Senator Jeff Bingaman
The Plan for the Senate Energy Committee
Special Issue
Volume A Number 1
I want to talk about the prospects for progress on energy legislation in the new Congress. And of course with the new administration, I think we have the circumstances in place that can lead to a very productive Congress with regard to energy legislation. There are a lot of challenges that the country faces on energy, which the new Congress and administration are committed in trying to deal with. So that's very positive.
When you have a commitment by a president to see progress in these areas and you also have bipartisan cooperation in the Congress to work with the administration, that's a good recipe for making progress. And I think that's what we have.
The Energy Independence and Security Act of 2007—€”that President Bush signed a year ago—€”was significant. The Energy Information Administration has projected the lessening of future oil imports because of the legislation. Carbon dioxide admissions will be reduced. Its estimate is that we will have savings of three million barrels of oil per day by 2030, primarily because of the increased vehicle fuel efficiency provisions in that bill. We will also have a half-million metric tons per year less in greenhouse gas emissions by 2030. So that's real progress—€”but obviously modest progress, compared to the size of the challenges we face.
Let me talk about what I hope we can do in six different areas. First is the deployment of clean energy technology, which is a major need. Second is improving energy efficiency—€”what more can we do in that respect. Third is maintaining adequate supplies of conventional fuels while we make this transaction to newer forms of energy. Fourth is increasing energy innovation in our country and taking the steps necessary to ensure that happens. Fifth is making energy markets more transparent. And finally, sixth, is maintaining a proper balance between meeting our energy needs and meeting our environmental needs, especially as it relates to global warming.
So let me just jump into the first of those, and give you some thoughts. The first major challenge is, how do we do a better job of actually deploying the clean energy technology that has been developed or is being developed, particularly in the electricity sector? I know that's a major focus of this Summit. For many years, I've advocated the adoption of a renewable electricity standard for the generation of electricity. In my view, we not only need a long-term market pool for generation technologies, but we also need the additional incentive that renewable electricity standard will provide.
The circumstances are right in the new Congress for us to actually enact and implement that idea. A national renewable electricity standard will enhance the diversity of domestic electric generation, which is very much in our interest.
It will help the United States to regain a leadership role in world technology development and help start preparing our electricity sector for the inevitable requirements that are going to be imposed upon them to reduce greenhouse gas emissions.
In addition to a more renewable generation, we also need to implement a smart and robust national transmission grid. There's significant bipartisan sentiment around the country and particularly in Congress in favor of addressing the tough issues that have kept us from taking action in this area in the past. These issues are difficult and doing something in any of them will require extensive dialogue among a large number of stakeholders.
In addition to these actions and policy challenges, we also need to take steps toward building the so-called smart grid of the future. Congress authorized a variety of smart grid programs in the 2007 bill that I referred to earlier. But in the stalemate of last year's federal spending debate, none of these programs were funded. I am hoping, frankly, that the stimulus package can provide the funding for those smart grid demonstration programs. That would be a major step forward.
Another key clean energy technology for the future is carbon dioxide capture, transportation and storage, or CCS. In the new Congress, we need to enact a comprehensive approach to this technology that addresses the need to rapidly deploy commercial-scale projects. There are important regulatory questions that need to be addressed. There are obviously funding issues for these large projects as well.
The final issue that relates to clean energy technology deployment is the issue of financing for large-scale deployment of new technologies. For several years now, we've been looking for ways to facilitate the large-scale investments that are needed in the energy sector. The problem has gotten much worse because of the meltdown in our financial markets. In 2005, Senator Pete Domenici led the effort, and I joined with him, to establish a loan guarantee program in the Department of Energy. Unfortunately that program, although a lot of work has been done in the DOE on it, has yet to issue a single loan guarantee. We obviously need to take a very hard look at that in the new Congress as to whether the program is structured properly. How can we supplement loan guarantees and other mechanisms to help with this financing of large, new, clean energy projects?
