The Institute's Policy Recommendations for the Administration and Congress

  

Aggressively Promote Energy Efficiency 

• The U.S. Department of Energy (DOE) should move expeditiously to promulgate the appliance standards as required by both the Energy Policy Act of 2005 (EPAct2005) and the Energy Independence and Security Act of 2007 (EISA2007).

• Allowing more rapid depreciation of capital equipment through the federal tax code would provide incentives for new investment that would accelerate reductions in energy intensity and carbon intensity. This can be accomplished by revising the tax code to:

• Reduce the recovery period for investment in electricity transmission lines and smart grid devices from 20 years to 10 years.
• Reduce by half the cost-recovery period for the installation of best available energy efficiency devices by commercial facilities and small businesses.
• Provide for immediate expensing for investments that meet the standard for breakthrough low carbon technologies.

• Congress should increase annual funding for DOE’s Buildings Program from the current level of about $110 million to $250 million and its Industrial Technologies Program from the current level of about $65 million to $175 million. (These funds are included as part of the increase of federal research and development (R&D) funding recommended in Section V of this report.)

• Congress should direct DOE to set energy-saving targets for national model building energy codes and encourage states to adopt such codes adapted for regional variances.

• Congress should require that federal energy efficiency grants to states be conditioned on the adoption of building codes that emphasize energy efficiency, consistent with model building codes certified by DOE.

• Congress should expand the tax deduction created in EPAct2005 for commercial buildings that reduce energy consumption by one-half to a value of at least $2.25 per square foot.

• States should establish appropriate regulatory mechanisms to treat utility investments in energy efficiency comparable to other investments.

 

Reduce the Environmental Impact of Energy Consumption and Production

• The administration and Congress must approach climate change as part of, not apart from, a comprehensive energy plan and they must take into account the extent of existing mandates, provide regulatory certainty, and permit considerable flexibility in how goals are achieved.

• Climate change policies must initially focus on promoting win-win ways to achieve energy security and emissions reductions while protecting economic growth. Efforts should focus on accelerating energy efficiency gains; promoting the development, demonstration, and commercial use of low- or zero emitting technologies; reducing or eliminating barriers to developing and using domestic climate-friendly fuel sources; and providing legal and regulatory certainty for implementing technologies to reduce emissions.

• Congress should remove the cloud of regulatory uncertainty by clarifying that greenhouse gas (GHG) emissions shall not be regulated under the Clean Air Act or the Endangered Species Act, and Congress should block legal “fishing expeditions” and lawsuits against particular entities for the effects of climate change. Federal standards should preempt state standards.

• Climate policies must not provide a revenue windfall to the government.

• To the extent that climate change policies reduce air pollution as a co-benefit, air pollution rules should be reevaluated and revised when it makes sense to do so.

• To ensure our competitiveness, any new national climate change policy should be conditional on an international agreement that requires full international participation.

• Congress should act expeditiously to legislate a mechanism to address the issues and concerns for which the Clean Air Interstate Rule (CAIR) was originally intended. Absent congressional action, the administration should appeal the D.C. Circuit Court’s decision.

 

Invest in Climate Science to Guide Energy, Economic, and

Environmental Policy

• The federal government should make filling the gaps in climate science a research priority. Progress in climate science is apparent, but significant knowledge gaps remain, such as the predictive capability of climate models and the impact of land use on climate change.

• Congress should provide adequate funding to support an integrated surface, ocean, and space-based observation network, including the Global Earth Observation System of Systems (GEOSS). Greater coordination is needed to ensure that federal agencies properly collect, maintain, and share observational data.

• Federal research and development (R&D) agencies should develop a more comprehensive and concise policy on data disclosure, identifying what must be made publicly available. To maintain the public’s trust and support and to ensure transparency, researchers who receive federal support should be required to disclose their data, models, and other relevant material, subject to protections for confidential business information, so that results can be assessed and reproduced.

• A federal multiagency Climate Change Adaptation Program, similar in organization and function to the Climate Change Science Program (CCSP) and the Climate Change Technology Program (CCTP), should be established to examine adaptation and geo-engineering issues and to coordinate R&D across government.

 

Significantly Increase Research, Development, Demonstration, and Deployment of Advanced Clean Energy Technologies

• Congress should, at a minimum, double the funding for federal energy technology R&D programs in real terms within five years.

• The federal government should support a broad R&D portfolio on both the supply and demand sides, including energy efficiency, new energy sources, and advanced fuel and power delivery options. Above all, these efforts must be supported by a robust scientific enterprise within DOE and other public and private research institutions.

• DOE should establish, and Congress should fund, a new ARPA-E program or its equivalent to assess, prioritize, select, and support high-risk, exploratory research on innovative concepts and enabling technologies that have great potential for breakthroughs.

