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Energy Policy Act Of 2005

Sen. Lamar Alexander

legislator photo

Mr. President, late last night the Senate finished work on what I call the Clean Energy Act of 2005. For Americans who watch the legislative process, this is not likely to have been the front-page news, but it is by far one of most important things we have done in this Senate because it affects millions of Americans. Our final vote is on Tuesday. I anticipate it will be a strong, bipartisan vote in support, just as the work that was done here was strong and bipartisan. The first thing the bill will do, and most important, in my opinion, is to stabilize and lower natural gas prices. We hear a lot of talk about $60 a barrel oil. No one likes to pay high prices for gasoline at the pump. The bigger problem is the price of natural gas. In North Carolina and Tennessee, all across this country, there are millions of blue-collar workers who work in plants where the cost of natural gas is driving their jobs overseas. Natural gas used to be in this country the lowest price in the industrial world at a unit price of $2 or $3. Our economy was geared to it. Today it is at $7, and headed up.

If you are working at the Eastman plant in Tennessee, where 10,000 or 11,000 people work, and 40 percent of the cost of your product is natural gas--because they make chemicals there; and you can buy natural gas at $7 here, and you can buy it at $5, $4 overseas--those jobs are going to be headed overseas if that keeps up for very long.

If you are a farmer in North Carolina or Tennessee, the cost of fertilizer has gone up $200 to $500 per unit. That is a big pay cut for you if you are a farmer.

If you are a homeowner across this country and you rely on natural gas to heat and cool your home--and natural gas heats and cools more homes than any other kind of fuel--you might find your bill going up 50 percent recently.

So for blue-collar workers, for farmers, and for homeowners, this legislation we will be voting on Tuesday stabilizes and potentially lowers the price of natural gas. That is one of the single most important things we can do for our country.

The second thing, in my view, the bill does that is important is it recognizes that global warming is a problem. There is not a complete consensus about that in the Senate, but the bill has a different kind of consensus that makes more difference, in my opinion, than the mandates that we did not adopt because the bill changes the way we produce electricity toward ways that are low carbon and no carbon. If you produce less carbon, then you have less global warming, if you believe carbon makes a difference in global warming.

So there is a big difference in the conversation and debate in the Senate this year over last year, in my judgment. While the McCain-Lieberman amendment was rejected--I voted against it myself--there was adopted the Hagel amendment, which has significant new incentives for producers of carbon across this country to reduce the amount of carbon they emit.

We did pass the Bingaman sense-of-the-Senate resolution, which I voted for, which says we expect one day to have mandatory controls that lead us toward a lower carbon production economy. But I, for one, am not yet ready to impose mandatory controls on this big, complicated economy because I do not think we know enough about what it would do to the economy, and I do not think it is wise.

Senator Domenici and Senator Bingaman have said they will begin, in July, to hold hearings about this complicated process and to assess how the incentives we may enact--or likely will enact--in this bill operate. Over the next year or two or three or four years, we may learn more.

We may learn enough where a majority of us are willing to have some system of mandatory caps, just as we have in other areas of clean air and acid rain, for example. But in my opinion, we are not there yet.

But the second most important thing in this legislation, in my view, is a shift in attitude toward global warming, a recognition by a majority of the Senators that it is a real problem and taking significant steps to change the way we make electricity so that we make it in a low-carbon or no-carbon way.

The third big change, I believe, is the technologies we use to meet those objectives of lowering natural gas prices and of producing low-carbon or no-carbon electricity. I would call it a new realism about energy in this country. This is a big country. We produce 33 percent of all the money. We use 25 percent of all the energy in the world. We are not some desert island. We use a lot of electricity for our computers and our jobs and our homes. If we have any disruption in that--whether it is a blackout or it is a price that is too high or a lack of supply--it has devastating consequences for us.

So there is a new realism, I would say, about exactly what is available to help us get where we want to go. First is aggressive conservation. That is new about this bill. It is twice the amount of conservation that was in the bill that we passed a year ago which never became law. By conservation, I mean new efficiency standards for appliances. The estimate of our committee is that these new efficiency standards for appliances will avoid the building of as many as 45 large gas electricity plants. That is significant conservation.

There is a provision in the bill that would give 300,000 Americans a $2,000 deduction to buy a hybrid or an advanced-diesel car. That reduces the use of oil. That is aggressive conservation.

There is an amendment in the bill that would have the President mandate a million-barrels-a-day reduction in the use of oil. That is aggressive conservation because that amount of oil equals about the entire production onshore of the State of Texas or the entire projected production from ANWR in Alaska. So we have aggressive conservation. We start there because that is the first thing we can do to save oil, increase supply, and reduce prices.

