DOE Advisors Issue Recommendations For Fracking Of Shale Gas

Aug 11: A diverse group of advisors to Department of Energy (DOE) Secretary Steven Chu released a series of consensus-based recommendations calling for increased measurement, public disclosure and a commitment to continuous improvement in the development and environmental management of shale gas, which has rapidly grown to nearly 30 percent of natural gas production in the United States [See WIMS 5/6/11]. The draft report indicates that increased transparency and a focus on best practices "benefits all parties in shale gas production: regulators will have more complete and accurate information, industry will achieve more efficient operations and the public will see continuous, measurable, improvement in shale gas activities."

    The report calls for industry leadership in improving environmental performance, underpinned by strong regulations and rigorous enforcement, evolving to meet the identified challenges. The Shale Gas Production Subcommittee Chairman John Deutch, an MIT professor said, "As shale gas grows and becomes an increasingly important part of our nation's energy supply, it is crucial to bring a better understanding of the environmental impacts -- both current and potential -- and ensure that they are properly addressed. The current output of shale gas and its potential for future growth emphasize the need to assure that this supply is produced in an environmentally sound fashion, and in a way that meets the needs of public trust. Better data will help the industry focus its investments, give the public the information it needs to effectively engage, and help regulators identify and address the most important problems," Deutch continued.  "We're issuing a call for industry action, but we are not leaving it to industry alone."

    On August 15, 2011, the full Secretary of Energy Advisory Board (SEAB) will convene a public meeting via conference call to discuss the draft report. Members of the public may submit comments on the draft report at any time, but comments must be submitted by noon on August 15, 2011, in order to be considered at this stage. Comments received after August 15, will be considered before the Subcommittee's final report is issued, which is scheduled for November 18, 2011. The Natural Gas Subcommittee met for the first time on May 18, 2011. Subsequently, it conducted public meetings on June 1-2, June 13, June 28, and July 13, to gather information and discuss issues surrounding hydraulic fracturing. As of July 15, 2011, DOE had received over 25,000 public comments.

    The Subcommittee was tasked with producing a report on the immediate steps that can be taken to improve the safety and environmental performance of shale gas development. The report reflects three months of deliberations among a diverse group of industry experts, environmental advocates, academics and former state regulators. The report includes recommendations in four key areas:

1. Making information about shale gas production operations more accessible to the public

     The report calls for the full disclosure of all chemicals used in fracturing fluids. While the committee agrees with the prevailing view that the risk of leakage of fracturing fluids through fractures made in deep shale reserves is remote where there are is large separation from drinking water, the report finds that there is no economic or technical reason to prevent public disclosure of all chemicals used in fracturing fluids. It also calls for the creation of a national database of all public information made about shale gas. Assembling the data, which are currently dispersed in perhaps a hundred different locations, in a comparable format would permit easier access by all interested parties. The report recommends government funding support for existing, multi-stakeholder mechanisms such as the non-profit Ground Water Protection Council's Risk Based Data Management System and the State Review of Oil and Natural Gas Environmental Regulation.

 2. Immediate and longer-term actions to reduce environmental and safety risks of shale gas operations, with a particular focus on protecting air and water quality

     Air Quality: The report says that measures should be taken to reduce emissions on air pollutants, ozone precursors and methane as quickly as practicable and supports prompt adoption of standards to reduce emissions of all air contaminants. The subcommittee recommends the design and rapid implementation of measurement systems to collect comprehensive methane and other air emissions data from shale gas operations. The subcommittee also recommends that a federal interagency planning effort be launched immediately to acquire data and analyze the overall greenhouse gas footprint of shale gas operations throughout the lifecycle of natural gas use in comparison to other fuels.

     Water Quality: The report urges the adoption of a systemic approach to water management based on consistent measurement and public disclosure. Companies should measure and publicly report the composition of water stocks and flow throughout the process; manifest all transfers of water among different locations; and makes recommendations about best practices in well development and construction, especially casing and cementing. Likewise, agencies should review and modernize their rules to ensure they are fully protective of both groundwater and surface water. The findings also recommend additional field studies on methane leakage from hydrofractured wells to water reservoirs and the adoption of requirements for background water quality measurements to record existing methane levels in nearby water wells prior to drilling.

 3. Creation of a Shale Gas Industry Operation organization committed to continuous improvement of best operating practices

     A more systemic approach by the shale gas industry based on best practices -- recognized as improvements to techniques and methods over time based on measurement and field experience -- is an important way to achieve better operational and environmental outcomes. The report envisions the creation of a national organization, with external stakeholders, dedicated to continuous improvement of best practice through the development and diffusion of standards and the assessment of member compliance. The organization would likely work through regional subgroups.

 4. Research and development (R&D) to improve safety and environmental performance

     The report finds that, while the majority of shale gas R&D will be performed by the oil and gas industry, there is a role for the Federal government. The report recommends that the administration set an appropriate mission for shale gas R&D and level funding, with a particular focus on efficiency of water use and other improvements to enhance environmental objectives. Deutch said, "We are mindful of the nation's financial constraints. But we do see a key role that can be played by modest government support for R&D around environmental questions."

    Access a release from DOE (click here). Access the complete 41-page 90-day draft report (click here). Access the SEAB website for extensive information including details on commenting, the Aug. 15 meeting, details of previous meetings, and a summary of comments (click here). Access a 5/5/11 release from DOE with additional background information on the committee members (click here). Access the complete 3-page charge to the group (click here). [*Energy/Frack]

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House & Senate Leaders Appoint Most Super Committee Members

Aug 10: House and Senate leaders have announced their appointments to the Joint Select Committee on Deficit Reduction (JSC, a.k.a. "Super Committee") recently created under the Budget Control Act of 2011 (i.e. debt ceiling legislation). The JSC is charged with devise a long-term approach to reducing the nation's deficit by at least $1.5 trillion before this Thanksgiving. The bipartisan, bicameral committee will be comprised of 12 members, 6 from each Chamber, equally divided between Democrats and Republicans. The JSC has been given broad leeway to examine all areas for deficit reduction, and its legislation will be given expedited consideration, with a guaranteed up-or-down vote in the Senate before Christmas.

 

    Senate Majority Leader Harry Reid (D-NV) announced his appointments as: Senate Democratic Conference Secretary Patty Murray (D-WA), Senate Finance Committee Chairman Max Baucus (D-MT), and Senate Foreign Relations Committee Chairman John Kerry (D-MA). Senator Murray will serve as the co-chair of the JSC. Senate Republican Leader Mitch McConnell (R-KY) appointed Republican Whip Jon Kyl (R-AZ); Budget, Banking, Commerce and Joint Economic Committee member Pat Toomey (R-PA), and former OMB Director and now Budget Committee Rob Portman (R-OH).