Let me move to the second item—€”energy efficiency. In looking at energy efficiency in transportation, the main provision in the 2007 legislation that results in reduced need for use of oil and gasoline in the future, is the increase in CAFE standards. This was the first time in over 30 years that Congress had been able to enact improvements in vehicle fuel efficiency. We also put in place a direct loan program to help retool Detroit to meet those standards.
As we proceed to take action that is helpful to the auto industry, we need to also look at how we create additional incentives for promoting energy efficiency and transportation. A main driver of increased attention to energy was the high price of gasoline in recent months. The price peaked at $147 a barrel. Today it's somewhat less than $50. There's a tremendous volatility in that and the danger is with the lower prices we will go back to a period of complacency about weaning ourselves from such dependence on foreign sources of energy.
Another subject that clearly needs attention with regard to energy efficiency is improvement in the building sector. After transportation, it is probably the largest source of greenhouse gas emissions and may be the largest source. Our current federal laws to promote building efficiency are very weak. We need to do more to encourage the adoption of modern energy-saving building codes across the country. We also need to do a better job of giving building owners and prospective buyers more information on the energy-performance ratings of buildings and homes that they're purchasing.
We also need to deal with energy efficiency standards for appliances. We've done a lot over the years to promote increased standards for appliances, but we need to find ways to improve that program.
The third area is maintaining adequate supplies of conventional fuels. Clearly, as we see this long-term push to cleaner sources of energy, we all recognize that this does not mean we can ignore our existing major sources of energy. As we make this transition, we need to recognize that traditional fossil fuels will be the mainstay of meeting our energy needs for a long period. Our energy strategy has to make sure that we have adequate supplies of conventional fuels as we go through that transition. We need an intelligent policy to continue to promote domestic oil and gas production, both on and off shore, and that production has to be undertaken in an environmentally responsible way with recognition that there are many users and stakeholders involved.
The fourth item is energy innovation. Our ability to fund new energy science and engineering and to train the next generation of energy researchers, engineers and technicians is absolutely crucial. Our investments in these areas have been totally inadequate in the last decade and even longer. We need to boost these levels substantially. I believe the enactment of the America Competes Act with strong bipartisan support indicates there is a commitment to strengthening the federal science and technology programs substantially.
The fifth goal is to make our energy markets more transparent. We have had to become aware of what has been called the new fundamentals in energy markets.
That means supply and demand are still very important, but there are other forces at work that are affecting energy prices and particularly in patterns of energy investments and trading. Frankly, we need better data and better oversight of these new market players and forces if we want energy markets to function effectively in the future.
And the final subject relates to the balance between meeting our energy needs and meeting our environmental obligations, especially as it relates to global warming. This is a major undertaking. Building a broad consensus on what a global-warming regulatory regime should look like is not going to be easy. No one that I've spoken to is anticipating there will be quick action in the new Congress on a cap and trade bill. This is legislation that President Obama is committed to. But for us to get a consensus on the detail of that, and how to proceed, is not going to be that easy.
The ultimate cost of any cap and trade system will be greatly influenced by the quality of the technologies that are ready to be implemented to reduce and to avoid greenhouse gas emissions. If we wait until we have a cap and trade system actually in place, it's going to be several years down the road. And if we wait until that time to make these funds available for technology development, I think we will be making a major mistake. Since almost all human-caused carbon dioxide emissions relate to energy production, transportation and use, a strong energy bill is an opportunity for us to address these technology prerequisites in advance, and go forward with enactment of a cap and trade bill. A well-designed and executed energy bill will both reduce the complexity of a cap and trade piece of legislation, and reduce the cost of complying with a cap and trade regime.
Energy is not an inherently partisan issue. It's one where we can take bipartisan agreement on a significant action that needs to be taken. We have done that in the past and I'm looking forward to working with my colleagues, both on the Democratic and Republican sides, on the Senate Energy Committee.
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