 days of application review with two opportunities for the Interior Department to extend the time period. Beyond that, it provides for default approval if Interior doesn't reject the application within 60 days. Additionally, it directs the Interior Department to provide rationale for rejection of permits.

    Access the roll call vote for S.940 (click here). Access the statement from Sen. Reid (click here). Access the statement from the White House (click here). Access the statement from Sen. Menendez (click here). Access the statement from Sen. McConnell (click here). Access the roll call vote for S.953 (click here, posted soon). Access legislative details for S.940 (click here). Access legislative details for S.953 (click here). [*Energy/Tax]

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Senate Attempt To Eliminate Big Oil Subsidies Defeated

6:50 PM: The Senate vote on S.940 to eliminate big oil tax subsidies was defeated on a vote of 52-48. 60 votes were necessary to move the item forward. Roll call vote should be posted soon (click here).

Senate Showdown On Big Oil Tax Subsidies Today

May 17: The showdown on big oil tax subsidies is scheduled to take place in the U.S. Senate this evening as Senators prepare to vote on the Close Big Oil Tax Loopholes Act, S. 940 -- legislation that would eliminate $21 billion of tax loopholes over the next decade for the five largest oil companies. On May 10, a group of Democratic Senators, led by Senator Robert Menendez (D-NJ), announced the legislation which they said would "finally put an end to the unfair tax subsidies that only benefit Big Oil's bottom line and CEOs." [See WIMS 5/10/11]. The bill proposes to use the $21 billion over 10 years in savings realized to be applied to deficit reduction.

 

    The call for ending the subsidies and the legislation have caused intense debate between Democrats and Republicans, as well as between industry and environmental groups over the last several weeks. On April 30, President Obama used his weekly address to call for an end to at least $4 billion annually in taxpayer subsidies to oil and gas companies. He said, "we can afford to do without, these tax giveaways aren't right. They aren't smart. And we need to end them. . ." [See WIMS 5/2/11]. House and Senate Republican leaders have indicated there complete disagreement, calling the proposal an energy tax increase, and said they will not vote to end the subsidies [See WIMS 4/29/11].

 

    On May 12, the Senate Committee on Finance, Chaired by Max Baucus (D-MT) with Ranking Member Orrin Hatch (R-UT) held a hearing on Oil and Gas Tax Incentives and Rising Energy Prices and heard testimony from the CEO's of the Big Oil companies --BP, Exxon, Shell, Chevron, and ConocoPhillips [See WIMS 5/12/11]. The CEO's testified that, "More domestic supply, along with aggressive measures to use energy more wisely, is one of the most effective ways to counter rising energy prices, enhance our energy security and stimulate economic growth. Tax increases on the oil and gas industry – which will result if you change long-standing provisions in the U.S. tax code – will hinder development of energy supplies needed to moderate rising energy prices. It will also mean fewer dollars to state and federal treasuries…and fewer jobs -- all at a time when our economic recovery remains fragile and America needs all three." They said the tax changes under consideration are "misinformed and discriminatory" will "discourage future investment" will "undercut job creation and economic growth" and would "do nothing to help reduce prices."

 

    On May 13, the U.S. Congress Joint Economic Committee, Chaired by Senator Bob Casey (D-PA) released a 9-page report entitled, End Tax Breaks For Big Oil: Reduce the Federal Deficit Without Increasing Prices At The Pump. According to the report, "Critics of repealing these subsidies argue that the targeted tax breaks spur production and lower energy prices. In reality, most of the so‐called incentives have no impact on near‐term production decisions, and thus repealing them would have no effect on consumer energy prices in the immediate future. Even in the longer term, the current proposed changes to these tax provisions would have little impact on global production and a negligible effect on consumer energy prices. More importantly, these subsidies failed to prevent spikes in the price of gasoline, such as the spike that occurred in 2007‐08. At the same time, these tax breaks may have discouraged investment in other industries, including alternative energy sources or energy efficiency, by distorting the effective tax rate on investments in oil and natural gas."

 

    The American Petroleum Institute (API) Vice President of Regulatory and Economic Policy Kyle Isakower criticized the study and said, "This study was neither accurate nor insightful. Annually raising taxes on the industry by billions of dollars would reduce investment in American oil and natural gas development, cost thousands of U.S. jobs, and, over time, reduce both energy production and the taxes and royalties generated from it. It would also increase imports. We wouldn't reduce the deficit, and necessary government investments could be adversely affected. Those advocating tax increases, therefore, would be cutting off their nose to spite their face."

 

    Meanwhile, the Republican staff of the Joint Economic Committee released a study yesterday (May 16) saying, "A weak U.S. dollar due to the Federal Reserve's unprecedented pumping of dollars into the American economy is adding 56 and a half cents* to the price of every gallon of gasoline, according to a new study by the Joint Economic Committee Republican staff. Titled The Price of Oil and the Value of the Dollar, the study notes the value of the U.S. dollar has declined 14 percent since the Federal Reserve began its program of quantitative easing in November of 2008. With oil an international commodity that trades in U.S. dollars, the declining value of the dollar has added $17.04 per barrel to the price of Brent Crude oil. Crude oil is the primary input in the process of making gasoline.

 

    In advance of the expected vote today, Senate Democrats released a video and a series of statements from Republican Senators from the past few years showing their previous support for repealing subsidies for oil companies. Among the statements are: Senator Snowe (R-ME), "Snowe: Subsidies Are "Unnecessary" And "Reckless"; Senator Thune (R-SD), "If In Fact They Are Making Such Enormous Profit, Perhaps They Don't Need The Support Of The Tax Incentives That Are Given To Them By The American Taxpayer"; Senator Collins (R-ME), We Should Not "Continue to Subsidize The Oil And Gas Industry."