 

    House Speaker John Boehner (R-OH) announced his appointments as: House Republican Conference Chairman Jeb Hensarling (R-TX); House Ways & Means Committee Chairman Dave Camp (R-MI); and House Energy & Commerce Committee Chairman Fred Upton (R-MI). House Minority Leader Nancy Pelosi (D-CA) has not yet announced her appointments.

 

    Access a release on the Senate Democrat appointments (click here). Access a release on the Senate Republican appointments (click here). Access a release on the House Republican appointments (click here). Access a release on the House Democrats (click here, posted soon). [#All]

First Ever Fuel Efficiency Standards For Trucks & Heavy Duty Vehicles

Aug 9: At a meeting with industry officials at Interstate Moving Services in Springfield, Virginia, President Obama announced the first of their kind fuel efficiency standards for work trucks, buses, and other heavy duty vehicles. The new standards are designed to provide American businesses, who operate and own these commercial vehicles, tens of billions of dollars in fuel savings, and to dramatically reduce oil consumption and cut pollution.

 

    According to a White House release, the standards, will save American businesses who operate and own these commercial vehicles approximately $50 billion in fuel costs over the life of the program. The U.S. Department of Transportation (DOT) and the U.S. EPA developed the standards in close coordination with the companies that met with the President today as well as other stakeholders, following requests from companies to develop this program. The cost savings for American businesses are on top of the $1.7 trillion that American families will save at the pump from the historic fuel-efficiency standards announced by the Obama Administrations for cars and light duty trucks, including the model year 2017-2025 agreement announced by the President last month [See WIMS 7/29/11].  

    The President said, "While we were working to improve the efficiency of cars and light-duty trucks, something interesting happened. We started getting letters asking that we do the same for medium and heavy-duty trucks. They were from the people who build, buy, and drive these trucks. And today, I'm proud to have the support of these companies as we announce the first-ever national policy to increase fuel efficiency and decrease greenhouse gas pollution from medium-and heavy-duty trucks."

    DOT Secretary Ray LaHood said, "Thanks to the Obama Administration, for the first time in our history we have a common goal for increasing the fuel efficiency of the trucks that deliver our products, the vehicles we use at work, and the buses our children ride to school. These new standards will reduce fuel costs for businesses, encourage innovation in the manufacturing sector, and promote energy independence for America." EPA Administrator Lisa Jackson said, "This Administration is committed to protecting the air we breathe and cutting carbon pollution -- and programs like these ensure that we can serve those priorities while also reducing our dependence on imported oil and saving money for drivers. More efficient trucks on our highways and less pollution from the buses in our neighborhoods will allow us to breathe cleaner air and use less oil, providing a wide range of benefits to our health, our environment and our economy."

    The White House indicated that under the comprehensive new national program, trucks and buses built in 2014 through 2018 will reduce oil consumption by a projected 530 million barrels and greenhouse gas (GHG) pollution by approximately 270 million metric tons. Like the recently proposed CAFE standards, this program -- which relies heavily on off-the-shelf technologies – was developed in coordination with truck and engine manufacturers, fleet owners, the State of California, environmental groups and other stakeholders.  

    The joint DOT/EPA program will include a range of targets which are specific to the diverse vehicle types and purposes.  Vehicles are divided into three major categories: combination tractors (semi-trucks), heavy-duty pickup trucks and vans, and vocational vehicles (like transit buses and refuse trucks). Within each of those categories, even more specific targets are laid out based on the design and purpose of the vehicle. The flexible structure allows serious but achievable fuel efficiency improvement goals charted for each year and for each vehicle category and type.  

    According to the White House, a semi-truck operator could pay for the technology upgrades in under a year and realize net savings of $73,000 through reduced fuel costs over the truck's useful life. These cost saving standards will also reduce emissions of harmful air pollutants like particulate matter, which can lead to asthma, heart attacks and premature death. By the 2018 model year, the program is expected to achieve significant savings relative to current levels, across vehicle types.  Certain combination tractors -- commonly known as big-rigs or semi-trucks -- will be required to achieve up to approximately 20 percent reduction in fuel consumption and greenhouse gas emissions by model year 2018, saving up to 4 gallons of fuel for every 100 miles traveled.

    For heavy-duty pickup trucks and vans, separate standards are required for gasoline-powered and diesel trucks. These vehicles will be required to achieve up to approximately 15 percent reduction in fuel consumption and greenhouse gas emissions by model year 2018. Under the finalized standards a typical gasoline or diesel powered heavy-duty pickup truck or van could save one gallon of fuel for every 100 miles traveled.

Vocational vehicles -- including delivery trucks, buses, and garbage trucks -- will be required to reduce fuel consumption and greenhouse gas emissions by approximately 10 percent by model year 2018. These trucks could save an average of one gallon of fuel for every 100 miles traveled.

    Access a release from the White House (click here). Access complete detailed information including fact sheets, prepublication copy, modeling, regulatory impact analysis, response to comments and more from EPA's website (click here). Access more information from the NHTSA website (click here). [#Energy/Efficiency, #Climate, #Air]

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Building America's Future: Falling Apart & Falling Behind

Aug 8: The Building America's Future Educational Fund (BAFEF), a bipartisan and national infrastructure coalition comprised of state and locally elected officials, released a new study that lays out the economic challenges posed by our ailing infrastructure. The report, Building America's Future: Falling Apart and Falling Behind, provides a comparative look at the smart investments being made by our international competitors and suggests a series of recommendations for crafting new innovative transportation policies in the U.S.

 

    The Building America's Future Educational Fund (BAF Ed Fund) is a bipartisan coalition of elected officials dedicated to bringing about a new era of U.S. investment in infrastructure that enhances our nation's prosperity and quality of life. Founded by former Governor Edward Rendell (D-PA), former Governor Arnold Schwarzenegger (R-CA), and Mayor Michael Bloomberg (I-NYC) of New York, the BAF Ed Fund boasts a politically diverse membership of state and local elected officials from across the nation. The BAF Ed Fund seeks to advance a new national vision for infrastructure investment that strengthens our cities and rural communities, focuses on economic growth and global competitiveness, job creation, and environmental sustainability. In addition, we embrace a wide definition of infrastructure - from roads and bridges to water and sewer systems, energy systems, buses, trains, ports, airports, levees, dams, schools and housing.

