During the 110th Congress, Senate Democrats have been working to address our most challenging energy needs. Senate Committees in the 110th Congress have held 44 hearings on energy and climate issues. On March 29, 2007, the Environment and Public Works Committee reported S.992, which would direct federal buildings to reduce energy consumption and greenhouse gas emissions. On April 12, the Foreign Relations Committee reported S.193, which would increase cooperation on energy issues between the United States government and foreign governments and entities in order to secure the strategic and economic interests of the United States. On May 1, 2007, the Energy Committee reported S.1231, which would increase energy efficiency, accelerate development and implementation of carbon capture and storage technology, and increase the use and distribution of biofuels. On May 8, 2007, the Senate Commerce, Science, and Transportation Committee reported S.357, which would improve the fuel economy of America’s motor vehicle fleet and protect consumers from price gouging. On June 6, 2007, the Environment and Public Works Committee reported S.506 and H.R.798, which would improve energy efficiency in federal buildings and direct the Administrator of General Services to install a photovoltaic system for the headquarters building of the Department of Energy. Based on these six bills that passed out of their committees with broad bipartisan support, Senate Democrats have introduced a bill, S.Amdt.1502 to H.R.6,that will increase our energy independence, strengthen the economy, reduce global warming emissions, and protect consumers.
The Need for Action
Gasoline prices have passed $3 and are expected to remain high all summer. The summer driving season just began on the Memorial Day weekend, but gasoline prices have already climbed to record levels. The average price nationwide for a gallon of regular gasoline was $3.22 on May 21, 2007, and the average price for the summer is predicted to be $2.95. Transportation costs this year are estimated to be more than double the cost in 2001. (Energy Information Administration, Weekly Retail Gasoline Prices 5/21/07 and Short Term Energy Outlook 5/07; AAA Fuel Gauge Report; EIA, Household Vehicles Energy Use: Latest Data and Trends 11/05)
Oil import costs skyrocketed in 2006. Americans spent $291 billion in 2006 on oil and petroleum product imports and sent $111 billion to OPEC countries for imports of crude oil. Petroleum made up about one third of the total trade deficit; America imported 60 percent of its oil in 2006. (U.S. Census Bureau, U.S. International Trade in Goods and Services December 2006, Exhibit 17 and Supplement Exhibit 3, 2/13/07; EIA Annual Energy Outlook 2007)
Petroleum dependence strains military operations. A study for the Pentagon found that the increasing cost and scarcity of oil is straining the military. The Air Force, America’s largest single energy consumer, spends $5 billion per year on fuel, and the Army and Navy spend nearly as much. Energy costs paid by the military have doubled since the attacks of September 11, 2001. Of all material transported on battlefields, 80 percent is fuel. The Pentagon study warns that operating costs could cut into funding for new weapons systems and states that applying new technologies to improve efficiency and address alternative supply sources are “imperative” for the future of the U.S. military. (Boston Globe, “Pentagon Study Says Oil Strains Military,” 5/1/07)
Fuel economy of U.S. fleet stagnant for two decades. After increasing dramatically from about 13 miles per gallon in 1975 to 22 miles per gallon in 1987, the fuel economy of America’s car and light truck fleet has remained stagnant since then. The average fuel economy for light-duty vehicles in model year 2006 was about 21 miles per gallon. (Environmental Protection Agency, Light Duty Automotive Technology and Fuel Economy Trends, 1975-2006, 7/21/06)
Consumers are not protected from price gouging. Chairman Deborah Majoras of the Federal Trade Commission (FTC), which is charged with protecting consumers from fraudulent business practices, has testified to Congress that she does not have or want authority to punish suppliers that may be manipulating fuel prices to make a profit. Laws protecting consumers from price gouging are already on the books in 28 states, but state attorneys general of both parties have told the Senate that they need federal protection as well. These protections already apply to the electricity and natural gas markets. (Testimony before Senate Commerce Committee, 11/9/05)
Infrastructure lacking to distribute high blends of biofuels. The Corporate Average Fuel Economy (CAFE) program as currently administered allows auto manufacturers to receive fuel economy credits for producing flexible fuel cars. However, less than one percent of service stations in the United States offer biofuels for owners of flex fuel vehicles, and big oil companies discourage stations from offering alternative fuels. Many consumers who own flex fuel vehicles do not know that their vehicles are capable of running on biofuel blends or do not have access to biofuels. (Wall Street Journal, 4/2/07)
