Energy highlights from Bush's first administration
High energy prices
Bush budget for fiscal year 2005
US Energy Policy
Corporate tax bill
New Source Review
Emissions
Kyoto protocol
Clean coal technology
Bureau of Land Management
Nuclear waste
California refunds
• High energy prices
The White House late September 2004 blamed unrest in Nigeria and Iraq, a spate of hurricanes, and opposition Democrats for record-high oil prices and said it was keeping a "close eye" on the situation. "The economy is moving forward and growing and certainly you want to keep an eye on things that could create more of a headwind as the economy moves forward, like rising oil prices," said spokesman Scott McClellan. Asked about whether violence in Iraq had contributed to the spike, McClellan replied: "That's been publicly stated by others that it has had an impact. Certainly, when you have attacks on pipelines and things of that nature, sure, it has an impact."
Bush made it clear that his administration will not use the SPR "to
manipulate
prices for political purposes," McClellan said. The administration remains
"concerned about rising energy prices and the impact those prices have on
families and workers," he said.
McClellan added that the president continues to call on Congress to pass his long-stalled energy plan. "[T]his is something we go through every year because Congress has not acted on the president's plan and because the Senate, certain members of the Senate, including the president's opponent, have blocked passing comprehensive energy legislation," he said.
Bush has continually declined to tap the SPR, to much criticism from
Democrats. The Bush
Administration has made it clear SPR would only be used for a supply emergency.
The Department of Energy did loan 5.4-mil bbl of SPR crude to five refiners in
September and October to provide temporary relief after Hurricane Ivan disrupted
crude production in the Gulf of Mexico.
• Bush budget for fiscal year 2005
The White House is projecting that US refiners will pay an average of $24.44/bbl to buy crude oil, both imported and domestic, in fiscal year 2005, according to the Bush's Administration's budget proposal, out Monday. The FY 2005 average cost for refiners is $2.72/bbl below the administration's fiscal year 2004 projection of $27.93/bbl. The budget also projects US wellhead natural gas prices of $4.36/Mcf on average, up 39 cts from FY 2004. The estimates, which are generated by the White House's Office of Management and Budget (OMB), are used during the budget process to determine estimated government expenses for such things as the heating and cooling of federal buildings and the buying of fuel for military use. They also help project the amount of money that will come into the Treasury in the form of royalties from drilling on federal lands. The White House's estimated average mine price for US bituminous coal was $18.30/short ton for FY 2005, up from $18.07/short ton for FY 2004.
President George W. Bush and other members of the administration have repeatedly asked Congress to pass an energy bill that would increase domestic production, promote use of renewable energy through tax breaks and improve the reliability of the power grid. Asked about high gasoline prices while on the campaign trail, Vice President Cheney said all he and President Bush could do is ask Congress to pass a comprehensive energy bill.
Senior administration officials in 2004 have rejected requests from some Democrats in Congress, who have called on the administration to support stand-alone or slimmer bills that they believe could pass easily. The officials, and the key sponsors of energy legislation (H.R. 6, S. 2095), dispute that passing any bill will be easy. They say the country needs a new, comprehensive policy to address a myriad of energy "challenges": electric reliability, natural gas production, and high coal, oil and gas prices.
Some lawmakers have asked the Energy Department (DOE) to take crude out of the Strategic Petroleum Reserve (SPR), while others have requested the government halt shipments to the stockpile. They argue filling the SPR is buoying prices. But DOE has denied all requests to change the White House's plan to fill the reserve to its 700-million-barrel capacity by 2005.
Bush signed into law a corporate tax bill (HR 4520) Oct 22, 2004, that includes several billion dollars in incentives for energy providers. The new law promotes renewable energy, fuel-efficient cars, ethanol and an Alaska natural gas pipeline. But in crafting the measure, lawmakers left out most policy provisions from stalled comprehensive energy legislation (HR 6). The corporate tax bill, deemed the American Jobs Creation Act, was passed by the House and the Senate earlier in October to end European tariffs on US manufactured goods. But bill sponsors tacked on roughly $140-bil in incentives for US manufacturers and closed tax loopholes in a bid to balance the cost of the bill. House Energy and Commerce Committee chairman Joe Barton (Representative-Texas) failed in an attempt to attach HR 6 to the tax bill. That bill is considered likely to lapse when Congress completes a lame-duck session after the Nov 2 elections.
