Energy Policy Act of 2003: Negative Energy

After over two years of legislative wrangling, an energy bill has finally emerged from “conference.” The need for a responsible, comprehensive set of policies to ensure safe, affordable, reliable energy could hardly be more acute. Unfortunately, the Energy Policy Act does not fit the bill. Its few positive elements, such as tax incentives for renewable energy, reliability standards for the electricity grid and funding for advanced technology research, are dwarfed by policies that further entrench the existing energy paradigm, putting our national security, economy, environment and public health at serious risk.

The goals of a responsible energy policy can be summed up simply: To reduce dependence on dangerous and finite sources of energy, protect and enhance our nation’s security and economy, and harness domestic technologies that can create jobs while delivering clean, reliable energy to consumers. The Energy Policy Act not only fails to meet these objectives, it undermines them. It’s little more than a grab bag of handouts to the industry lobbyists that contributed millions to ensure that vested interests prevail over clear thinking and technological innovation.

Among the most prominent flaws of the bill:

Threatening security

Instead of reducing dependence on foreign oil, the bill actually increases it, creating new loopholes to avoid improving automobile efficiency and lacking any oil savings goal. Tax credits for efficient cars that had long-standing bipartisan support were eroded to the point where hybrid technologies were rejected in favor of more support for diesel engines. A new program for hydrogen vehicles is awarded millions for research with no requirement that the technologies be deployed.

The bill raises the risk of nuclear proliferation by reversing a decades-old ban on reprocessing of spent fuel from commercial reactors. It directs billions in funds to the nuclear industry despite the fact that there still is no safe long-term nuclear waste storage solution and the industry is no closer to being competitive without federal price supports.

The reliability of the electricity grid remains in jeopardy as the bill fails to invest significantly in energy efficient technologies that can curb peak power demand. Major decisions about overhauling the electricity reliability system were postponed until 2007 with consumers left vulnerable to potential market manipulation as the bill repeals the Public Utility Holding Company Act without replacing it with strong consumer safeguards.

Squandering resources

With deficits ballooning and dollars for domestic programs scarce, the bill adds over $50 billion of additional debt. The vast majority of the tax breaks are directed toward mature, polluting oil, coal, and nuclear technologies.

Despite the support of a strong, bipartisan majority in the Senate, the bill dropped the federal requirement to produce a portion of our nation’s energy from clean, renewable sources of energy. Numerous studies of state experiments with such incentives have demonstrated that Renewable Portfolio Standards create jobs in addition to providing clean, secure, and domestic energy.

In addition to the billions spent on industry tax breaks, taxpayers are further shortchanged by new “royalty relief” provisions which rob the federal treasury of money owed by companies making a profit from energy sources on public lands. A billion dollars in federal royalty revenues intended for land conservation are diverted to oil producing states. Moreover, the funds aren’t restricted to paying to address damage from energy development – they can be used to build roads, ports, or other infrastructure that could further stress the coastal environment.

Sacrificing our environment and health

The bill deals a devastating blow to the effort to contain the dangerous effects of global warming. After the United States walked away from the international negotiating table, the bill makes plain the administration’s rejection of any serious domestic investment in carbon reduction technologies and policies. Not only does this mean that the U.S. will remain among the world’s largest contributors to the problem, it also undermines our ability to be a leader in exporting and designing energy efficiency and renewable energy technologies.

The coal industry is given billions in new tax breaks without any requirement to improve air quality. Adding to its air pollution toll, conferees added new language that erodes Clean Air Act protections by delaying efforts to curb pollution in areas that already exceed public health limits.

Major threats to coasts and beaches were adopted, including a provision that opens the door to drilling offshore in states that are currently under drilling moratoria, and another that weakens states’ ability to determine whether proposed energy development projects are consistent with coastal protection objectives.

Manufacturers of MTBE, an additive in gasoline, are granted liability relief for the contamination that has occurred in drinking water wells around the country. Groundwater is further threatened by new drinking water protection exemptions for the oil and gas industry.

Public review and participation in energy project sitting is limited, making it harder for affected communities to voice concerns about the potential impacts of new drilling projects on their lands.

Proponents of the bill hope they have thrown in enough special-interest sweeteners for this egregious bill to squeak through the Senate. Those who care about sound energy policy must pray that they are wrong.