• Congress should establish a long-term R&D tax credit so that companies can plan their R&D activities with greater certainty.

• DOE should provide opportunities for businesses and venture capital firms to work within the national laboratories to identify and create business plans to commercialize new advanced energy technologies being developed by the laboratories.

• Congress should create a Clean Energy Bank of the United States (CEBUS), a quasigovernmental entity, with sufficient initial capitalization to invest in and accelerate the market penetration of advanced clean energy technologies. The bank should have the authority to issue loans, loan guarantees, lines of credit, insurance, and other financial products and help support demonstration projects. CEBUS should become self-financing through fees and interest.

 

Immediately Expand Domestic Oil and Natural Gas

Exploration and Production

• The President and Congress should increase domestic energy supply by permanently ending the moratorium on exploration and production of oil and natural gas in the Outer Continental Shelf (OCS) and on federal lands onshore.

• Congress should provide a 37.5% share of royalty revenues from all new production on the OCS to the state(s) off the coast of which development occurs.

• The U.S. Department of the Interior should promptly conduct a comprehensive seismic inventory of areas of the OCS and the eastern Gulf of Mexico currently precluded from oil and natural gas exploration and production. 

• The President and Congress should actively support construction of the Alaska natural gas pipeline.

• The President and Congress should expand the leasing program for increased access to and production of fuels from oil shale, oil sands, and other frontier hydrocarbons fuels in nonpark federal lands.

• Congress should repeal Section 526 of EISA2007, which prevents the federal government (including the military) from utilizing nontraditional transportation fuel sources, such as CTL or oil shale, for its vehicles and aircrafts.

 

Commit to and Expand Nuclear Energy Use

• Congress should increase the loan guarantee authority of DOE’s Loan Guarantee Program commensurate with the capital cost of new nuclear power facilities. Additionally, Congress should transition the function of the DOE Loan Guarantee program to a more permanent, stable financing platform, like the Clean Energy Bank of the U.S. (CEBUS) discussed in Section V of this report.

• Congress should amend the Nuclear Standby Support Program to allow for recovery of increased project costs as a result of delays, rising equipment costs, escalation clauses, and costs of litigation, and it should provide for the recovery of 100% of covered costs and debt obligations.

• Congress should ensure that the Nuclear Regulatory Commission (NRC) has the necessary resources to review and approve combined construction and operating licenses for new nuclear power plants in a timely manner.

• DOE should increase the amount of federally stockpiled uranium available for use in domestic nuclear facilities and create a strategic reserve of low-enriched uranium from its existing inventory to guard against supply disruptions.

• The President and Congress should authorize the Secretary of Energy to enter into agreements with willing communities to foster the development of privately owned central facilities for the temporary storage of used nuclear fuel where DOE could purchase storage services for commercial used fuel removed from nuclear power plants.

• The President and Congress must commit to a permanent solution to our nation’s nuclear waste. As directed by current law, the President and Congress must act expeditiously to ensure that the Nuclear Regulatory Commission’s Yucca Mountain licensing process proceeds and, if it is licensed, provide full funding for construction and operation of the repository as well as take legislative action to permanently withdraw the necessary land from public use, eliminate the current statutory 70,000 metric ton cap on disposal capacity at Yucca Mountain, and establish a radiation health standard for a time period that can reasonably be demonstrated through scientific evidence.

• If the President or Congress will not fully commit to this path, they owe it to the American public and the utilities that have paid fees and interest in excess of $27 billion into the Nuclear Waste Fund, to pursue a parallel path of centralized interim storage, industrial deployment of advanced recycling technology, and continued governmental research and development to more quickly place the U.S. government in compliance with U.S. law.

• Congress should change budgeting rules to take the Nuclear Waste Fund “off budget” and codify use of this fund for interim used fuel storage through purchasing storage services from private central storage facilities as well as used fuel recycling.

• The President and Congress should expeditiously establish a program to begin the recycling of the nation’s used nuclear fuel and establish a new corporation to coordinate the federal government’s legal responsibility to safely and reliably dispose of the waste while not subsuming DOE’s R&D mission. This entity should be provided long-term contracting authority and access to monies from the Nuclear Waste Fund.

 

Commit to the Use of Clean Coal

• The President and Congress should accelerate clean coal technology development by increasing funding at DOE to $500 million per year to support R&D for advanced Integrated Gasification Combined Cycle (IGCC), carbon sequestration, advanced turbines, innovations for existing plants, fuels cells, and related technologies. (This is included in the increase in federal R&D as described in Section V of this report.)