Under the Environmental Protection Agency's (EPA) Clean Air Act (CAA), the New Source Review (NSR), a preconstruction permitting program, is to ensure that air quality in polluted areas was not further affected by new plants and factories and boilers or modifications to existing producers, and to control pollution towards cleaner air. The issue of what was "maintenance" and what was "upgrade requiring pollution control equipment" had languished for 20 years until the Clinton administration filed its last-minute lawsuits. Bush rolled back the NSR requirements and in October 2003 new NSR regulations regarding routine maintenance and repair were established. The rule revised the definition of routine maintenance, which allows utilities to undertake projects up to 20% of the cost of the unit without being subject to NSR requirements.
Sources in the environmental community said pursuing NSR violations would clean the air sooner, and pointed to the Department of Justice (DOJ) settlement with Dominion Virginia Power in 2003. The record $1.2-bil settlement covered eight power plants owned by the Richmond-based utility. Dominion Virginia Power agreed to install pollution control technology and upgrade existing equipment on several units to reduce NOx and SO2 emissions by about 67% by 2013. The Bush administration has pursued legislation and regulations that would eliminate NSR in favor of cap-and-trade programs to curb power plant emissions.
The US government on July 28, 2004, said it would spend $53-mil over the next five years to help develop projects abroad that will recover and use methane, a key component of natural gas and the second-most prevalent greenhouse gas from human sources. EPA Administrator Mike Leavitt said the US will join seven other countries, including Australia, Japan, India and the UK, in the Methane to Market Partnership. "The Bush administration welcomes this global partnership...that has the double benefit of capturing the second most abundant greenhouse gas and turning it to productive use as a clean-burning fuel," Leavitt said in a statement. EPA said the partnership has the potential to cut annual net methane emissions by as much as 50-mil metric tons of carbon-equivalent by 2015 by reducing and capturing emissions from landfills, coal mines and oil-and-gas systems. The program is aimed at developing countries and countries with economies in transition.
The anticipated signing of the Kyoto Protocol by Russia has not softened the Bush administration's opposition to the treaty, a White House official said. "The administration views the Kyoto Protocol as seriously flawed," presidential science adviser John Marburger told reporters. Marburger said the administration continues to believe that the best answer to concerns over climate change is promoting technologies that would lead to reductions in emissions rather than mandating cuts. "We think international cooperation is important," he said. "We are doing it our own way." Marburger noted, for example, the US Energy Department's FutureGen project, a $1-bil initiative to develop a coal-fired plant with near-zero emissions that would generate electricity and hydrogen. Asked if US refusal to sign the protocol could put the nation at a competitive disadvantage in the development of cleaner, more energy efficient technologies, he said, "The US is still a major researcher of technologies and will continue to be the world leader... We will probably sell technologies to Europe and will develop them independently of Kyoto."
Bush has pledged to invest up to $2-bil in federal funds over 10 years to encourage the development of technologies that would meet the nation's power demand while also protecting the environment and providing a low cost resource, the DOE said.
The Bush administration received appropriations of $338.6-mil and $378.3-mil, respectively, in FY-03 and FY-04 for its "coal research initiative" -- including clean coal r&d and the FutureGen zero-emissions project -- and has requested $447-mil for the same for FY-05. DOE officials have said coal r&d under the Bush administration is on pace to exceed $3-bil over 10 years.
In July 2004, thirteen companies proposed clean coal projects valued at $6-bil in the latest go around of the Bush Administration's Clean Coal Power Initiative and requested nearly $1-bil in total federal cost sharing, the DOE said. In the first round, the agency chose eight projects, and it expects to select winners in the second round by January 2005. The proposals will be weighed on coal use, power output and plant location, as well as the company's commitment to repay the government's investmentThe proposals were from Basin Electric Power Cooperative, Southern Company Services, Minnesota Power, FuelCell Energy, Excelsior Energy, Medicine Bow Fuel & Power, Alaska Cowboy Coal Power, Breen Energy Solutions, ClearStack Combustion Corp, EnviRes, NeuCo, Peabody Energy and Pegasus Technologies.
