Transcript Ending the Energy Stalemate A Bipartisan Strategy To Meet

The Energy Bill of 2005
and the Recommendations of the
National Commission on Energy Policy:
How much of the latter got into the former?
John P. Holdren
Heinz Professor of Environmental Policy, Harvard
Director, The Woods Hole Research Center
Co-Chair, National Commission on Energy Policy
Presentation at the Kennedy School
27 October 2005
The National Commission on Energy Policy
• Launched in 2002, the Commission…
– was thoroughly bipartisan & multi-sectoral,
– met a dozen times,
– sponsored and digested some 35 background and
research papers on key issues,
– issued interim reports on natural gas and electricitysector restructuring,
– released its final report December 8, 2004.
• Cost was $10 million, principally from
– the William and Flora Hewlett Foundation
– with minority participation from MacArthur Foundation,
Pew Charitable Trusts, Packard Foundation, Energy
Foundation.
Members of the commission
John P. Holdren, Co-Chair, Heinz
Professor of Env’t Policy, Harvard
Henry Habicht, former Deputy
Administrator, USEPA
William Reilly, Co-Chair, former
Administrator, EPA
Mario Molina, Institute Professor &
Nobel Laureate in Chemistry, MIT
John W. Rowe, Co-Chair, CEO,
Exelon Corp.
Sharon Nelson, Chief, Consumer
Protection, Washington; Chair of
the Board, Consumers Union
Philip R. Sharp, Congressional Chair,
former member of Congress, IN
Linda Stuntz, former Deputy
Secretary of Energy
Marilyn Brown, Director, Energy
Efficiency & Renewables, ORNL
Susan Tierney, former Assistant
Secretary of Energy, EERE
Ralph Cavanagh, Co-Director, Energy
Programs, NRDC
R. James Woolsey, former Director
of Central Intelligence
Archie Dunham, CEO, ConocoPhillips (1999-2004)
Rodney Ellis, State Senator, Texas
Leo W. Gerard, President, United Steel
Workers of America
Martin B. Zimmerman, VP for
Corporate Affairs, Ford (2001-4)
The Commission’s overarching objective
Develop recommendations that can…
– Ensure ample, clean, reliable, and affordable energy for
the United States in the 21st century while responding
to growing concerns about the nation’s energy security
and the risks of global climate change.
– Command the bipartisan support necessary to be break
the stalemate and be enacted.
The Commission’s principles for policy
•
•
•
•
Prefer markets and market-based solutions
Prefer gradual adjustments to dramatic interventions
Appreciate the law of unintended consequences
Aim for…
–
–
–
–
–
–
–
–
Economic efficiency
High cost-effectiveness
Low consumer impacts
Appropriate incentives for future action
Flexibility for adjustment with experience & new information
Equity
Political viability
Ease of implementation, monitoring, & measurement
• Achieve revenue neutrality in recommended measures.
Recommendations were in five categories
1.
Expanding oil & gas supply and strategic
petroleum reserves
2.
Strengthening & protecting energy-supply
infrastructure
3.
Accelerating energy-technology innovation
4.
Dampening growth of demand for liquid fuels
5.
Limiting & reducing greenhouse-gas emissions
Listed here not in the order of presentation in the NCEP
report, but from highest to lowest degree of “success” in
getting into the energy legislation that was signed into law in
August 2005.
Key recommendations: expanding oil & gas
supply and strategic petroleum reserves
• Encourage nations with underdeveloped oil reserves to
foreign investment in their energy sectors.
• Support R&D on technologies to mitigate environmental
impacts of developing unconventional oil resources.
• Fill Strategic Petroleum Reserve & encourage other
nations to establish publicly owned reserves.
• Adopt effective public incentives for construction of an
Alaskan natural gas pipeline (loan guarantees, accelerated
depreciation, tax credits, protection for investors against
low-price contingencies).
• Address hurdles to siting & construction of LNG facilities.
• Increase resources for public land planning & permitting.
• Increase federal support for R&D on methane hydrates.
Key recommendations: protecting critical energy
infrastructure
• Address vulnerability of electricity grid to attack on the
essential, difficult to replace, extra-high-voltage (EHV)
transformers scattered throughout the grid.
– Explore the feasibility of developing a modular, universal EHV
transformer that would be smaller, cheaper, more versatile, and
more transportable than typical transformers.
• Improve security against cyber-attack on supervisory
control and data acquisition (SCADA) systems that
manage the power grid
• Examine whether surveillance technologies developed for
defense and intelligence purposes could be applied to
widely distributed energy systems.
– Examples include drone aircraft, satellite surveillance, intelligent
software analysis of surveillance images, change-detection
sensors, and intrusion-detection cables.
Key recommendations: accelerating energytechnology innovation
• Revise the tax code to increase private-sector incentives to
invest in energy research, development, demonstration, &
early deployment.
• Roughly double annual real federal expenditures for
energy research, development, & demonstration (ERD&D)
in next 5 years (reaching ~3.3 billion 2004$ per yr in 2010).
– Within this effort, triple the funding for international cooperation on
ERD&D, to $750 million per year.
• Complement the increased RD&D activity with a tripling of
federal expenditures supporting accelerated deployment of
the most promising technologies that successfully pass the
demonstration phase (reaching ~$2 billion/year in 2010).
Key recommendations: dampening growth
of demand for liquid fuels
• Significantly strengthen federal fuel economy standards for
cars and light trucks while also reforming CAFE program.
Range explored was 10-20 mpg increase by 2015;
proposed Congress ask NHTSA to recommend figure.
• Provide manufacturer & consumer incentives to promote
domestic production and increased use of highly efficient
advanced diesel & hybrid-electric vehicles.
• Pursue efficiency opportunities in heavy-duty truck fleet
and existing passenger vehicle fleet.
Key recommendations: addressing climate-change
risks with mandatory greenhouse-gas restraints
• Initiate in 2010 a mandatory, economy-wide, tradablepermits system to limit greenhouse gas emissions.
– Number of permits based on reducing GHG intensity of
the economy (tons of carbon-equivalent emissions per
million dollars of real GDP) at 2.4% per year.
– Cap initial costs to the U.S. economy at $7 per metric
ton of CO2-equivalent ($26/tC) via a “safety valve”
mechanism; safety valve to increase at 5%/yr in nominal
terms.
• Link subsequent U.S. action with comparable efforts by
other developed and developing nations via a program
review in 2015 and every five years thereafter.
For more information about the Commission’s
recommendations …
• Go to http://www.energycommission.org, where the
Commission’s final report is available in PDF.
• In addition to final report, staff & outside expert analyses
sponsored by Commission are collected in a 2,700 page
technical appendix (on the website) and CD-ROM.
• Economic analysis describing key assumptions and detailed
modeling results for the Commission’s greenhouse gas
proposal is also available on the website and CD-ROM.
• An EIA analysis of economic impacts to 2025 of
implementing the Commission’s recommendations is on the
web at
http://www.eia.doe.gov/oiaf/se/vicerpt/bingaman.index.html