    The first section of the report, A Building Crisis, makes the case why U.S. infrastructure has fallen from first place in the World Economic Forum's 2005 economic competitiveness ranking to number 15 today. The second section of the report, Losing Ground to Our Global Competitors, takes an international look at transportation infrastructure and highlights certain themes that unify our competitors' plans while setting our transportation policies apart. The third section of the report, Recommendations for Reform, contains a clear set of recommendations for moving our economy-- and the case for strategic investment in infrastructure—forward.

 

    Former Governor Rendell, BAFEF co-chair said, "There are always excuses to delay tough decisions, but the time has come for the U.S. to commit to a long-term infrastructure revitalization plan that invests at least $200 billion a year. It should focus on transportation but should also include our water and wastewater systems, our dams, our electric grid and our broadband system. At a time when our nation is crying out for job creation, this plan can produce millions of good-paying American jobs over a sustained period of time." Mayor Bloomberg (I-NYC), BAFEF co-chair said, "In Washington, everyone is talking about the need to fix the economy, but our long-term economic prospects will only get weaker the longer Congress allows our infrastructure to crumble. As Congress stands idly by, our competitors around the world are racing ahead -- especially when it comes to building modern transportation networks. Washington needs to get into gear transforming our infrastructure or else our economy will be stalling out for decades to come."

    The report explains how international economic competitors are sprinting ahead of the U.S. and outlines the case for creating a blueprint to transition to a high-tech transportation network for the 21st century. The report also contains many sobering statistics detailing how the U.S. is falling behind including:

• U.S. infrastructure has fallen from first place in the World Economic Forum's 2005 economic competitiveness ranking to number 15 today; 
• China now boasts six of the world's top ten ports -- and none of the top ten are located in the U.S.  The Shanghai port now moves more container traffic a year than the top seven U.S. ports combined;
• The U.S. has the world's worst air traffic congestion -- a quarter of flights in the U.S. arrive more than 15 minutes late, and the national average for all delayed flights in the U.S. (about 56 minutes) is twice that of Europe's average;
• There are more than 15,000 miles of true high-speed rail in operation around the world – essentially none of which is in the U.S.;
• The U.S. is one of the only leading nations without a national plan for public-private partnerships for infrastructure projects or a National Infrastructure Bank to finance large-scale projects and leverage private capital.

    The final section of the report is a set of recommendations for moving the economy forward through strategic investments in infrastructure including:

• Develop a long-term national infrastructure strategy that makes choices based on economics, not politics.
• Pass a robust transportation bill that focuses investment on projects that will increase economic return and mobility while reducing congestion and pollution. Such a bill will put Americans back to work and make the U.S. more competitive in the global economy.
• Be both innovative and realistic about how to pay (including the establishment of a National Infrastructure Bank) and looking at all long-term revenue generating options including congestion pricing, carbon auctions, fees based on miles traveled, and – once the economy recovers – an updated gas-tax.
• Promote accountability and innovation by setting clear criteria for all funding; encouraging innovation by states and the country's largest cities through competitive grants; and carefully auditing the results to ensure projects are completed on time, on budget, and yielding promised results.

     Access a release from BAFEF (click here). Access the complete 48-page report (click here). Access a 4-page Executive Summary (click here). Access a 3-page fact sheet (click here). Access the BAF website for more information and background (click here). [#All]

 

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Administration Announces Environmental Justice Strategies

Aug 4: The Obama Administration announced that Federal agencies have agreed to develop environmental justice strategies "to protect the health of people living in communities overburdened by pollution and provide the public with annual progress reports on their efforts." U.S. EPA Administrator Lisa Jackson, White House Council on Environmental Quality (CEQ) Chair Nancy Sutley and U.S. Attorney General Eric Holder were joined by agency heads across the Administration in signing the "Memorandum of Understanding on Environmental Justice and Executive Order 12898" (EJ MOU). 

    Administrator Jackson said, "All too often, low-income, minority and Native Americans live in the shadows of our society's worst pollution, facing disproportionate health impacts and greater obstacles to economic growth in communities that can't attract businesses and new jobs. Expanding the conversation on environmentalism and working for environmental justice are some of my top priorities for the work of the EPA, and we're glad to have President Obama's leadership and the help of our federal partners in this important effort. Every agency has a unique and important role to play in ensuring that all communities receive the health and environmental protections they deserve. Our broad collaboration will mean real progress for overburdened communities."

    Environmental justice means that all communities overburdened by pollution -- particularly minority, low income and tribal communities -- deserve the same degree of protection from environmental and health hazards, equal access to the Federal decision-making process, and a healthy environment in which to live, learn, and work.

    According to a release, the signing of the EJ MOU is the latest in a series of steps the Obama Administration has taken to elevate the environmental justice conversation and address the inequities that may be present in some communities. Last September, Jackson and Sutley reconvened the Interagency Working Group on Environmental Justice (EJ IWG) for the first time in more than a decade. In December, at the White House Environmental Justice Forum, Cabinet Secretaries and other senior Administration officials met with more than 100 environmental justice leaders from across the country to engage advocates on issues that are affecting their communities, including reducing air pollution, addressing health disparities, and capitalizing on emerging clean energy job opportunities. The EJ MOU reflects the dialogue, concerns and commitments made at the forum and other public events. Since her appointment, Jackson has also joined congressional leaders across the country to tour impacted communities and hear residents' concerns.

    The MOU advances agency responsibilities outlined in the 1994 Executive Order 12898, "Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations." The Executive Order directs each of the named Federal agencies to make environmental justice part of its mission and to work with the other agencies on environmental justice issues as members of the EJ IWG. The EJ MOU broadens the reach of the EJ IWG to include participant agencies not originally named in Executive Order 12898 and adopts an EJ IWG charter, which provides the workgroup with more structure and direction. It also formalizes the environmental justice commitments that agencies have made over the past year, providing a roadmap for agencies to better coordinate their efforts. Specific areas of focus include considering the environmental justice impacts of climate adaptation and commercial transportation, and strengthening environmental justice efforts under the National Environmental Policy Act and Title VI of the Civil Rights Act of 1964. The MOU also outlines processes and procedures to help overburdened communities more efficiently and effectively engage agencies as they make decisions.