Greenhouse gas emissions are rising even as the effects of climate change are evident. The Environmental Protection Agency (EPA) recently touted a rise in greenhouse gas emissions of 0.8 percent from 2004-2005 as progress. Meanwhile, the National Climatic Data Center announced that 2006 was the warmest year on record in the continental United States, a full 2.2 degrees Fahrenheit above the average national temperature during the 20th century. The past nine years have all been among the warmest 25 years on record for the continental United States. Today, global climate change hastens the spread of invasive species that threaten sensitive habitats; causes sea ice to melt, restricting vital habitat for polar bears to feed; and may be causing allergies and asthma in the United States. The Administration has predicted that energy-related world emissions of carbon dioxide will rise from 26.9 billion metric tons in 2004 to 33.9 billion metric tons in 2015 and 42.9 billion metric tons in 2030. (EPA testimony before the Senate Environment and Public Works Committee, 4/24/07; Washington Post, 1/10/07; Wall Street Journal, 5/3/07; Testimony before Senate EPW Committee, 2/17/07; New York Times, 12/28/06; EIA, International Energy Outlook 2007)
Federal government energy use costs taxpayers billions. The federal government is the largest single consumer of energy in the United States, using 1.6 percent of U.S. consumption. In 2005, the federal government spent $14.5 billion on energy; $5.6 billion of that amount went toward heating, cooling, and powering more than 500,000 federal buildings. The General Services Administration (GSA) owns and leases over 340 million square feet of space in more than 8,900 buildings, located in every state. The GSA calls itself the “largest public real estate organization” in the country and uses about five percent of the federal government’s building energy use. (Alliance to Save Energy; GSA testimony before Senate EPW Committee, 3/28/07)
Senate Democrats Want A New Energy Policy
Make the government a leader in cutting energy consumption. S.Amdt.1502 would require the GSA to reduce operating costs in its buildings by 20 percent in no less than five years by implementing measures to increase energy efficiency and to replace inefficient lighting. The Alliance to Save Energy has said this bill would “establish the federal government as a successful model for others to emulate and complement rather than compete with existing funding and activities.” S.Amdt.1502 would codify the Administration’s stated goal of reducing petroleum usage by the federal government by 30 percent by 2015. This will save taxpayers’ money; in Fiscal Year 2005, the federal government spent almost $9 billion on vehicles, fuels and equipment–more than 60 percent of the total federal energy bill. It would also require the federal government to increase its purchases of renewable electricity to 10 percent by 2010 and 15 percent by 2015.
Make the United States a world leader on global energy security. S.Amdt.1502 would put the United States back on the world stage as a leader in preventing and preparing for energy crises. The legislation expresses the Sense of Congress that the President should work with foreign governments, particularly governments with high or rapidly growing energy consumption, to establish strategic energy partnerships and crisis response mechanisms. The President should also establish a regional-based ministerial Hemisphere Energy Response Forum to develop and implement energy crisis, sustainability, and development initiatives.
Ramp up biofuels production and infrastructure. S.Amdt.1502 would set annual requirements for the amount of renewable fuels used in motor vehicles, and for home heating oil and boiler fuels. The expanded renewable fuels standard (RFS) requires 8.5 billion gallons of renewable fuels in 2008 and progressively increases to 36 billion gallons requirement by 2022. Beginning in 2016, an increasing portion of renewable fuels must be advanced biofuels. Advanced biofuels include cellulosic ethanol, biobutanol,and other fuels derived from unconventional biomass feedstocks. The required amount of advanced biofuels begins at 3 billion gallons in 2016 and increases to 21 billion in 2022. The bill also promotes investment in renewable fuels infrastructure and supports research and development of new bioenergy sources.
Promote high efficiency vehicles, advanced batteries, and energy storage.
S.Amdt.1502 would authorize research and development programs at the Department of Energy in the use of light-weight materials such as advanced carbon composites and light-weight steel alloys in the construction of vehicles and on energy storage and advanced battery development for vehicles and electricity transmission. The bill would also authorize loan guarantees for facilities to manufacture parts for fuel-efficient vehicles and authorize awards to manufacturers and suppliers for 30 percent of qualified investment for incremental costs incurred to re-equip, expand, or establish a manufacturing facility to produce advanced technology vehicles.
Increase appliance efficiency standards. S.Amdt.1502 would enact consensus efficiency standards for residential boilers, dishwashers, clothes washers, refrigerators and dehumidifiers, and electric motors. It would also provide the Department of Energy with expedited rulemaking authority and increased flexibility to issue energy efficiency standards that maximize energy savings and direct the FTC to develop, through a rulemaking, Energy Guide labels for televisions, computer monitors, and other consumer electronics product categories.
Invest in carbon capture and storage technology. Carbon capture and sequestration is a key technology in helping to reduce U.S. greenhouse gas emissions. It may hold particular promise in reducing pollutants from power plants, since they produce an estimated one-third of U.S. carbon dioxide emissions from fossil fuels. S.Amdt.1502 would expand and improve the Department of Energy’s existing research in this area and require a national assessment of capacity to sequester carbon.