   

    Yesterday on the Senate floor, Majority Leader Harry Reid (D-NV) said, ""The bonus checks taxpayers are writing to Big Oil are absurd and obscene. They defy common sense. Big Oil isn't hurting. It doesn't need a hand. In the first three months of this year, the oil industry made $36 billion in profits alone. Not revenues -- profits. That's $12 billion a month.  That's $3 billion a week.  That's pretty good money. Meanwhile, the American taxpayer is giving these same successful companies $4 billion a year. . . The people who want to keep giving their Big Oil buddies four billion taxpayer dollars a year are the same ones who want to take the social safety net away from the sick, seniors and the poor. These people kick and scream about investing in cancer research, or protecting student loans that help so many afford the rising costs of college. But ask them to recognize the absurdity of giving Big Oil taxpayer money it doesn't need, and they cover their eyes and plug their ears. . ."

 

    Today, Senate Republican Leader Mitch McConnell (R-KY) responded to the Democrats with his own floor statement. He said, "Instead of actually doing something about high gas prices, our Democratic friends staged what one of my Republicans colleagues accurately described as a dog and pony show [referring to the Senate hearing with big oil CEOs]. They rounded up what they believed were a few unsympathetic villains who they could blame for high gas prices, hoping nobody would notice they don't have a plan of their own to deal with them. . . Blame this crisis on somebody else -- and then see if they can't raise taxes while they're at it. . . symbolic votes like this that aim to do nothing but pit people against each other will only frustrate the public even more. "Americans aren't interested in scapegoats. They just want to pay less to fill up their cars. . . Over the past two years, the President has mounted nothing short of a war on American energy, cancelling dozens of leases, imposing a moratorium off the Gulf Coast, arbitrarily extending public comment periods, and increasing permit fees. On the crucial issue of permits, the administration has held them up in Alaska, the Rocky Mountain West, and particularly offshore. . ."

 

    Because Senate Republicans threatened to conduct a "silent-filibuster" if Senator Reid attempted to bring the bill to the floor, he filed a cloture motion on Monday evening on the legislation, which means it could come to a vote at 6:15 PM. Insiders do not expect the bill to get the required 60 votes to pass. Most Republicans and some Democrats including Senator Mary Landrieu (D-LA), are opposed to the bill. In a May 11, floor speech Sen. Landrieu indicated she was strongly opposed to the Menendez and said, "Of the $16.6 billion spent on U.S. energy subsidies over the course of one year, fuels such as renewables, refined coal nuclear, solar and hydro account for more than 85%. You would think, because of this bill, that the big oil and gas companies are getting all the subsidies, making all the profits, paying no taxes, and the rest are suffering. Nothing could be further from the truth. So, why are we doing it? Will it create jobs? No."

 

    Access legislative details for S.940 (click here). Access the complete Democratic Economic Committee report (click here). Access the API release on the study (click here). Access the complete Republican Economic Committee report (click here). Access the Senate Democrats release on previous Republican statements (click here). Access the floor statement from Sen. Reid (click here). Access the floor statement from Sen. McConnell (click here). Access the statement from Senator Landrieu (click here). Access a lengthy analysis of big oil tax subsidy issue from the Center for American Progress (click here).[*Energy/Tax]

 

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Blue Ribbon Commission Draft Recommendations On Nuclear Energy

May 13: The President's Blue Ribbon Commission (BRC) on America's Nuclear Future held a day-long meeting in Washington, DC, and released its draft recommendations from subcommittees on: Reactor & Fuel Cycle Technology; Disposal of Nuclear Waste; and Transportation and Storage of Nuclear Waste. The actions follows last week's May 10 release of the Government Accountability Office's (GAO's) 80-page report entitled, Commercial Nuclear Waste: Effects of a Termination of the Yucca Mountain Repository Program and Lessons Learned (GAO-11-229, April 08, 2011) [See WIMS 5/11/11], and recent Congressional investigations and debates between Republicans and Democrats on nuclear energy and nuclear waste disposal [See WIMS 5/5/11].

 

    The BRC was established in accordance with the provisions of the Federal Advisory Committee Act (FACA), and as directed by the President's Memorandum for the Secretary of Energy dated January 29, 2010: Blue Ribbon Commission on America's Nuclear Future. The Commission is organized under the authority of the U.S. Department of Energy (DOE). The draft recommendations respond to questions presented to the three subcommittees. The BRC was co-chaired by: Lee Hamilton, former Democratic U.S. Representative from Indiana from January 1965-January 1999; and, Brent Scowcroft, a Republican who served as the National Security Advisor to both Presidents Gerald Ford and George H.W. Bush. Thirteen additional members included former Senators Chuck Hagel (R-NE); and Pete Domenici (R-NM) and long-time chair of the Senate Energy & Natural Resources Committee; John Rowe, CEO of Exelon Corporation; MIT Physics Professor Ernie Moniz and others.

 

    The Technology subcommittee addressed the question: "to evaluate existing fuel cycle technologies and R&D programs in terms of multiple criteria. Criteria for evaluation should include cost, safety, resource utilization and sustainability, and the promotion of nuclear nonproliferation and counterterrorism goals; and will any of the technologies "have the potential to change the fundamental nature of the nuclear waste management challenge we confront over the next several decades." The draft recommendations indicate that the, "technologies may hold promise for achieving substantial benefits," research should continue, but, "No currently available or reasonably foreseeable reactor and fuel cycle technologies including current or potential reprocess or recycle technologies have the potential to fundamentally alter the waste management challenge this nation confronts over at least the next several decades."

    The Transportation subcommittee addressed the question: "Should the United States change its approach to storing and transporting spent nuclear fuel (SNF) and high-level radioactive waste, while one or more permanent disposal facilities are established?" The draft recommendations indicate that, "The United States should proceed expeditiously to establish one or more consolidated interim storage facilities as part of an integrated, comprehensive plan for managing the back end of the nuclear fuel cycle" and, "there do not appear to be unmanageable safety or security risks associated with current methods of storage at existing sites."