The second thing this bill does is recognize we need new supplies. We have taken steps to make it easier to bring liquefied natural gas into this country. Some may say: Oh, we don't want to go down that road. We are already bringing in too much oil.

We all agree with that. But if we do not bring the natural gas in, we are going to be sending the jobs out. And for the foreseeable future, for the short term, if we want to reduce the cost of natural gas, we need to bring a lot of it in from overseas. And having a few more terminals, as provided in the streamlined provisions in this bill--which still give States and communities input into where it goes--is a very important provision.

This legislation basically relaunches the American interest in nuclear power. That is realistic, too. There is a growing interest in global warming. That is caused, many say, by carbon in the air. So we need energy that has less carbon. Seventy percent of the carbon-free electricity we produce in the United States today comes from nuclear power. So if we care about global warming, we better care about nuclear power. There is no other way around it.

There are incentives for advanced nuclear power, the kind of reactors that do not cost as much to build. We know how to operate them. Twenty percent of our electricity is already from that. We invented the technology. Dozens of our Navy vessels operate with nuclear reactors. They have, without incident, since the 1950s. France is now 80 percent nuclear power. They are the European country most likely to meet the Kyoto standards because they have adopted the technology that is likely to produce the largest amount of carbon-free electricity--nuclear power.

We also have come to a consensus within the last year--I think I am accurate on this--that waiting in the wings behind nuclear power is coal gasification and carbon sequestration. Long words, but it simply means we take this several-hundred-year supply of coal that we have and we find a clean way to burn it. The way we are encouraging that in this legislation is to turn the coal into gas and then burn the gas. That gets rid of the nitrogen and the mercury and the sulfur, but it leaves the carbon.

There are also provisions, incentives in this bill, and loan guarantees and authorization, then, to have large demonstrations of carbon sequestration, taking the remaining carbon dioxide--the major residue or pollutant from coal gasification--and putting it in the ground.

Now, this is the strategy that is preferred by several important environmental groups. That sounds like a surprise. They would prefer coal? Here is the reason. They have some concerns about nuclear--the proliferation problems, the storage of waste--but if coal can be burned in a clean way and the carbon can be recaptured and put in the ground, that is a solution to global warming without mandates.

That is a solution, and not just in the United States but around the world. Because we might clean up our air, but if China and India and the rest of the world build hundreds of coal plants that are dirty, it will not matter what we do because the air just goes around the world, and we will be breathing it, too. So a very important way for us to help the world have clean air and an adequate supply of electricity is coal gasification.

So I call that the new realism: conservation; increased natural gas supplies, including from overseas; relaunching nuclear; and coal gasification and carbon sequestration. If we do that over the next 10 years, we will have an adequate supply of American-produced, reliable, low-carbon electricity. And the debate about global warming will be off our desks because we will not be producing enough carbon to affect global warming, and we can argue about something else.

Now, there is also generous support in this legislation for renewable energy. I am especially pleased that for the first time, we have support for solar energy in a useful way. Up to this time, we have had a renewable tax credit that solar could not take advantage of. But the Finance Committee changed that. Solar shows some promise, as does biomass, as does some geothermal, as does wind. I think my colleagues know I think wind is heavily oversubsidized and overestimated, but it is supported in here.

But there is a realism about that. We are not going to run the American economy on windmills and solar panels. They will provide a few percent of what we need by the year 2025. If we want carbon-free adequate supplies of American-produced energy, we are going to have to conserve, launch nuclear again, do coal gasification, and bring in supplies of natural gas. Renewables are fine, but they are a very small part of the answer. While we do not all agree on that here in the Senate, there is still a consensus.

There is also generous support for longer term technologies. I think we are realistic about that as well. There is a great deal of excitement about the hydrogen-fuel-cell vehicle.

When I was in Yokohama a year ago, I visited a hydrogen-fuel-cell vehicle filling station. There were seven SUVs parked, all of them from different manufacturers in the world, many of them American. I filled up the Nissan hydrogen-fuel-cell vehicle. Carlos Ghosn is the chief executive of Nissan. He drives that vehicle around Tokyo every weekend. He is spending $700 million of Nissan money every year on hydrogen-fuel-cell research. And Toyota is doing the same. Others--Ford, General Motors--are all interested.

But the potential of hydrogen is down the road. It's several years away. We are going to be talking about it, working on it--and hopefully it will come to fruition. But it is several years down the road. When we produce enough hydrogen to run our automobiles, we will have to use nuclear power or natural gas or coal gasification to produce that hydrogen.