• The President and Congress should fund a clean coal power demonstration program on the order of $500 million per year to take advantage of R&D breakthroughs and more aggressively and rapidly undertake first-of-a-kind commercial-scale demonstration of advanced IGCC and other coal-fueled systems with carbon capture and storage (CCS). (This is included in the increase in federal R&D as described in Section V of this report.)

• The President and Congress, working with the private sector, should establish a fund managed by fossil-based utilities to support research and demonstration of CCS technologies at private, academic, and government entities. Funding would be raised through a small fee on fossil based utilities that could be passed onto consumers and treated as “off-budget” and not subject to appropriations. The fund’s budget should not exceed $1 billion per year over 10 years.

• Congress should expand and structure the EPAct2005 clean coal investment tax credit program to reduce the effective cost of the first five or six advanced coal-fueled plants of each design and coal type so that they are market competitive with state-of-the-art supercritical coal-fired plants. Doubling the EPAct2005 tax credit would stimulate the construction of 12 more initial IGCC plants (four more plants for each major design type). Carbon capture “readiness” could be used as scoring criteria to encourage sequestration-amenable plants.

• The federal government and the private sector should capitalize on opportunities to partner with other governments and overseas businesses to advance CCS technology.

• The federal government should ensure a stable regulatory environment for carbon sequestration and ensure that regulations are ready when the technology is. These legislative and rulemaking processes should work in parallel with technology development and take advantage of knowledge developed during large-scale sequestration demonstrations.

 

Increase Renewable Sources of Electricity

• Congress should increase annual funding for wind, solar, geothermal, and ocean programs at DOE from the current level of about $250 million to $450 million. (These funds are included as part of the increase of federal R&D funding recommended in Section V of this report.)

• Congress should extend for eight years the renewable energy tax credits and establish a phaseout period of four years.

• Congress should extend the existing Clean Renewable Energy Bond program to enable public power systems and electric cooperatives to seek alternative financing mechanisms for clean energy projects that are not eligible for production tax credits.

• As directed by EPAct2005, the Minerals Management Service (MMS) should issue regulations for the development of renewable energy projects on the OCS and should continue to process permits for these projects in the interim.

 

Transform our Transportation Sector

• The President and Congress should accelerate and increase funding from the current level of roughly $400 million to $600 million for transportation technologies and bio-based fuel technology R&D programs at DOE to support the transition to unconventional vehicles and alternative fuels, including hybrid electric systems, materials technology, advanced combustion engines, technology integration, and fuels technology.

• Congress should create a new tax credit for the production of plug-in hybrid vehicles over 10 years. The level should remain the same over the first five years and decline each year thereafter, phasing out entirely after 10 years. 

• Congress should make the blenders’ tax credit for biofuels variable by linking it to the price of gasoline or diesel fuel, as appropriate, so that as the price for these conventional fuels rises, the value of the tax credit falls proportionately. There should be a reasonable and rational floor price set.

• Second generation biofuels, like cellulosic ethanol, should be included in the blenders’ tax credit; however, because these technologies are not as mature or economically competitive as other eligible fuels, Congress should increase the allowable credits for these fuels with a definite phaseout after 10 years.

• The President should direct the Secretary of Transportation, in consultation with the secretaries of Agriculture and Energy, and the administrator of the EPA, to commence a comprehensive review of the impacts of biofuels production on U.S. competitiveness, the environment, and global food supplies. The departments should enter into an agreement with the National Academies to produce an analysis of scientific findings relating to current and future biofuels production and the domestic effects of a dramatic increase in such production activity.

• The departments of State and Energy, the Office of the U.S. Trade Representative, and the private sector should work together internationally to develop harmonized standards for biofuels to increase international market opportunities.

• DOE and the Department of Defense should continue to work in partnership to develop and deploy technologies to ensure a domestic supply of alternative fuels for military use.

 

Modernize and Protect U.S. Energy Infrastructure

• The Secretary of Energy should place high priority on the implementation of the smart power grid requirements of the Energy Independence and Security Act of 2007 (EISA2007).  This may include specific recommendations for state and federal policies and other actions necessary to facilitate the transition to a smart power grid.

• The Department of Energy, in cooperation with the Department of Transportation, should undertake a robust, systems analysis of energy and associated infrastructure requirements from 2009 to 2030. The results should be applied to the Department of Energy’s Energy Information Administration (EIA) forecasts as appropriate.

• Congress should simplify siting for electric transmission facilities and other energy facilities in interstate commerce (such as pipelines for carbon capture and storage) by giving the Federal Energy Regulatory Commission (FERC) the same authority as it has to site natural gas pipelines under Section 7 of the Natural Gas Act.