 

    The Disposal subcommittee addressed the question: "How can the United States go about establishing one or more facilities for permanently disposing of high-level nuclear wastes in a manner and within a timeframe that is technically, socially, economically, and politically acceptable?" The draft recommendations indicate in part that, "The United States should proceed expeditiously to

develop one or more permanent deep geological facilities for the safe disposal of high-level nuclear waste. Permanent disposal is needed under all reasonably foreseeable scenarios. Geologic disposal in a mined repository is the most promising and technically accepted option available for safely isolating high-level nuclear wastes for very long periods of time."

 

    Additionally, the Disposal subcommittee recommended, "A new, single-purpose organization is needed to develop and implement a focused, integrated program for the transportation, storage and disposal of nuclear waste in the United States. . . siting processes for all such facilities are most likely to succeed if they are: (1) consent-based; (2) transparent; (3) phased; (4) adaptive; and (5) standards- and science-based." The subcommittee also said that the Nuclear Waste Technical Review Board "should be retained as a valuable source of independent technical advice and review."

 

    Even before the draft recommendations were officially released, they received immediate, harsh criticisms from Republicans. House Energy and Commerce Committee leaders expressed what they said was "disbelief with reports that the Obama administration's blue ribbon commission on nuclear waste disposal is set to recommend taxpayers fund a new search for temporary storage – despite 30 years of research and billions of dollars already spent on a permanent storage site buried deep within Yucca Mountain." They cited advance media reports which indicated that the scope of the panel's review which they said "did not allow for the consideration of Yucca as an option."

 

    Full Committee Chairman Fred Upton (R-MI) and Environment and the Economy Subcommittee Chairman John Shimkus (R-IL) who are conducting their own investigation into the Administration's termination of the Yucca repository said that "already, facts have come to light revealing significant internal legal and policy dissent within the Nuclear Regulatory Commission (NRC) about the administration's decision." Representatives Upton and Shimkus said, "The Obama administration's blue ribbon panel is nothing short of a smokescreen -- we already have a long-term, visionary plan for permanent storage in Yucca Mountain. It is unconscionable for the Obama administration to squander three decades of bipartisan collaboration, breakthrough scientific research, and billions of taxpayer dollars, all for what the GAO has determined to be political calculations. This administration should be listening to the nuclear scientists, not political scientists, on matters as serious as our nuclear future. Nuclear safety is a matter of national security, and political motives cannot be allowed to jeopardize the investments and expertise gathered over the course of decades." 

 

    Access the meeting materials, recommendations and a webcast Access (click here). Access complete background on the BRC including all meetings, background papers, correspondence, comments and more (click here). Access the release and links to more information from the House Energy and Commerce Committee (click here). [*Energy/Nuclear, *Haz/Nuclear, *Haz/Transport]

NAS Warns "Risk Of Dangerous Climate Change Impacts Is Growing"

May 12: As Congress continues to engaged in divisive debates on EPA's authority to address climate change and whether the basic science of global warming is a hoax, the National Academy of Sciences (NAS), National Research Council (NRC) reiterated "the pressing need for substantial action to limit the magnitude of climate change and to prepare to adapt to its impacts." The nation's premiere science institution warned that "the risk of dangerous climate change impacts is growing with every ton of greenhouse gases emitted into the atmosphere."

 

    The nation's options for responding to the risks posed by climate change are analyzed in a new report and the final volume in America's Climate Choices, a series of studies requested by Congress. The committee that authored the report included not only renowned scientists and engineers but also economists, business leaders, an ex-governor, a former congressman, and other policy experts. Committee chair Albert Carnesale, chancellor emeritus and professor, University of California, Los Angeles said, "The goal of the America's Climate Choices studies is to ensure that climate decisions are informed by the best possible scientific knowledge, analysis, and advice, both now and in the future."

 

    The final report reaffirms that "the preponderance of scientific evidence points to human activities -- especially the release of carbon dioxide and other greenhouse gases into the atmosphere -- as the most likely cause for most of the global warming that has occurred over the last several decades. This trend cannot be explained by natural factors such as internal climate variability or changes in incoming energy from the sun. The report adds that the impacts of climate change on human and natural systems can generally be expected to intensify with warming."

 

    According to the report, while it recognized that climate change is inherently a global issue requiring an international response, the committee focused on the charge from Congress to identify steps and strategies that U.S. decision makers could adopt now.  According to a release, the report says, "A coordinated national response to climate change, which the country currently lacks, is needed and should be guided by an iterative risk management framework in which actions taken can be revised as new knowledge is gained." Committee vice chair William Chameides, dean of the Nicholas School of the Environment, Duke University, Durham, NC said, "America's response to climate change is ultimately about making choices in the face of risk. Risk management strategies must be durable enough to promote sustained progress yet sufficiently flexible to take advantage of new knowledge and technologies."

 

    According to the Committee, "Substantial reductions of greenhouse gas emissions should be among the highest priorities in the national response." Although the exact magnitude and speed of reductions will depend on how much risk society deems acceptable, "it would be imprudent to delay taking action." The Committee cited many reasons for not waiting, including that the faster emissions are reduced, the lower the risks. And because the effects of greenhouse gases can take decades to manifest and then persist for hundreds or even thousands of years, "waiting for impacts to occur before taking action will likely be too late for meaningful mitigation. Beginning emissions reductions soon will also lower the pressure to make steeper and costlier cuts later."  Carnesale said, "It is our judgment that the most effective strategy is to begin ramping down emissions as soon as possible."