So I would say of special note--to reemphasize some of the points I made--is the serious interest in conservation. This is a bipartisan bill. You do not hear the word ``conservation'' come out of the mouths of every Senator first. You might not think Republican Senators would start out talking, first, about conservation. But we know if we want to reduce the cost of natural gas, if we want to reduce our reliance on oil, that the quickest and easiest way to do that is aggressive conservation.

Nuclear power--Senator Domenici, our chairman, mentioned to me we had something like 167 amendments offered to this bill at one time, and so far as we could tell, not a single amendment was antinuclear, not a single amendment was antinuclear. There is a growing awareness that if we want carbon-free electricity, we are going to have to have some nuclear powerplants to do that. That is a big change even just from last year.

Another big change, as I mentioned, is the emergence of coal gasification and carbon sequestration and support and research for that in a very serious way, both in industrial sites and in freestanding plants, and sequestration demonstrations. None of that was being discussed broadly by the Energy Committee last year. A few Senators understood that, but most of us, I think it is fair to say, did not really see the significance of this technology. Now we do, and we have strong support for it.

The importance of liquefied natural gas and the streamlining of siting--that may be the most important provision in the bill in terms of an immediate impact because there are large amounts of natural gas that can be brought in.

Another important development is the serious discussion of new supplies of natural gas here at home. Now, this is a very controversial subject. But last year we could not even get an inventory of what supplies of natural gas we have offshore. We have plenty of natural gas; we just have rules that say you cannot drill for it. There was no serious discussion of giving States the opportunity--other States, such as Virginia--the option of drilling in Federal waters offshore for natural gas, as Texas, Alabama, Mississippi, and Louisiana now do.

We couldn't get a vote on that because of the controversy, but I believe there were 51 votes in the Senate for giving States the option of deciding for themselves whether they wanted to allow natural gas drilling offshore, take a share of the money for the State, put a share of the money in a national fund for wildlife preservation, put the rest in the Federal Treasury, and put the gas into our system so we could lower the cost of natural gas. There is a lot of progress there.

Finally, I pay tribute to two parts of the Senate. One is to the Finance Committee for what it did with the tax title. The total amount of money of incentives is $14 to $16 billion. But rather than the amount of money, it is what it is for because it is completely consistent with clean energy objectives for low-carbon and no-carbon, new technologies. There is money for clean energy bonds for certified coal products, consumer incentives for hybrid and diesel vehicles, incentives for energy-efficient appliances and buildings, incentives for coal gasification powerplants, incentives for solar energy development in an important way for the first time in a long time, incentives for the deployment of advanced nuclear power, incentives for cogeneration projects. All of these will change the way we produce electricity.

I compliment Chairman Grassley and his staff for this. I hope very much that the Senate version of how we spend our tax dollars in support of research and development for clean energy is dominant in the conference rather than another version. That will be something we will have to work out with our friends in the House of Representatives.

I think a great deal of credit needs to go to Chairman Domenici and to Senator Bingaman, ranking Democrat on the committee. This bill came out 21 to 1 in favor from our committee. For those who are not in the Senate, this may sound like inside housekeeping. This body operates only by consensus. Nothing happens here--because of the unique nature of this body, where every Senator is an equal, every single one of us can stop anything at least for a while, unless there is a consensus. The consensus came because of the kind of leadership, beginning with Chairman Domenici, who personally visited all the members of the committee, including the Democratic members, in their offices, took their advice, incorporated their ideas, and we came to a consensus.

Senator Bingaman pointed out in our hearing that we had many votes, but he didn't remember a single party-line vote. We had close votes, but we voted our convictions and our regions of the country and our backgrounds and attitudes. We didn't line up and say: This is a Republican view and a Democratic view.

I am glad we have waited until next Tuesday morning to vote on the Clean Energy Act of 2005, until Chairman Domenici and Senator Bingaman can be here. They had to be in New Mexico yesterday for a BRAC hearing. They deserve to be here. I want the full Senate and our country to see the result that they have led. I believe their being here and the big vote we have will get us off to a big start.

I feel very good about what the Senate has done. I hope there is a big vote on Tuesday. For the American people, the result will be stabilized and lower natural gas prices for homeowners, for blue-collar workers, and for farmers; No. 2, a recognition that global warming is a problem, and the beginning of aggressive conservation and a variety of technologies to deal with that by producing low-carbon and no-carbon electricity; and, finally, a realism about the base load that we need to encourage in this country to produce that kind of electricity, aggressive conservation, new supplies of natural gas, relaunching nuclear power, coal gasification, and carbon sequestration.

I thank the Chair.

The Senator from Mississippi.