2004 Energy Agenda Looks A Lot Like Last Year's   -H.R. 6 Hangs In Balance

When official Washington returns in earnest from the holidays, energy policy-makers will be faced with many of the same problems that were on the table this time last year. In fact, many of the big energy problems hanging around today - growing dependence on foreign imports, the lack of consensus on how to balance energy production and conservation, and to some extent, high prices and aging infrastructure - have gone unresolved for a decade or more.

The energy bill (H.R. 6) favored by the Bush administration and most Republican congressmen remains the top priority for national policy-makers, as it was in 2003. Supporters say it would improve the diversity of energy supplies, stave off future power outages like the one in August and reduce oil imports.

GOP lawmakers began 2003 with the hope that their control of both chambers would ensure swift passage of a landmark energy bill. Inter-party squabbling over pet provisions nearly killed the bill, which needs just Senate approval of the conference report to land at the White House, where it would be signed into law.

Though it only narrowly failed to gain Senate approval in November, even senior GOP staffers acknowledge a difficult fight ahead for 2004. They hope to see the bill on the Senate floor for votes by springtime.

The legislation, which would be the first rewrite of energy policy since 1992, would institute the most change in the electricity sector, with sponsors hoping to create a national power grid. It would also provide more than $30 billion in tax incentives to encourage greater production of energy from all domestic sources, including renewables.

What remains to be seen is whether this new "policy" will do what supporters say it will do: improve energy security and sustain the economy by reducing imports and stimulating production and development of new technologies. The Energy Department's Energy Information Administration has not conducted a full-fledged analysis of the legislation to see if it would achieve some of those lofty goals.

There is consensus in Washington that a new energy policy is needed, for a variety of reasons. EIA's latest long-term outlook shows oil imports, for example, comprising 70% of demand by 2025.

The energy bill aims to revive the nuclear power and coal industries. Coal is the centerpiece of the administration's energy policy, in part because of the fear that rising natural gas prices from soaring demand will hurt the economy over the next two decades.

Top Bush officials are looking to coal and gas to serve jointly as a "bridge" to the hydrogen economy the White House highlighted in January 2003.

The other major legislative goal for the Bush administration in 2003 was "Clear Skies" legislation, named a higher priority than the energy bill by some in the White House early last year. It would rely on a market-based cap and emissions trading to reduce power-sector emissions.

While both the House and Senate committee of jurisdiction held hearings on the proposal (H.R. 999, S. 485), neither took action - some in the majority want to pursue the measure in early 2004, before election-year politics consume the Capitol. Passage by both houses of Congress seems remote, especially with Democrats united in wanting carbon dioxide emissions addressed under the bill.

Seeing the road ahead, the Environmental Protection Agency's new chief, Michael Leavitt, in late-2003 moved to administratively install Clear Skies under authority provided by Congress in 1990. But the two proposals to do this weakened the mercury component so that utilities would have zero incentive to reduce mercury emissions below the business-as-usual forecast.

While the energy bill may be the biggest energy-policy priority for the White House, the toughest fight for the Energy Department in 2004 will likely be over the proposed high-level waste repository at Yucca Mountain in Nevada. The longstanding fight between the state and the federal government will take on more urgency later this month, when the two sides square off in a federal court in Washington.

A final resolution to the controversy is unlikely to occur this year, or anytime in the future. Nevada's legal team told reporters last month that regardless of the outcome the pending case is likely to go to the Supreme Court.

Oral arguments are scheduled for Jan. 14; the court is expected to make a decision by summer. Nevada claims DOE is ignoring laws that require the site be primarily a geologic barrier, not a manufactured one. Lawyers also will argue that it is unconstitutional for the other 49 states to force Nevada to accept nuclear waste shipments. DOE has said the Nevada's arguments have no merit.

DOE plans to file a license application for Yucca Mountain by December 2004 for the right to store spent fuel at the site.

Although the battle will rage into 2005 and beyond, 2004 will provide a major sniff test as to whether DOE has followed the law in choosing Yucca Mountain; if the plan for shipping the waste by 2010 is technically sound enough to meet the schedule; and whether opponents have gained any foothold to derail DOE efforts to store the waste there.