 

    The Committee said, state and local efforts currently under way or being initiated to reduce greenhouse gas emissions are "potentially quite significant but unlikely to yield outcomes comparable to what could be achieved with a strong federal effort." It said the most efficient way to accelerate emissions reductions is through "a nationally uniform price on greenhouse gas emissions with a price trajectory sufficient to spur investments in energy efficiency and low-carbon technologies. Having such policies in place is crucial to guide investments in energy infrastructure that will largely determine the direction of greenhouse gas emissions for decades to come."

 

    The Committee deemed the risks of sticking to "business as usual" to be a much greater concern than the risks associated with a strong response. They said, "Most policy responses could be reversed if they prove to be more stringent than is needed, but adverse changes to the climate system are difficult or impossible to undo." It also said that "uncertainty in projecting the severity, location, or time of climate change impacts is not a reason for inaction. On the contrary, uncertainty about future risks could be a compelling reason for taking action given that abrupt, unanticipated, or more severe impacts could occur."

                                   

    The committee emphasized that, aggressive cuts in greenhouse gas emissions would reduce the need for adaptation but not eliminate it and urged the nation to mobilize now to reduce vulnerability to climate change impacts. While adaptation planning largely occurs at the state and local level, the Federal government should help coordinate these efforts and develop a national adaptation strategy.

 

    In addition, they said the Federal government should maintain an integrated portfolio of research programs aimed at increasing understanding of the causes and consequences of climate change and developing tools to limit climate change and adapt to its impacts. The government also needs to take the lead in collecting and sharing climate change information to ensure that pertinent knowledge is used to inform decisions. Public and private sector engagement through broad-based deliberative processes is essential as well. These processes should include transparent analyses of climate change information, an explicit discussion of uncertainties, and consideration of how decisions will be affected by differing personal values.

 

    The Committee said, "Because emissions reductions in the U.S. alone will not be adequate to avert dangerous climate change risks, U.S. leadership needs to remain actively engaged in international climate change response efforts. If the U.S. pursues strong emission reduction efforts, it will be better positioned to influence other countries to do the same. Given that climate change impacts elsewhere in the world may affect U.S. interests, it would also be prudent to help enhance the adaptive capacity of other nations, particularly developing countries."

                       

    The final report in the series builds upon the four previous America's Climate Choices panel reports: Advancing the Science of Climate Change; Limiting the Magnitude of Future Climate Change; Adapting to the Impacts of Climate Change; and Informing an Effective Response to Climate Change. The America's Climate Choices studies were sponsored by NOAA.

 

    Jennifer Morgan, director of the Climate and Energy Program, World Resources Institute (WRI) said, "This report, from one of America's leading scientific institutions, provides another stark reminder of the increasing risks associated with human-caused climate change. The report delivers a clear message that the federal government should take an active role in managing these very serious risks. We need policies to reduce greenhouse gas emissions, as we advance adaptation measures and develop technologies to respond to the changing world. We don't wait for the flood to arrive or the fire to spark before we buy insurance. The same should be true for climate change."

 

    Access a release from NAS (click here). Access the complete 144-page report and links to the previous reports, summaries and videos (click here). Access a release from WRI (click here) [*Climate]

House Passes Two More Bills On Offshore Drilling

Note: This posting was originally published on May 12, 2011, but was somehow deleted by Blogspot.com.

 

May 12: House Speaker John Boehner (R-OH) issued a statement praising the House for passing what he called two pieces of the Republican "American Energy Initiative" -- the Putting the Gulf Back to Work Act (H.R.1229) and the Reversing President Obama's Offshore Moratorium Act (H.R.1231). He said each bill is designed to address rising gas prices and create new American jobs.

    Speaker Boehner said, "This week, the House took another two steps in our effort to expand American energy production to help lower gas prices and create new jobs. These bills -- part of our ongoing American Energy Initiative -- will end the Obama Administration's de facto moratorium on offshore energy production, help put thousands of Americans back to work, and reduce our dependence on foreign energy. On the other side of the Capitol, Senate Democrats debated a tax hike backed by the White House that some in their own party admit 'won't lower gasoline prices by one penny.' Republicans are focused on solutions that create a better environment for private-sector job growth and provide much-needed relief to families and small businesses struggling with high prices at the gas pump. Raising taxes and imposing new barriers to job growth will do neither; increasing the supply of American energy and stopping policies that drive up prices will."

    Other pieces of the House Republican plan which have been approved by the full House include: the Restarting American Offshore Leasing Now Act (H.R.1230), passed last week, which the Speaker said will "help address soaring gas prices and create new jobs by moving forward on energy projects the Obama Administration has either delayed or canceled." Additionally, in April, the House approved the Energy Tax Prevention Act (H.R.910), aimed at "stopping the EPA from unilaterally imposing a job-crushing 'cap and trade' national energy tax." H.R.910, was essentially the same as a McConnell Amdt. No. 183 to S.493 which failed to pass the Senate by a vote of 50-50.  

    H.R.1229, sponsored by House Committee on Natural Resources Chairman, Representative Doc Hastings (R-WA) had 70 cosponsors and passed by a vote of 263-163, with 163 Democrats voting no and 28 voting for the bill. Rep. Hastings said, ""This bill will provide relief to the people of the Gulf of Mexico by allowing them to finally return to work following the Obama Administration's intentional slow-walking of drilling permits. With passage of this bill, House Republicans are sending a strong signal that we will not sit idly by while the Obama Administration sidelines American workers, sends American jobs overseas and continues to lock-up our American energy resources at a time of rising gasoline prices. I applaud the House for passing the Putting the Gulf back to Work Act and hope the Senate follows our lead to ease the economic pain in the Gulf of Mexico and help reduce gasoline prices across the country."