    The following agencies signed the EJ MOU: Environmental Protection Agency; White House Council on Environmental Quality; Department of Health and Human Services; Department of Justice; Department of Agriculture; Department of Commerce; Department of Defense; Department of Education; Department of Energy; Department of Homeland Security; Department of Housing and Urban Development; Department of Interior; Department of Labor; Department of Transportation; Department of Veterans Affairs; General Services Administration; and Small Business Administration.

 

    Access a release with comments from other agency heads (click here). Access the EJ MOU (click here). Access more information on the EJ IWG (click here). [#All]

 

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Increasing U.S. Oil Production While Safeguarding The Environment

Aug 1: A new report from the group Securing America's Energy Future (SAFE) entitled, U.S. Oil Supply Post-Macondo, provides 9 technical and detailed recommendations for increasing U.S. oil production. SAFE is a nonpartisan organization that aims to reduce America's dependence on oil and improve U.S. energy security to bolster national security and strengthen the economy. SAFE, which does not accept funding from oil companies, advocates for expanded domestic production of our energy resources, continued improvement in fuel efficiency, and in the long-term, severing our reliance on oil through the electrification of the transportation sector. In 2006, SAFE joined with General P.X. Kelley (Ret.), 28th Commandant of the U.S. Marine Corps, and Frederick W. Smith, Chairman, President, and CEO of FedEx Corporation, to form the Energy Security Leadership Council (ESLC), a group of business and former military leaders committed to reducing U.S. oil dependence.

 

    According to a release, the report finds that high oil prices and innovative development techniques are combining to place substantial new resources on the table in the United States, with potentially game-changing consequences for economic and national security. The report makes a series of recommendations designed to safely expand the production of domestic oil resources, including a series of regulatory reforms.

    The report highlights a number of positive trends supporting future U.S. oil production growth, both onshore and offshore. However, the report also details a series of existing and emerging regulatory barriers facing the domestic industry. Among other things, the report finds that policymakers could do more to promote domestic oil production while safeguarding the environment, specifically through a series of pilot programs designed to leverage technology to minimize the industry's development footprint in frontier areas of the Outer Continental Shelf and the U.S. Arctic. The report argues that the current regulatory uncertainty surrounding hydraulic fracturing poses an emerging risk to production of both shale gas and shale liquids, and it calls on industry as well as state and federal regulators to provide a more comprehensive framework for development.

    Top among the reasons to boost domestic oil production are reasons of economic and national security. According to the report, "From a national security perspective, increased self-reliance would help minimize the exposure of the United States to a crippling disruption in oil supplies brought about by turbulence in the Middle East or any other oil-supplying region. With the U.S. trade deficit in crude oil and petroleum products on pace to surpass $300 billion in 2011, producing more domestic oil would also minimize the transfer of U.S. wealth abroad."

     General James Conway, former Commandant of the U.S. Marine Corps and member of SAFE's Energy Security Leadership Council said, "Without a question, it is in the United States' economic and national security interests to develop more of our own energy resources. For decades, our nation's energy policy has not been decided by Americans, but largely by state-owned oil exporting nations. Many of these countries are unstable, do not share our values, and in some cases, are outwardly hostile to the United States. It is time our leaders work in the short-term to develop more of our own oil resources as part of a comprehensive energy security strategy."

    According to the report, "Increased domestic oil production has clear economic and national security benefits. Recent domestic production increases aside, the United States still imports large volumes of crude oil and petroleum products. As oil prices have increased in recent years, U.S. imports have had a sharply negative impact on the current account deficit. Through the first 5 months of 2011 alone, the United States ran a $138.8 billion deficit in petroleum trade. To the extent that domestic oil production offsets the need for imports, it can help to minimize the transfer of U.S. wealth abroad. From a national security perspective, increased self reliance would help minimize the exposure of the United States to a crippling disruption in oil supplies brought about by turbulence in the Middle East or any other oil-supplying region.

 

    "Of course, greater energy security must be built on lessons learned. Public policy and private sector investment should be developed within a broad framework designed to accomplish at least three core objectives: increase economic security, bolster foreign policy, and safeguard natural resources. The 2010 Deepwater Horizon disaster in the Gulf of Mexico clearly illustrates that future policy must carefully balance each of these three core objectives -- achieving increased energy security while sacrificing

the environment is not an acceptable outcome. And yet, events around the world, from the rise of China to the Arab Spring, suggest that the U.S. economy will continue to be at risk in the absence of comprehensive energy reform, including a pathway to increased domestic production of oil and gas."

 

    The report makes 9 major recommendations including:

• Initiate a pilot program in cooperation with the State of Alaska to demonstrate extended reach drilling in the 1002 Area of the Arctic National Wildlife Refuge (ANWR).
• Implement comprehensive reform of the U.S. offshore regulatory approach, shifting from a rule-based to a goal-based approach.
• Increase funding for BOEMRE to attract highly trained engineers and enable BOEMRE to engage with operators on equal footing.
• Use the new regulatory approach to open frontier areas and use the experience of frontier areas to refine the new regulatory approach.
• Implement distance-from-shore provisions designed to minimize the footprint of offshore oil and gas development in all frontier areas.
• Initiate an "inventory-to-lease" program in frontier areas of the Outer Continental Shelf, subject to goal-based regulation.
• Implement a system of progressive royalties for new OCS leases.
• Create loan guarantees for the construction of CO2 pipelines from major economic and industrial centers to regions populated with oil and gas fields for use in EOR projects.
• Establish a comprehensive approach to ensure regulatory stability for unconventional oil and gas production while also giving operators the certainty to move forward.

    U.S. Senator Lisa Murkowski (R-AK), Ranking Member of the Senate Energy and Natural Resources Committee commended the new report and particularly the recommendation for a pilot program to demonstrate extended reach drilling in the 1002 Area of ANWR. Senator Murkowski said, "This is a concept that I have long offered as a reasonable alternative to those who oppose conventional development of the 1002 Area. While I still favor responsible production within the coastal plain, this compromise allows us to access much of the resource without the same environmental risk, making it a commonsense solution that everyone should be able to embrace." Murkowski indicated that estimates are that 10.4 billion barrels of oil are contained in the non-wilderness portion of ANWR.

 

    She said, "The existence of the Point Thompson project so close to the 1002 Area provides an opportunity for the industry to use extended reach drilling to develop ANWR oil without establishing a surface presence in ANWR itself and without necessarily adding substantially to the existing industry footprint on state lands. In a recent Senate Energy and Natural Resources Committee hearing, a representative from Alaska's Department of Natural Resources suggested that extended reach drilling from Point Thompson into the 1002 Area could have a major impact on production." In a release she indicated that opening ANWR to production is expected to create roughly 70,000 American jobs and the Congressional Research Service estimates that federal revenues from ANWR development could total $152.9 billion at oil prices of $100 per barrel.