The US Bureau of Land Management (BLM) Aug 7, 2003, issued new policies designed to ease permitting restraints in seven "focus areas" in the western US with a high potential for oil and gas development. The directive instructs BLM land planners "not to unduly restrict access to federal lands especially in cases where an unnecessary stipulation could result in an abandonment or delay of a project," while at the same time "continuing to protect resources." For instance, the policy suggests that conditions of approval attached to applications for permit to drill -- developed through site-specific environmental analyses -- can be considered as an alternative to lease stipulations. The move fulfills a promise made in an Interior Department report issued earlier 2003 under the Energy Policy and Conservation Act in which it said it would estimate oil and gas reserves beneath energy-prone western basins and identify impediments to developing those resources.
Yucca Mountain
In 2002, Bush recommended Yucca Mountain be developed as a nuclear waste repository. Bush said he based his recommendation by listening to the "the people who know the facts and know the science, and made a decision." He said he also listened to officials who opposed the facility, adding that appeals can be made to the courts and to Nuclear Regulatory Commission (NRC) and vowed he would stand by any decisions by NRC and the courts.
After Bush's approval of the site, Nevada Governor Kenny Guinn vetoed the decision, in an unprecedented move authorized by Congress. The House and Senate swiftly overrode Guinn's veto, officially designating Yucca Mountain as the nation's repository for 77,000 tons of HLW.
Early 2004, the administration sought a record $907.4-million for DOE's waste
program
in fiscal 2005, saying that amount would allow the department to prepare a
license application and to begin repository operations in 2010.
Congress has not yet set spending limits for the Department of Energy and has put off the stalemate until after the November elections.
The Department of Interior Oct 21, 2004, issued a new policy aimed at
spurring the
development of solar energy on federal lands in the West. The agency described
its "Solar Energy Development Policy" as a "framework for
authorizing
commercial solar facilities on public lands." The agency also promised to
treat the
applications as a high priority issue. BLM in September said 3,240 MW of wind
power could be developed on federally owned land in 11 western states.
Hanford, Washington
The DOE's Hanford Site, the country's most contaminated waste site, has been a sore spot for voters in Washington. Experts say they doubt cleanup of the site, or the Bush administration's management of it, will be an issue that will impact the presidential election.
Hanford has been the subject of national attention this year since congressional Republicans, pushed by DOE, moved to reclassify high-level waste, which could leave more in place at the site.
DOE wants to reclassify liquid high-level waste, which is in tanks at Hanford, as low-level "incidental waste." This would allow DOE to bury the waste at Hanford, or ship it to a repository in New Mexico. Congress has yet to endorse the plan from DOE, which sought legislation after a court in 2003 said DOE could not take the action.
Washington is suing to stop DOE from sending waste to Hanford from other cleanup sites. In an effort to reach an agreement with the state, DOE said it was willing to halt some shipments of radioactive waste to Hanford. It agreed to stop the shipments once a court schedule to settle the legal dispute over reclassification is agreed upon
Over 30 western lawmakers told the Bush administration not to appeal a September 2004 court decision that found the US Federal Energy Regulatory Commission erred when it concluded it could not order refunds for certain sales during the 2000-2001 western energy crisis. In a letter mid October, the lawmakers, led by House Minority Leader Nancy Pelosi, Democrat-California, urged the White House to direct FERC to comply with the Sep 9 court decision. "On Sep 9, the US Court of Appeals for the 9th Circuit issued a ruling admonishing FERC for its failure to protect consumers and to use the tools at its disposal to order refunds," Pelosi and the lawmakers said. The lawmakers told Bush to direct FERC to "use the full range of its authority to ensure that consumers are made whole for the entire period during which Enron and other energy companies manipulated the market in the West." The 9th Circuit decision ruled FERC improperly concluded that retroactive refunds related to the California crisis were not legal.
This section is a compilation of news stories first published in Inside Energy.
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