Increase fuel economy. S.Amdt.1502 would increase fuel economy to 35 miles per gallon by 2020 and include passenger cars and light trucks in the fleet average. After 2020, fuel economy must improve by four percent each year. S.Amdt.1502 would also establish a fuel economy standard by 2011 for medium duty and heavy duty trucks, which do not currently have fuel economy standards, that will improve by four percent per annum over the previous year. S.Amdt.1502 would also eliminate credits for flexible fuel capable vehicles from the CAFE program beginning in model year 2011. Finally, the bill would offer grants for service station owners to install pumps for E85 and other biofuels.
Make price gouging a punishable federal crime. S.Amdt.1502 would make gas price-gouging a federal crime, enhance federal authority to prevent and prosecute manipulation of fuel supplies and anti-competitive behavior, and increase the transparency of petroleum markets. These actions will protect consumers from manipulative practices like those used by Enron to gouge electricity consumers in the western United States during 2000 and 2001. Fifty-seven Senators have supported this proposal, but Republican leadership blocked it from becoming law.
Benefits from Senate Legislation
Reduce petroleum dependence. S.Amdt.1502 establishes an escalating goal for reducing U.S. gasoline consumption, starting with 20 percent in 2017. That is enough to reduce world oil prices more than $2.50 barrel under current EIA assumptions and is five times the projected savings associated with drilling in the Arctic National Wildlife Refuge. The national goal for gasoline savings ramps up to 45 percent in 2030, equivalent to 5.6 million barrels of oil per day. That is more than twice the amount of oil the United States imported from the Persian Gulf in 2005. The legislation boosts renewable content in U.S. gasoline, starting at 8.5 billion gallons in 2008, to 36 billion gallons in 2022 with specific requirements for the production of advanced biofuels from new, more efficient feedstocks. That’s enough to reduce projected U.S. oil imports a million barrels per day. In addition, the fuel economy improvements in passenger cars and light truckswould save 1.2 million barrels of oil per day by 2020 and fuel economy improvements to medium and heavy duty trucks would save an additional 300,000 barrels per day, putting America well on the way to achieving the gasoline savings goal. (Senate Energy Committee; Union of Concerned Scientists, “The Ten-in-Ten Fuel Economy Bill,” 5/07)
Reduce greenhouse gas emissions. The increased RFS is a positive step toward reducing U.S. greenhouse gas emissions to combat the threat of global climate change. S. Amdt. 1502 specifies that a renewable fuel included in the standard must emit 20 percent fewer lifecycle greenhouse gas (GHG) emissions than conventional gasoline. The Environmental Protection Agency (EPA) has found that biofuels easily meet, and sometimes dramatically exceed, this standard. Corn ethanol emits on average 21.8 percent fewer GHG emissions than conventional gasoline, biodiesel emits 67.7 percent fewer emissions, and cellulosic ethanol emits 90.9 percent fewer emissions. S.Amdt.1502 would cut greenhouse gas emissions from cars by 15 to 18 percent by 2025, the equivalent of taking about 50 million cars off the road. Transportation emissions currently account for one-third of U.S. greenhouse gas emissions. (EPA, “Greenhouse Gas Impacts of Expanded Renewable and Alternative Fuels Use,” 4/07; Union of Concerned Scientists, “The Ten-in-Ten Fuel Economy Bill,” 5/07; EIA Annual Energy Outlook 2007, data from Figure 92)
Reduce taxpayer money spent to power the federal government. The government will help drive markets for new renewables and efficiency technologies. S.Amdt.1502 requires the federal government to purchase ten percent renewable electricity by 2010, increasing to 15 percent by 2015. It will also ramp-up federal building efficiency, requiring a 30 percent reduction in energy use by 2015. Cumulatively, a 30 percent reduction is enough to save 60 trillion BTUs of energy, 15 million metric tons of carbon dioxide, and almost $4 billion in taxpayers’ money. More efficient lighting and other electrical equipment in GSA buildings, as called for in S.Amdt.1502, would not only cut energy bills and reduce energy use for lighting but also reduce the amount of waste heat produced by lighting, as the GSA Administrator testified. This in turn will reduce air conditioning needed to cool a building and result in even greater energy savings. (Senate Energy Committee; Testimony before Senate EPW Committee, 3/28/07)
Boost consumer savings through energy efficiency. Lighting and common household appliances can drive as much as two-thirds of an average American family’s electricity bills. By improving a number of efficiency standards, and streamlining and strengthening the Department of Energy’s existing program, consumers stand to collect $12 billion in benefits. All together, the appliance efficiency provisions in S.Amdt.1502 will save at least 50 billion kilowatt hours per year, or enough to power roughly 4.8 million typical U.S. households. The legislation will save 17 trillion BTUs of natural gas per year, or enough to heat about a quarter-million typical U.S. homes. And it will conserve at least 560 million gallons of water per day, or 1.3 percent of daily potable water usage across the nation. (Senate Energy Committee)