 

    Access a release from SAFE (click here). Access the complete 48-page report (click here). Access a release from Sen. Murkowski (click here). [#Energy/OilGas]

EIA Reports On Energy Financial Interventions & Subsidies

Aug 1: The U.S. Energy Information Administration (EIA) has released a report entitled, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010. The report responds to a November 2010 request to EIA from U.S. Representatives Roscoe Bartlett (R-MD), Marsha Blackburn (R-TN), and Jason Chaffetz (R-UT) for an update to a 2008 report prepared by EIA that provided a snapshot of direct Federal financial interventions and subsidies in energy markets in fiscal year (FY) 2007, focusing on subsidies to electricity production. As requested, the report updates the previous report using FY 2010 data and is limited to subsidies that are provided by the Federal government, provide a financial benefit with an identifiable Federal budget impact, and are specifically targeted at energy markets. Subsidies to Federal electric utilities, in the way of financial support, are also included, as requested. The criteria do exclude some subsidies beneficial to energy sector activities which EIA details in a separate summary. EIA notes that this fact should be kept in mind when comparing the report to other studies that may use narrower or more expansive inclusion criteria.

    Energy subsidies and interventions discussed in the report are divided into five separate program categories:

• Direct Expenditures to Producers or Consumers. These are federal programs that involve direct cash outlays which provide a financial benefit to producers or consumers of energy.
• Tax Expenditures. These are provisions in the federal tax code that reduce the tax liability of firms or individuals who take specified actions that affect energy production, consumption, or conservation.
• Research and Development (R&D). These are federal expenditures aimed at a variety of goals, such as increasing U.S. energy supplies or improving the efficiency of various energy consumption, production, transformation, and end-use technologies. R&D expenditures generally do not directly affect current energy consumption, production, and prices, but, if successful, they could affect future consumption, production, and prices.
• Loans and Loan Guarantees. These involve federal financial support for certain energy technologies. The U.S. Department of Energy (DOE) is authorized to provide financial support for "innovative clean energy technologies that are typically unable to obtain conventional private financing due to their 'high technology risks.' In addition, eligible technologies must avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases."
• Electricity programs serving targeted categories of electricity consumers in several geographic regions of the country. Through the Tennessee Valley Authority (TVA) and the Power Marketing Administrations (PMAs), which include the Bonneville Power Administration (BPA) and three smaller PMAs, the federal government brings to market large amounts of electricity, stipulating that "preference in the sale of such power and energy shall be given to public bodies and cooperatives." The federal government also indirectly supports portions of the electricity industry through loans and loan guarantees made by the U.S. Department of Agriculture's Rural Utilities Service (RUS) at interest rates generally below those available to investor-owned utilities.

    According to the report, the value of direct federal financial interventions and subsidies in energy markets doubled between 2007 and 2010, growing from $17.9 billion to $37.2 billion. In broad categories, the largest increase was for conservation and end-use subsidies (approx. $4 billion to $15 billion), followed to a lesser degree by increases in electricity-related subsidies and subsidies for fuels used outside the electricity sector (approx. $6.2 billion to $10.5 billion). Electricity-Related increased from  $7.7 billion to $11.9 billion.

 

    The report indicates that a key factor in the increased support for conservation programs, end-use technologies and renewables was the passage of several pieces of legislation responding to the recent financial crisis and subsequent economic downturn, particularly the American Recovery and Reinvestment Act of 2009 (ARRA) and the Energy Improvement and Extension Act (EIEA). Some of the ARRA-related programs that account for a large portion of the growth in subsidies and support between FY 2007 and FY 2010 are temporary and the subsidies associated with them are scheduled to phase out over the next few years. Other recent legislation impacting energy subsidies included the Food, Conservation, and Energy Act of 2008, which provided significant new subsidies to biofuels (primarily ethanol and biodiesel) producers, and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended the sunset dates for several tax expenditure programs, as well as the grant program for qualifying renewables.

    The report indicates that conservation and end-use subsidies experienced rapid growth in both absolute and percentage terms, more than tripling in real terms between FY 2007 and FY 2010. The increase in subsidies and support was led by growth in direct expenditures and tax expenditures. The home energy efficiency improvement tax expenditure accounts for most of the increase in conservation-related subsidies between FY 2007 and FY 2010. Conservation subsidies were almost equally divided between direct expenditures and tax expenditures, with estimated tax credits for energy efficiency improvements to existing homes totaling $3.2 billion. These tax credits funded investments in energy-efficient windows, furnaces, boilers, boiler fans, and building envelope components. End-use subsidies, nearly all of which were provided through direct expenditures of appropriated funds, were boosted by a doubling of expenditures in the Low Income Home Energy Assistance Program (LIHEAP) spending between FY 2007 and FY 2010.

    The report indicates that relative to their share of total electricity generation, renewables received a large share of direct federal subsidies and support in FY 2010. For example, renewable fuels accounted for 10.3 percent of total generation, while they received 55.3 percent of federal subsidies and support. However, caution should be used when making such calculations because many factors can drive the results. For example, many of the programs that showed the largest increases in subsidies between FY 2007 and FY 2010 are supporting facilities that are still under construction, including energy equipment manufacturing facilities that may not affect energy consumption or production for several years. Furthermore, the ARRA 1603 grant program, that allows investors to choose an upfront grant instead of a 10-year production tax credit, tended to lead to much higher overall electricity subsidy estimates for renewables in FY 2010 than would have occurred had they continued to rely on the existing production tax credit program, which does not front-load subsidy costs. Focusing on a single year's data also does not capture the imbedded effects of subsidies that may have occurred over many years across all energy fuels and technologies.

    Additionally, the report indicates that biofuels receive most of the subsidies and support for fuels used outside the electricity sector. Based on the subsidy categories used in this report, subsidies and support for fuels used outside the electricity sector, at $10.4 billion, accounted for 28 percent of total energy subsidies. In this category, biomass and biofuels received the largest subsidy in FY 2010, at $7.6 billion. Under the Volumetric Ethanol Excise Tax Credit (VEETC), blenders receive a $0.45-per gallon credit for each gallon of ethanol that is blended with gasoline for use as a motor fuel. Internal Revenue Service regulations require that blenders apply for VEETC refunds to offset gasoline excise tax payments, but they may submit a claim for payment or take a credit against other taxes if their VEETC credits exceed their gasoline excise tax liability. Based on its implementation rules, the Treasury reports VEETC as a $5.7-billion reduction in excise tax revenues for FY 2010. For purposes of this report, VEETC is classified as tax expenditure.