    H.R.1231, also sponsored by Rep. Hastings had 69 cosponsors and passed by a vote of 243-179, with 170 Democrats and 9 Republicans voting no and 21 Democrats voting for the bill. Rep. Hastings said, "A bipartisan majority of the House recognized the job creating potential of developing new American offshore energy. With unemployment at or near 9 percent for almost three years, Americans need good, high paying jobs to support their families, which is why H.R. 1231 will create 1.2 million new jobs around the country. Make no mistake, this is just as much of a job creating bill as it is an energy creating bill. The positive economic impacts of 1.2 million jobs and an additional 3 million barrels per day of American oil production will make a very real difference."

    Frances Beinecke, Natural Resources Defense Council (NRDC) president and a former member of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, issued a statement on the Republican bills saying, "The House continues its reckless march toward increasing offshore drilling while totally disregarding the lessons learned from the Gulf of Mexico disaster or the fact that more drilling won't make a noticeable difference at the pump. Instead of doing Big Oil companies' bidding and granting their every wish, lawmakers ought to be following the Senate's lead in seeking to end Big Oil tax breaks and also push for solutions that can make a real difference at the pump - like encouraging the development of more efficient vehicles."

    While the House Republicans were passing their American Energy Initiative bills, House Democratic Leader Nancy Pelosi (D-CA) and other House Democrats held a press conference to unveil their "Make It In America – Clean Energy Jobs Now" initiative which they said would "lower gas prices, end taxpayer dollars to Big Oil, and invest in a stronger economy." Rep. Pelosi said, "It's a plan to invest in American energy, put consumers first, and create jobs. . . we announced [last week] the Taxpayer and Gas Price Relief Act [H.R.1748], sponsored by Congressman Bishop of New York, to eliminate those tax breaks for the five largest oil companies, saving the taxpayers $31 billion over 10 years. . . That bill, which the Republicans said no to, would save the taxpayers $31 billion over 10 years. . .

    "Today, we are putting two more measures on the table. Increasing American Energy Production Now Act -- that's being sponsored by Congressman Connolly of Virginia. And he's here to talk about enacting the recommendations of the bipartisan BP Oil Spill Commission. . . And the Building Our Clean Energy Future Now Act -- sponsored by Congressman Cicilline [D-RI] -- encouraging new alternatives in transportation and how we build our infrastructure and developing and manufacturing advanced vehicle technologies. 

    Access the release from Speaker Boehner (click here). Access a release from Rep. Hastings on H.R.1229 (click here). Access a release from Rep. Hastings on H.R.1231 (click here). Access the statement from NRDC and link to more information (click here).Access the release from Rep. Pelosi on the Democrat's plan (click here). Access legislative details for H.R.1229 (click here). Access legislative details for H.R.1231 (click here). Access legislative details for H.R.1230 (click here). Access legislative details including roll call votes of H.R.910 (click here).  Access legislative details for H.R.1748 (click here). [*Energy]

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GAO Report On Impacts Of Yucca Mountain Termination

May 10: The Government Accountability Office (GAO) released an 80-page report entitled, Commercial Nuclear Waste: Effects of a Termination of the Yucca Mountain Repository Program and Lessons Learned (GAO-11-229, April 08, 2011). The report was prepared at the request of Representative Fred Upton (R-MI), Chairman of the Committee on Energy and Commerce, Representatives Joe Barton (R-TX), Cliff Stearns (R-FL), and Greg Walden (R-OR).

    GAO indicates that spent nuclear fuel -- considered very hazardous -- is accumulating at commercial reactor sites in 33 states. The Nuclear Waste Policy Act of 1982, as amended, directs the Department of Energy (DOE) to dispose of this waste in a repository at Yucca Mountain, Nevada. In June 2008, DOE submitted a license application for the repository, but in March 2010 moved to withdraw it. However, the Nuclear Regulatory Commission (NRC) or the courts -- as a result of lawsuits -- could compel DOE to resume the licensing process. The report examines: (1) the basis for DOE's decision to terminate the Yucca Mountain program; (2) the termination steps DOE has taken and their effects; (3) the major impacts if the repository were terminated; and, (4) the principal lessons learned. GAO reviewed documents and interviewed knowledgeable parties.

    GAO reports that DOE decided to terminate the Yucca Mountain repository program because, according to DOE officials, it is not a workable option and there are better solutions that can achieve a broader national consensus. DOE did not cite technical or safety issues. DOE also did not identify alternatives, but it did create a Blue Ribbon Commission to evaluate and recommend alternatives [See WIMS 1/29/10].

 

    Amid uncertainties about the status of the repository license, DOE took an ambitious set of steps to dismantle the Yucca Mountain program by September 30, 2010. DOE has taken steps to preserve scientific and other data, eliminated the jobs of all Federal employees working on the program, and terminated program activities by contractors. DOE also disposed of property from its Las Vegas offices by declaring the property abandoned. The procedure saved DOE time and costs, according to officials. However, DOE's documentation for this process was limited, given the variety and volume of property disposed of. In addition, DOE did not finalize a plan for the shutdown, nor did it identify or assess risks of the shutdown. Both steps are required under Federal internal control standards and DOE orders. Some of DOE's shutdown steps would likely hinder progress, should NRC or the courts require DOE to resume the license application review process.

 

    GAO said that terminating the Yucca Mountain repository program could bring benefits, such as allowing DOE to search for a more acceptable alternative, which could help avoid the costly delays experienced by Yucca Mountain. However, there is no guarantee that a more acceptable or less costly alternative will be identified; termination could instead restart a costly and time-consuming process to find and develop an alternative permanent solution. It would also likely prolong the need for interim storage of spent nuclear fuel at reactor sites, which would have financial and other impacts. For example, the Federal government bears part of the storage costs as a result of industry lawsuits over DOE's failure to take custody of commercial spent nuclear fuel in 1998, as required. These costs exceed $15.4 billion and could grow by an additional $500 million a year after 2020.