• Congress should modify DOE’s existing authority (granted under Section 216(h) of the Federal Power Act) that designates DOE as the “lead agency” to coordinate the multiple federal agencies’ permits required for an interstate transmission facility to ensure that in no case shall the process extend beyond two years. Two years is more than adequate to thoroughly consider and plan to mitigate environmental impacts.

• The President should require a federal task force led by the departments of Energy and State, in coordination with the departments of Homeland Security, Commerce, and Defense, to work with foreign governments and international organizations to strengthen domestic and international critical infrastructure protection efforts.

• Congress should fully fund the expansion of the Strategic Petroleum Reserve (SPR) from its current capacity of 727 million barrels to 1 billion barrels, as required by EPAct2005. To correspond with rising domestic demand, EPAct2005 authorizes the expansion of the nation’s SPR as an insurance policy to provide the American people with protection against a significant oil disruption at home or abroad.

• The President should evaluate if the inclusion of refined products in the SPR is necessary.

 

Address Critical Shortages of Qualified Energy Professionals

• Government at all levels should cooperate to provide incentives and motivate U.S. students and adults to enter science, technology, engineering, and mathematics careers.

• With state and local assistance, schools should offer competitive and performance-based salaries to recruit and retain highly qualified individuals into math and science teaching, even without a teaching certification, especially at the middle and high school levels, and provide flexibility so that qualified professionals can teach these subjects part time.

• The administration and Congress should reform visa and immigration policies to enable the United States to attract and retain science, technology, engineering, and mathematics students from around the world to study for advanced degrees and remain in the United States to work.

• The administration should request funding for and Congress should fully fund the America COMPETES Act to meet its objectives, including the following:

• Strengthening America’s K–12 education system by recruiting and training highly qualified teachers and emphasizing science and mathematics in curricula.

• Recognizing the importance of long-term basic research in science and engineering—particularly with regard to energy-related technologies and processes—and providing adequate financial and institutional support for researchers.

• Revising and reforming policies to ensure that America remains the most attractive setting for the world’s top talent to study and undertake research activities.

• Cultivating America’s role as the premier place in the world to innovate by investing in manufacturing and marketing, modernizing the patent system, realigning tax policy to encourage innovation, and ensuring widespread and affordable broadband Internet access.

 

Reduce Overly Burdensome Regulations and Opportunities

For Frivolous Litigation

• Congress should provide for federal siting authority for energy infrastructure projects similar to that provided for natural gas pipelines in Section 7 of the Natural Gas Act to prevent lengthy delays in decisions at the state level.

• The President should establish an office for transportation fuel production facility permitting with responsibility to streamline the permitting process for refineries, similar to the Office for Electric Transmission Facilities codified in EPAct2005.

• Congress must reform the Clean Air Act’s New Source Review program to allow routine maintenance on existing facilities to ensure efficiency, reliability, and safety without triggering costly environmental upgrades that do not significantly increase environmental protections but could lead to increases in the cost of gasoline and more plants being off-line for longer periods of time.

 

Demonstrate Global Leadership on Energy Security and

Climate Change

• The United States should strengthen support for the International Energy Agency (IEA) and support efforts to expand its membership to key consuming countries, particularly China and India.

• The U.S. government should engage the North Atlantic Treaty Organization (NATO) on energy security challenges and encourage member countries to support the expansion of its mandate to address energy security.

• Nations should improve transparency, reliability, and availability of oil and gas market data as well as their analysis of long- and short-term supply and demand trends to help make the world energy market less volatile.

• The United States should continue leadership efforts to expand the use of nuclear energy for peaceful purposes worldwide in a safe and secure manner through advanced technologies to foster economic growth, improve the environment, and reduce the risk of nuclear proliferation.

• The United States and other industrialized countries should support efforts to establish an International Clean Energy Fund, housed at the World Bank, to reduce capital costs for clean energy projects in the developing world. The United States should examine all of its tools through the Export-Import Bank, U.S. Trade and Development Agency, the Overseas Private Investment Corporation, and it should work closely with the multilateral development banks to ensure that attractive instruments are made available for this purpose.

• The U.S. government should elevate energy as a critical part of the U.S. trade agenda and lead a global effort to eliminate tariff and nontariff barriers to clean energy goods and services and utilize the World Trade Organization and bilateral free trade agreements to ensure a level playing field for energy projects, access, and trade.

• The United States should promote a global approach to energy security and climate change that does the following:

• Allows each nation to develop its own path to meet strong environmental and economic development goals.

• Considers growing energy needs, circumstances, and resource endowments.

• Sets achievable and realistic goals.

• Ensures global participation, including major developing countries.

• Ensures that mitigation actions by all parties are measurable, reportable, and verifiable.

• Promotes the development and commercialization of, and trade in, clean energy technologies and services.

• Protects intellectual property.

 

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