    Finally the report notes, natural gas and petroleum liquids also received significant subsidies and support for fuels used outside the electricity sector. They accounted for 20.7 percent of the fuel specific subsidies and support and, together with biofuels, accounted for nearly 94 percent of the subsidies and support going to fuels not supporting electricity production.

    Access the complete 105-page report (click here). Access an Executive Summary and Tables with links to footnotes (click here). [#Energy/Subsidies]

The Infamous Bipartisan Debt Deal Is Finalized

Aug 2: Following weeks of debate on the highly controversial issue of raising the United States debt ceiling, a deal was finally reached on Sunday (July 31), and the U.S. House voted in bipartisan fashion, 269-161, to approve the measure last evening (August 1). The bill, the Budget Control Act of 2011 (S.365), was voted on in the U.S. Senate today (August 2) and also passed with a bipartisan vote of 74-26. The President signed the bill shortly following the Senate approval. Below, we have included excerpts from summaries released by the White House and House Republicans, because there is different emphasis and interpretations by both.

 

    A White House fact sheet indicates that the "Bipartisan Debt Deal: A Win for the Economy and Budget Discipline" as follows:

• Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation's first default now, or in only a few months, for political gain;
• Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
• Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
• Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
• Stays true to the President's commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks. 

    According to the White House summary the bill will:

• Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
• President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
• Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011 [the day before Thanksgiving Day], which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
• Enforcement mechanism established to force all parties -- Republican and Democrat -- to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 -- split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.  

    The White House summary also emphasizes that: "The deal puts us on track to cut $350 billion from the defense budget over 10 years; The enforcement mechanism would not be made effective until 2013, avoiding any immediate contraction that could harm the recovery; The deal provides specific protection in the discretionary budget to ensure that the there will be sufficient funding for the President's historic investment in Pell Grants without undermining other critical investments; Any recommendation of the Committee would be given fast-track privilege in the House and Senate, assuring it of an up or down vote and preventing some from using procedural gimmicks to block action; To Meet This Target, the Committee Will Consider Responsible Entitlement and Tax Reform. This means putting all the priorities of both parties on the table – including both entitlement reform and revenue-raising tax reform."

 

    The White House said, "The deal is designed to achieve balanced deficit reduction, consistent with the values the President articulated in his April Fiscal Framework. The discretionary savings are spread between both domestic and defense spending. And the President will demand that the Committee pursue a balanced deficit reduction package, where any entitlement reforms are coupled with revenue-raising tax reform that asks for the most fortunate Americans to sacrifice. . . The enforcement mechanism in the deal exempts Social Security, Medicaid, Medicare benefits, unemployment insurance, programs for low-income families, and civilian and military retirement."

 

    House Republican Speaker John Boehner (R-OH) issued a summary saying, "The final agreement to cut spending and avoid default meets Republicans' criteria to (1) cut government spending more than it increases the debt limit; (2) implement spending caps to restrain future spending; and (3) advance the cause of a Balanced Budget Amendment -- all without tax hikes on families and job creators.  It is largely consistent with the bill House Republicans passed last Friday [July 29], and reflects the principles of Cut, Cap, & Balance."

 

    The Republican summary emphasizes that, "As further protection against any tax hikes, the Joint Committee of Congress (described below) will be scored on a current-law baseline.  The committee would have to raise taxes by more than $3.5 trillion above today's rates before it would begin to count as 'deficit reduction.'  Since that is unlikely, there is little chance the Joint Committee will produce a bill that increases taxes."

 

    The Republican summary indicates, "The bill would cut and cap discretionary spending immediately, saving $917 billion over 10 years – as certified by the nonpartisan Congressional Budget Office CBO) – and raise the debt ceiling by less – $900 billion – to approximately February. Congress must vote to cut spending FIRST.  Then, the President may ask for debt authority of up to $900 billion, which will be subject to a vote of disapproval by the House and Senate that can be vetoed by the President."

 

    Regarding the "Balanced Budget" issue, the Republican summary indicates, "The bill advances the cause of a Balanced Budget Amendment by requiring the House and Senate to vote on the measure after October 1, 2011 but before the end of the year, allowing the American people time to build sufficient support for this popular reform. This is the same as the House-passed bill.  Also, similar to the House-passed bill, the measure authorizes the President to request a second tranche of debt limit increase of $1.5 trillion if the Joint Committee's proposal is enacted OR if a Balanced Budget Amendment is sent to the states."

 

    One of the key elements of the deal is the 12-member Joint Committee of Congress [a.k.a. the Super Committee] that is required to report legislation by November 23, 2011, that would produce a proposal to reduce the deficit by another $1.5 trillion over 10 years. House and Senate Republicans would each appoint 3 members to the Committee. Each chamber would consider the proposal of the Joint Committee on an up-or-down basis without any amendments by December 23, 2011. Many observers predict the Super Committee will result in another deadlock because their is no tie-breaking mechanism and the mandatory across-the-board cuts will be enacted.

 

    If the Joint Committee fails to achieve at least $1.2 trillion, then the President may request up to $1.2 trillion for a debt limit increase. The deal includes an automatic sequester on certain spending programs to ensure that -- between the Committee and the trigger -- that at least an additional $1.2 trillion in deficit reduction by 2013. If the Joint Committee recommendations are not implemented then across-the-board spending cuts would apply to FYs 2013-2021, and apply to both mandatory and discretionary programs. The final agreement specifies that total reductions would be equally split between defense and non-defense programs. The across-the-board cuts would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side.

 

    Access the White House fact sheet (click here). Access a video and the President's remarks (click here). Access the complete House Republican summary (click here). Access the 74-page final version of S.365 (click here). Access legislative details for S.365 including the roll call votes (click here). [#All]

U.S. "Nuclear Waste Management Program Is At An Impasse"

Jul 29: The President's Blue Ribbon Commission on America's Nuclear Future (BRC) released the draft full commission report for public comment. The draft report represents the work and recommendations BRC to date. BRC said, "It is important to note that we expect this document to continue to change and take form as we receive additional comments." The public comment period will be open through October 31, 2011. On May 13, the BRC 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 [See WIMS 5/16/11].