 

    GAO indicated that published reports and our interviews -- with federal, state, and local government officials and representatives of various national organizations -- suggest two broad lessons for developing a future waste management strategy. First, social and political opposition to a permanent repository, not technical issues, is the key obstacle. Important tools for overcoming such opposition include transparency, economic incentives, and education. Second, it is important that a waste management strategy have consistent policy, funding, and leadership, especially since the process will likely take decades. Some Federal and other stakeholders suggested that a more predictable funding mechanism and an independent organization may be better suited than DOE to overseeing nuclear waste management.

    In its recommendations, GAO suggests that Congress consider whether a more predictable funding mechanism would enhance future efforts and whether an independent organization would be more effective. GAO also recommended that DOE assess remaining risks of the shutdown; create a plan to resume licensing if necessary; and report on Federal property and its disposition. NRC concurred with the facts in a draft of this report, but DOE strongly disagreed with the draft and the recommendations, questioning the veracity of GAO's information. GAO said it continues to believe its findings and recommendations are sound.

    Energy and Commerce Committee Chairman Fred Upton commented on the report and said, "The ongoing situation in Japan further underscores that our national security demands a coherent nuclear policy to safely and permanently store spent nuclear fuel. It is alarming for this administration to discard 30 years of research and billions of taxpayer dollars spent, not for technical or safety reasons, but rather to satisfy temporary political calculations. Now, it appears the Obama administration's work to derail the Yucca repository over the last two years may have set back our bipartisan efforts by two decades. Our nuclear future requires visionary leadership as we seek a long-term solution to our spent nuclear fuel and high-level waste." 

    Upton and Environment and the Economy Subcommittee Chairman John Shimkus (R-IL) indicated they are conducting an investigation into the Administration's decision to terminate the Yucca Mountain project. They said, "That investigation has already revealed significant internal legal and policy dissent from within the Nuclear Regulatory Commission about the administration's decision. The GAO estimates that nearly $15 billion has been spent on the Yucca Mountain repository since 1983, $9.5 billion of which has been directly collected from the public's electric bills."

    Access the complete GAO report (click here). Access the release from Rep. Upton and link to additional information (click here). Access the DOE High-Level Nuclear Waste Disposal website for more information (click here) [*Haz/Nuclear, *Energy/Nuclear]

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Senators Announce Legislation To End Tax Subsidies For "Big 5"

May 10: A group of Democratic Senators today announced legislation which they say would "finally put an end to the unfair tax subsidies that only benefit Big Oil's bottom line and CEOs." [See WIMS 5/6/11]. They said the nation's five largest oil companies (BP, Exxon, Shell, Chevron, and ConocoPhillips) have taken home nearly $1 trillion in profits over the past decade. In a release they said, "As families are paying more than $4 per gallon in gas prices and doing their part to address the country's growing deficit, Big Oil needs to step up to the plate and share in the sacrifice to help balance the budget.

    U.S. Sens. Robert Menendez (D-NJ), Sherrod Brown (D-OH), Claire McCaskill (D-MO), and Jon Tester (D-MT) announced the introduction of the Close Big Oil Tax Loopholes Act, which they said will put an end to "taxpayer handouts" to the 5 largest oil companies making record profits, and use the billions in savings to help reduce the deficit. The Senators also called on Republicans to support the effort to close the loopholes and join other Republicans, including Speaker Boehner and Representative Ryan, who have voiced support for cutting subsidies [See WIMS 4/27/11]. Reportedly, additional Senators Reid, Durbin, Schumer, Murray, Leahy, Reed, Bill Nelson, Lautenberg, and Whitehouse have also signed on to the draft legislation.

    Senator Menendez said, "At a time when families are feeling the pain at the pump and our deficit keeps growing at an alarming rate, we simply can't afford to keep giving away billions in taxpayer handouts to oil companies that are doing nothing to help lower prices. The 'Close Big Oil Tax Loopholes Act' is based on a simple premise: we need everyone to do their share to lower the deficit, not just working families and the elderly." Last week Senators Menendez and Frank Lautenberg (D-NJ) condemned legislation that passed the House of Representatives on May 5 which they said would weaken drilling standards and expedite drilling off the Virginia Coast -- less than 100 miles from Cape May, NJ. 

    Senator Brown said, "It's bad enough that Ohioans have to pay more than $4.00 a gallon at the gas pump. They shouldn't need to subsidize the oil industry through the tax code as well. Big Oil is reaping big profits while working- and middle-class Ohioans struggle to make ends meet. It's about time this corporate welfare meet its end." 

    Senator McCaskill said, "If we are going to get serious about addressing our national debt, we can no longer afford to keep giving away taxpayer's money to the most profitable companies in the world. There are going to be some tough decisions when it comes to cutting back, but I hope we can agree that our government writing checks to oil and gas companies with tax dollars should be on the chopping block." Senator Tester said, "For years, the world's biggest oil companies have slipped their way through every loophole in the book to pad their profits at the expense of American taxpayers. This bill restores fairness and holds these corporations accountable to taxpayers, who deserve no less."