Boost consumer savings on gasoline. S.Amdt.1502 would save consumers $41 billion by 2025 with gasoline at $2.00 per gallon, even after accounting for the extra cost of purchasing a more fuel-efficient vehicle. The additional investment of $1,100 per vehicle would be recovered in less than three years by the owner, faster when the price of gasoline is over $2.00 per gallon. Over the lifetime of the vehicle, the owner would save more than $3,600 in gasoline costs. (Union of Concerned Scientists, “The Ten-in-Ten Fuel Economy Bill,” 5/07)
Advance development of carbon capture and storage technology through innovation. Carbon capture and sequestration is key technology to help reduce U.S. greenhouse gas emissions. It may hold particular promise in reducing pollutants from power plants, since they produce an estimated one-third of U.S. carbon dioxide emissions from fossil fuels. S. Amdt. 1502 expands and improves the Department of Energy’s existing research in this area, and requires a national assessment of capacity to sequester carbon. (Senate Energy Committee)
Bush Administration Policy is Incomplete and Insufficient
Goals are not binding. While the Bush Administration’s proposal sets a goal of increasing fuel economy by four percent each year, the goal is not mandatory. The Administration and the National Highway Traffic and Safety Administration (NHTSA) have repeatedly rejected any specific fuel economy increase and in testimony before the Senate Commerce Committee, the NHTSA Administrator said, “I can’t today tell you exactly what percentage increase we would see, year over year.” With no mandate to direct NHTSA, setting fuel economy standards is completely at the discretion of the Bush Administration with the same authority to decide to increase standards that exists today. The Administration also set an unenforceable goal of reducing the federal government’s petroleum consumption, which Democrats are codifying.
No standards for medium or heavy trucks. Unlike the Bush Administration, Senate Democrats will require fuel economy standards for medium and heavy trucks, which have the poorest fuel economy of the vehicle fleet. Improvements to these vehicles will save consumers and businesses in transportation costs and reduce our oil consumption.
Insufficient policy to get biofuels to consumers. Although President Bush announced in his 2007 State of the Union address that he wanted to displace 35 billion gallons of petroleum with alternative fuels by 2017, he did not present a plan to achieve that goal. The Administration’s approach also leaves out needed initiatives to develop infrastructure for the increased use of biofuels in flex fuel vehicles. While millions of vehicles on the roads are flex fuel capable, only about 1,200 stations offer E85 due to a lack of infrastructure, concentrated mainly in a few states in the Midwest.
Bush Administration has fought against price gouging protections. In 2001, Vice President Dick Cheney told local California press that price gouging investigations during the 2001 energy crisis were “exactly the kind of misguided, I’m trying to think how to state this gracefully, politically motivated policies we’ve had in the past.” Soon after, America learned that Enron had been manipulating prices in the California electricity market and gouging consumers across the West. As prices rose last spring, the Administration asked the FTC to investigate price gouging after the FTC Chairman had said she did not have or want authority to prosecute proven price gougers. The FTC investigation targeted only actors at the end of a long supply chain, and found no instances of price gouging. (Contra Costa Times, 5/15/01; Testimony before Senate Commerce Committee, 11/9/05; FTC Report, 5/22/06)
Greenhouse gas emission policies are insufficient. The Bush Administration touts its goal to reduce greenhouse gas emission intensity by 18 percent between 2002 and 2012. Under this goal, the Administration admits that actual emissions will continue to increase. In fact, they are projected to grow by 14.2 percent during that time period. The EIA has attributed the relatively small rise in greenhouse gas emissions between 2004 and 2005 not to Administration voluntary programs but to “higher energy prices that suppressed demand, low or negative growth of several energy-intensive industries, and weather-related disruptions in the energy infrastructure across the Gulf Coast.” The Administration’s approach to climate change is insufficient. (Senate Commerce Committee, 7/11/02; GAO 04-146R; EIA, “Emissions of Greenhouse Gases in the United States 2005,” p. 13)
Blocking, instead of leading, global response. Just this month, Bush Administration negotiators worked to remove language from an agreement at the upcoming G-8 summit that would establish targets for greenhouse gas emission reductions and state that combating global climate change is “an imperative not a choice.” This marks the third year in a row in which the Bush Administration has tried to water down language on climate change at the G-8 summit. In March 2006, the Administration opposed expanded protection for World Heritage sites recognized by the United Nations that may be threatened by global warming, and at a Montreal conference of 189 nations in November 2005, the Administration refused to join any binding agreement on global warming. (Bloomberg News, 5/17/07; Greenwire, 3/21/06 and 11/30/05)