 

    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.

 

    According to the BRC final draft report, "America's nuclear waste management program is at an impasse. The Obama Administration's decision to halt work on a repository at Yucca Mountain in Nevada is but the latest indicator of a policy that has

been troubled for decades and has now all but completely broken down. The approach laid out under the 1987 Amendments to the Nuclear Waste Policy Act (NWPA) -- which tied the entire U.S. high-level waste management program to the fate of the Yucca Mountain site -- has not worked to produce a timely solution for dealing with the nation's most hazardous radioactive materials. The United States has traveled nearly 25 years down the current path only to come to a point where continuing to rely on the same approach seems destined to bring further controversy, litigation, and protracted delay.

 

    "The Blue Ribbon Commission on America's Nuclear Future (the Commission) was chartered to recommend a new strategy for managing the back end of the nuclear fuel cycle. We approached this task from different perspectives but with a shared sense of urgency. Put simply, this nation's failure to come to grips with the nuclear waste issue has already proved damaging and costly and it will be more damaging and more costly the longer it continues: damaging to prospects for maintaining a potentially important energy supply option for the future, damaging to state–federal relations and public confidence in the federal government's competence, and damaging to America's standing in the world -- not only as a source of nuclear technology and policy expertise but as a leader on global issues of nuclear safety, non-proliferation, and security. Continued stalemate is also costly -- to utility ratepayers, to communities that have become unwilling hosts of long-term nuclear waste storage facilities, and to U.S. taxpayers who face mounting liabilities, already running into billions of dollars, as a result of the failure by both the executive and legislative branches to meet federal waste management commitments.

 

    A new strategy is needed, not just to address these damages and costs but because this generation has a fundamental ethical obligation to avoid burdening future generations with the entire task of finding a safe permanent solution for managing hazardous nuclear materials they had no part in creating. At the same time, we owe it to future generations to avoid foreclosing options wherever possible so that they can make choices -- about the use of nuclear energy as a low-carbon energy resource and about the management of the nuclear fuel cycle—based on emerging technologies and developments and their own best interests.

 

    "Almost exactly one year after the Commission was chartered and less than five months before our initial draft report was due, an unforeseen event gave new urgency to our charge and brought the problem of nuclear waste into the public eye as never before. A devastating earthquake off the northeastern coast of Japan and the unprecedented tsunami that followed set off a chain of problems at the Fukushima Daichii nuclear power station that eventually led to the worst nuclear accident since Chernobyl. In the

weeks of intense media coverage that followed, many Americans became newly aware of the presence of tens of thousands of tons of spent fuel at more than 70 nuclear power plant sites around this country -- and of the fact that the United States currently has no physical capacity to do anything with this spent fuel other than to continue to leave it at the sites where it was first generated.

 

    "The strategy we recommend in this draft report has seven key elements:

1. A new, consent-based approach to siting future nuclear waste management facilities.
2. A new organization dedicated solely to implementing the waste management program and empowered with the authority and resources to succeed.
3. Access to the funds nuclear utility ratepayers are providing for the purpose of nuclear waste management.
4. Prompt efforts to develop one or more geologic disposal facilities.
5. Prompt efforts to develop one or more consolidated interim storage facilities.
6. Support for continued U.S. innovation in nuclear energy technology and for workforce development.
7. Active U.S. leadership in international efforts to address safety, waste management, nonproliferation, and security concerns.

    The elements of this strategy will not be new to those who have followed the U.S. nuclear waste program over the years. All of them are necessary to establish a truly integrated national nuclear waste management system, to create the institutional leadership and wherewithal to get the job done, and to ensure that the United States remains at the forefront of technology developments and international responses to evolving nuclear safety, non-proliferation, and security concerns. . .

 

    "Overall, we are confident that our waste management recommendations can be implemented using revenue streams already dedicated for this purpose (i.e., the Nuclear Waste Fund and fee). Other Commission recommendations -- particularly those concerning nuclear technology programs and international policies -- are broadly consistent with the program plans of the relevant agencies. A second overarching point concerns timing and implementation. All of our recommendations are interconnected and will take time to implement fully, particularly since many elements of the strategy we propose require legislative action to amend the NWPA and other relevant laws . . ."

 

    Acting Department of Energy (DOE) Press Secretary Damien LaVera issued a brief comment on the BRC "Interim Recommendations" saying, "The Obama Administration continues to believe that nuclear energy has an important role to play as America moves to a clean energy future. As part of our commitment to restarting the American nuclear industry and creating thousands of new jobs and export opportunities in the process, we are committed to finding a sustainable approach to assuring safe, secure long-term disposal of used nuclear fuel and nuclear waste. Secretary Chu appreciates the hard work done by the members of the Blue Ribbon Commission, and thanks them for a very thoughtful report. The interim report issued today is a strong step toward finding a workable solution to the challenges of the back end of the fuel cycle."

   

    The Nuclear Energy Institute's (NEI) senior vice president for governmental affairs, Alex Flint issued a statement on the report saying in part, "The Blue Ribbon Commission has rightly recognized that the national nuclear waste management system must be truly integrated and that the United States should remain at the forefront of technology developments and international efforts to responsibly manage nuclear materials. A number of recommendations in the report strike the nuclear energy industry as sensible, desirable and, given time, achievable. The industry is particularly gratified to see the recommendations calling for the establishment of one or more consolidated interim storage facilities for used nuclear fuel; development of a permanent underground repository for commercial used fuel and high-level radioactive waste from U.S. defense programs; creation of a new management organization that will assume the U.S. Department of Energy's role in managing this material; and legislation providing full access to nuclear waste fee revenues and the federal Nuclear Waste Fund. These should be among the nation's top energy policy priorities.The industry concurs with the Blue Ribbon Commission's assertion that the availability of consolidated interim storage will provide 'valuable flexibility' in the nuclear waste management system. . . the nuclear energy industry continues to believe that . . . review of the Department of Energy's license application for the proposed Yucca Mountain, Nevada, repository should continue."