    The Senators cited a recent report from Citizens for Tax Justice indicating that Big Oil companies spent most of their profits in the purchase of their own stocks and boosting their dividends between 2005-2010. In 2010, four of the largest "Big Five" oil companies (excluding BP due to the oil spill) allocated only 18 percent of their post tax profits on exploration and 60 percent on dividends and stock repurchases. The Senators released a summary of the bill as follows:

• Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers. U.S. taxpayers are taxed on their income worldwide, but are entitled to a dollar-for-dollar tax credit for any income taxes paid to a foreign government. U.S. oil and gas companies have been accused of disguising royalty payments to foreign governments as foreign taxes. This allows them to lower their taxes in the U.S. The bill would close this loophole that amounts to a U.S. subsidy for foreign oil production for the Big 5.
• Limitation on deduction for income attributable to the production of oil, natural gas, or primary products thereof. In 2004 Congress enacted Section 199, the domestic manufacturing tax deduction. In 2008 Congress froze the Section 199 deduction at 6% for all oil and gas activity. The bill eliminates the Section 199 deduction for the Big 5.
• Limitation on deduction for intangible drilling and development costs. Would deny the Big 5 oil companies the option of expensing Intangible Drilling Costs (IDCs) and require such costs be capitalized. IDCs are expenditures such as wages, fuel, repairs, hauling, and supplies necessary for the drilling of oil wells. Currently, integrated oil companies can expense 70% of the cost of IDCs. The bill requires the Big 5 to capitalize all of its IDC costs.
• Limitation on percentage depletion allowance for oil and gas wells. Firms that extract oil and gas are permitted a deduction to recover their capital investment under one of two methods. Cost depletion allows for the recovery of the actual capital investment—the costs of discovering, purchasing, and developing the well -- over the period the well produces income.  Under this method, the taxpayer's total deductions cannot exceed its original investment. Percentage depletion allows the cost recovery to be computed using a percentage of the revenue from the sale of the oil or gas. Under this method, total deductions could (and often do) exceed the taxpayer's capital investment. The bill repeals percentage depletion for the Big 5.
• Limitation on deduction for tertiary injectants. Tertiary injectants are used in enhanced oil recovery to drive more oil from an existing well. Currently, oil companies are allowed to deduct the cost of tertiary injectants rather than capitalizing their costs and recovering them over time. The bill requires the Big 5 to capitalize the cost of tertiary injectants it uses during the year and recover those costs over time. 
• Repeal of Outer Continental Shelf deep water and deep gas royalty relief. Repeals Sections 344 and 345 of the Energy Policy Act of 2005. Section 344 extended existing deep gas incentives and Section 345 provided additional mandatory royalty relief for certain deepwater oil and gas production. These changes will help ensure that Americans receive fair value for Federally-owned fossil fuel resources.
• Deficit Reduction. All savings realized as the result of the bill's elimination of the tax breaks and other subsidies currently going to the major integrated oil companies are devoted to deficit reduction. They said $21 billion would be recouped over 10 years.

    Senate Majority Leader Harry Reid (D-NV) also issued a statement saying, "There's clear waste in the federal budget and the tax code.  And then there's Big Oil. We're giving billions and billions of dollars every year -- $4 billion to be exact -- every cent of it taxpayer money -- to oil companies that already are more than successful. These oil companies made $36 billion in profits during the first quarter of this year alone.  Exxon made 70 percent more this year than last year. The industry's $36 billion in quarterly profits means it's making $12 billion a month. That's $4 billion a week. And yet the U.S. government is giving these companies $4 billion a year in corporate welfare?

    "Why are taxpayers on the hook for oil companies that are doing just fine on their own? If we're serious about reducing the deficit, this is an easy place to start.  It's a no-brainer.  Let's use the savings from these taxpayer giveaways to drive down the deficit, not drive up oil company profits."

    Senate Minority Leader Mitch McConnell (R-KY) discussed the issue on the Senate Floor yesterday morning and said in part, "Every time gas prices go up, Democrats claim there's nothing they can do about it. Then they propose something completely counterproductive just to quiet their critics. This time it's a tax increase. That is the Democrat response to high gas prices: a tax hike. Well, the first thing to say about this proposal is that it won't do a thing to lower gas prices. In fact, raising taxes on American energy production will increase the price of gas. "Oh, and it would also make us even more dependent on foreign sources of oil.

    "That's not my view. That's the view of the independent Congressional Research Service, which concluded in March that the Democrat's proposed tax increase on energy production would, `make oil and natural gas more expensive for U.S. consumers and likely increase foreign dependence.' Sounds like a brilliant strategy. . ." Senator McConnell said the solution is "to develop our resources here at home"; "cut through the bureaucratic red tape that prevents companies that are authorized to explore here from getting to work"; "stop penalizing American producers with new fees and threats of tax hikes"; and "call an end to the anti-energy crusade of the EPA."

    He said, "They [Democrats] need to end an approach that hasn't changed since the days of Jimmy Carter. Just like Carter before them, today's Democrats are using the crisis of the moment as an excuse to push their own vision of the future with a `windfall profits tax' on energy companies; and just like Carter before them, they have rightly been accused of bringing BB guns to a war. This is a serious crisis. It's time for serious solutions. . ."

    Access the joint release from the Senators (click here). Access the full Citizens for Tax Justice Report (click here). Access the May 6 release from Sens. Menendez and Lautenberg (click here). Access the statement from Sen. Reid (click here). Access the statement from Sen. McConnell (click here). [*Energy/OilTax]

IPCC Report On Global Potential Of Renewable Energy

May 9: A report from the Intergovernmental Panel on Climate Change (IPCC), prepared by over 120 researchers, indicates that close to 80 percent of the world's energy supply could be met by renewables by mid-century if backed by the right enabling public policies. The findings also indicate that the rising penetration of renewable energies could lead to cumulative greenhouse gas (GHG) savings equivalent to 220 to 560 Gigatonnes of carbon dioxide (GtC02eq) between 2010 and 2050. The upper end of the scenarios assessed, representing a cut of around a third in greenhouse gas emissions from business-as-usual projections, could assist in keeping concentrations of greenhouse gases at 450 parts per million.