 

    Access the complete 192-page final draft report (click here). Access the BRC website for additional draft reports, background and an online commenting form (click here). Access the DOE statement (click here). Access the NEI statement (click here). [#Energy/Nuclear, #Haz/Nuclear]

 

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President Makes 54.5 MPG CAFE Proposal Official

Jul 29: Approximately 20 minutes after he addressed the nation on status of debt ceiling negotiations, President Obama announced an historic agreement with thirteen major automakers to pursue the next phase in the Administration's national vehicle program, increasing corporate average fuel economy (CAFE) standard to 54.5 miles per gallon for cars and light-duty trucks by Model Year 2025 [See WIMS 7/28/11]. The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo – which together account for over 90 percent of all vehicles sold in the United States -- as well as the United Auto Workers (UAW), and the State of California, who were integral to developing this agreement.

 

    Immediately following the nationally televised debt ceiling announcement, the President opened the CAFE announcement saying, "I've been having a lot of fun this week, but -- nothing more fun and more important to the future of the American economy than the agreement that we're announcing today. I am extraordinarily proud to be here today with the leaders of the world's largest auto companies, and the folks who represent autoworkers all across America. . .

 

    "For decades, we've left our economy vulnerable to increases in the price of oil. And with the demand for oil going up in countries like China and India, the problem is only getting worse. The demand for oil is inexorably rising far faster than supply.  And that means prices will keep going up unless we do something about our own dependence on oil. That's the reality. . .

 

    "I've laid out an energy strategy that would do that. In the short term, we need to increase safe and responsible oil production here at home to meet our current energy needs. And even those who are proponents of shifting away from fossil fuels have to acknowledge that we're not going to suddenly replace oil throughout the economy. We're going to need to produce all the oil we can. But while we're at it, we need to get rid of, I think, the $4 billion in subsidies we provide to oil and gas companies every year at a time when they're earning near-record profits, and put that money toward clean energy research, which would really make a big difference. Those are all short-term solutions, though.  In the long run, we're going to have to do more.. .

 

    "And that's why we're here today. This agreement on fuel standards represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil. Think about that. Most of the companies here today were part of an agreement that we reached two years ago to raise the fuel efficiency of their cars over the next five years. And the vehicles on display here are ones that benefited from that standard.  Folks buying cars like these in the next several years will end up saving more than $3,000 over time because they can go further on a gallon of gas. And today, these outstanding companies are committing to doing a lot more. The companies here today have endorsed our plan to continue increasing the mileage on their cars and trucks over the next 15 years. We've set an aggressive target, and the companies here are stepping up to the plate.

 

    "By 2025, the average fuel economy of their vehicles will nearly double to almost 55 miles per gallon. So this is an incredible commitment that they've made.  And these are some pretty tough business guys. They know their stuff. And they wouldn't be doing it if they didn't think that it was ultimately going to be good business and good for America. . . Think about what this means. It means that filling up your car every two weeks instead of filling it up every week.  It will save a typical family more than $8,000 in fuel costs over time. And consumers in this country as a whole will save almost $2 trillion in fuel costs. . .

 

    "And just as cars will go further on a gallon of gas, our economy will go further on a barrel of oil.  In the next 15 years, we're going to reduce the amount of oil we need by 2.2 million barrels per day. And this will help meet the goal that I've set for America:  reducing our dependence on foreign oil by one-third. Using less oil also means our cars will produce fewer emissions. So when your kids are biking around the neighborhood, they'll be breathing less pollution and fewer toxins. It means we're doing more to protect our air and water. And it means we're reducing the carbon pollution that threatens our climate. Lastly, these standards aren't just about the bad things we'll prevent; it's about the good things that we'll build.  As these companies look for ways to boost efficiency, they'll be conducting research and development on test tracks. They're going to look to startups working on biofuels and new engine technologies. They're going to continue to invest in advanced battery manufacturing. They're going to spur growth in clean energy. And that means new jobs in cutting-edge industries all across America. . ."

 

    The oil savings, consumer, and environmental benefits of this comprehensive program are detailed in a new report entitled Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil, which the Administration released today. 

 

    U.S. Transportation Secretary Ray LaHood said, "These standards will help spur economic growth, protect the environment, and strengthen our national security by reducing America's dependence on foreign oil. Working together, we are setting the stage for a new generation of clean vehicles." EPA Administrator Lisa Jackson said, "This is another important step toward saving money for drivers, breaking our dependence on imported oil and cleaning up the air we breathe. American consumers are calling for cleaner cars that won't pollute their air or break their budgets at the gas pump, and our innovative American automakers are responding with plans for some of the most fuel efficient vehicles in our history."

    The White House indicated in a release that a national policy on fuel economy standards and greenhouse gas emissions provides regulatory certainty and flexibility that reduces the cost of compliance for auto manufacturers while addressing oil consumption and harmful air pollution. Consumers will continue to have access to a diverse fleet and can purchase the vehicle that best suits their needs.

    EPA and the National Highway Traffic Safety Administration (NHTSA) are developing a joint proposed rulemaking, which will include full details on the proposed program and supporting analyses, including the costs and benefits of the proposal and its effects on the economy, auto manufacturers, and consumers. After the proposed rules are published in the Federal Register, there will be an opportunity for public comment and public hearings. The agencies plan to issue a Notice of Proposed Rulemaking by the end of September 2011. California plans on adopting its proposed rule in the same time frame as the Federal proposal.

 

    Given the long time frame at issue in setting standards for MY2022-2025 light-duty vehicles, EPA and NHTSA intend to propose a comprehensive mid-term evaluation. Consistent with the agencies' commitment to maintaining a single national framework for vehicle GHG and fuel economy regulation, the agencies will conduct the mid-term evaluation in close coordination with California.

 

   In achieving the level of standards described above for the 2017-2025 program, the agencies expect automakers' use of advanced technologies to be an important element of transforming the vehicle fleet. The agencies are considering a number of incentive programs to encourage early adoption and introduction into the marketplace of advanced technologies that represent "game changing" performance improvements, including:

• Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
• Incentives for advanced technology packages for large pickups, such as hybridization and other performance-based strategies;
• Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures. 

In addition, EPA plans to propose provisions for:

• Credits for improvements in air conditioning (A/C) systems, both for efficiency improvements and for use of alternative, lower global warming potential refrigerant;
• Treatment of compressed natural gas (CNG);
• Continued credit banking and trading, including a one-time carry-forward of unused MY 2010-2016 credits through MY 2021.

    Access the full text of the President's comments (click here). Access a background document listing all auto company attendees, legislators, and officials (click here). Access a White House press release (click here). Access the Driving Efficiency report (click here). Access a CAFE overview from the NHTSA website (click here). Access EPA's Fuel Economy website (click here). Access the May 10 FR announcement (click here). Access the NHTSA docket for this action (click here). [#Energy/CAFE]

 

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