    IPCC said in a release that this could contribute towards a goal of holding the increase in global temperature below 2 degrees Celsius – an aim recognized in the United Nations Climate Convention's Cancun Agreements. The findings, released today after being approved by member countries of the IPCC in Abu Dhabi, United Arab Emirates, are contained in a summary for policymakers of the Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN). The summary is a short version of a roughly a thousand page comprehensive assessment compiled by over 120 leading experts from all over the world for IPCC's Working Group III.

    Professor Ottmar Edenhofer, Co-Chair of Working Group III said, "With consistent climate and energy policy support, renewable energy sources can contribute substantially to human well-being by sustainably supplying energy and stabilizing the climate. However, the substantial increase of renewables is technically and politically very challenging." The SRREN report, approved by government representatives from 194 nations, will provide input into the broader work of the IPCC as it prepares its Fifth Assessment Report (AR5) which is scheduled for finalization in September 2014.

    The report reviewed the current penetration of six renewable energy technologies and their potential deployment over the coming decades. Over 160 existing scientific scenarios on the possible penetration of renewables by 2050, alongside environmental and social implications, have been reviewed with four analyzed in-depth. These four were chosen in order to represent the full range. Scenarios are used to explore possible future worlds, analyzing alternative pathways of socio-economic development and technological change.

    The six renewable energy technologies reviewed are: Bioenergy, including energy crops; forest, agricultural and livestock residues and so called second generation biofuels; Direct solar energy including photovoltaics and concentrating solar power;

Geothermal energy, based on heat extraction from the Earth's interior; Hydropower, including run-of-river, in-stream or dam projects with reservoirs; Ocean energy, ranging from barrages to ocean currents and ones which harness temperature differences in the marine realm; and, Wind energy, including on- and offshore systems.

 

    The researchers have also studied the challenges linked to how renewable energy can be integrated into existing and future energy systems including electricity grids and likely cost benefits from these developments. While the scenarios arrive at a range of estimates, the overall conclusions are that renewables will take an increasing slice of the energy market.

 

    The most optimistic of the four, in-depth scenarios projects renewable energy accounting for as much as 77 percent of the world's energy demand by 2050, amounting to about 314 of 407 Exajoules per year. As a comparison, 314 Exajoules is over three times the annual energy supply in the United States in 2005 which is also a similar level of supply on the Continent of Europe according to various government and independent sources.

 

    According to the report, the 77 percent scenario is up from just under 13 percent of the total primary energy supply of around 490 Exajoules in 2008. Each of the scenarios is underpinned by a range of variables such as changes in energy efficiency, population growth and per capita consumption. These lead to varying levels of total primary energy supply in 2050, with the lowest of the four scenarios seeing renewable energy accounting for a share of 15 percent in 2050, based on a total primary energy supply of 749 Exajoules. While the report concludes that the proportion of renewable energy will likely increase even without enabling policies, past experience has shown that the largest increases come with concerted policy efforts.

 

    Key Findings from the Summary for Policymakers include: 

• Of the around 300 Gigawatts (GW) of new electricity generating capacity added globally between 2008 and 2009, 140 GW came from renewable energy.
• Despite global financial challenges, renewable energy capacity grew in 2009—wind by over 30 percent; hydropower by three percent; grid-connected photovoltaics by over 50 percent; geothermal by 4 percent; solar water/heating by over 20 percent and ethanol and biodiesel production rose by 10 percent and 9 percent respectively.
• Developing countries host more than 50 percent of current global renewable energy capacity.
• Most of the reviewed scenarios estimate that renewables will contribute more to a low carbon energy supply by 2050 than nuclear power or fossil fuels using carbon capture and storage (CCS).
• The technical potential of renewable energy technologies exceeds the current global energy demand by a considerable amount—globally and in respect of most regions of the world.
• Under the scenarios analyzed in-depth, less than 2.5 percent of the globally available technical potential for renewables is used—in other words over 97 percent is untapped underlining that availability of renewable source will not be a limiting factor.
• Accelerating the deployment of renewable energies will present new technological and institutional challenges, in particular integrating them into existing energy supply systems and end use sectors.
• According to the four scenarios analyzed in detail, the decadal global investments in the renewable power sector range from 1,360 to 5,100 billion US dollars to 2020 and 1,490 to 7,180 billion US dollars for the decade 2021 to 2030. For the lower values, the average yearly investments are smaller than the renewable power sector investments reported for 2009.
• A combination of targeted public policies allied to research and development investments could reduce fuel and financing costs leading to lower additional costs for renewable energy technologies.
• Public policymakers could draw on a range of existing experience in order to design and implement the most effective enabling policies--there is no one-size-fits-all policy for encouraging renewables.

    Sven Teske, Renewable Energy Director from Greenpeace International, and one of the lead authors of the report said, "This is an invitation to governments to initiate a radical overhaul of their policies and place renewable energy center stage. On the run up to the next major climate conference, COP17 in South Africa in December, the onus is clearly on governments to step up to the mark. The IPCC report shows overwhelming scientific evidence that renewable energy can also meet the growing demand of developing countries, where over two billion people lack access to basic energy services. And it can do so at a more cost competitive and faster rate than conventional energy sources. Governments have to kick start the energy revolution by implementing renewable energy laws across the globe."

    The "Energy [R]evolution" scenario -- a joint project of Greenpeace International, the European Renewable Energy Council (EREC) and the German Space Agency (DLR) -- was chosen as one of the lead scenarios of the report. Since the first edition was launched in 2005, Greenpeace has published the Energy [R]evolution in over 40 countries and developed national scenarios, as well as three editions of its global version.

    Access a lengthy release from IPCC with more details (click here). Access the 26-page Summary for Policymakers report (click here). Access a webcast of the press conference (click here). Access a website on the report for extensive background (click here). Access more information on the IPCC and the report (click here). Access a release from Greenpeace International and link to more information (click here). [*Energy/Renewable, *Climate]