Expert Panel Calls for Overhaul of U.S. Energy Policy

By J.R. Pegg

WASHINGTON, DC, December 9, 2004 (ENS) - Current energy policy is failing to balance the United States’ energy needs with its economic, security and environmental concerns, a bipartisan panel of energy experts said on Wednesday.

Revamping this policy requires a new and broad strategy, according to the panel, that includes measures to boost global oil and natural gas production, stricter U.S. fuel economy standards, mandatory limits on greenhouse gas emissions, as well as incentives to increase renewable energy and further develop clean coal and advanced nuclear power.

The 148 page report by the National Commission on Energy Policy reflects the consensus views of its 16 member panel, which includes representatives from industry, government, labor, academia, and environmental and consumer groups.

Supported by the William and Flora Hewlett Foundation, the commission spent more than two years developing the report.

Commission members told reporters they hope federal lawmakers and the White House will use the report to help guide a major overhaul of U.S. energy policy - something that Congress has repeatedly tried and failed to accomplish over the past four years during the first term of President George W. Bush.

Exelon Chairman and CEO served as co-chair of the National Commission on Energy Policy. (Photo courtesy Exelon)

The commission said its plan is "revenue neutral," but the funds to cover the proposed $36 billion in spending are generated by a provision strongly opposed the White House and some Republican leaders in Congress - mandatory greenhouse gas emissions limits.

But the commission recommends using a permit trading system to cut greenhouse gas emissions intensity - the ratio of emissions to economic output - by 2.4 percent per year, starting in 2010.

The permit costs would be capped to soften the economic impact on carbon polluters and the overall revenue generated would be used to offset the rest of the spending outlined in the commission’s strategy.

The plan is more stringent than the Bush administration’s current policy, which targets a voluntary reduction in greenhouse gas intensity of 1.8 percent annually through 2012, but its impact on addressing greenhouse gas emissions appears modest at best.

The report notes that unless there are changes to the current Bush policy, annual U.S. greenhouse gas emissions will increase from an estimated 7.8 billion metric tons in 2010 to 9.1 billion metric tons by 2020.

The commission’s proposal would cut that increase by some 40 percent, but even that decrease is uncertain because the implementation of the plan is linked to global action.

The report calls on Congress to review the program in 2015 to ensure other nations are also addressing greenhouse gas emissions.

"Further action by the United States would be reliant on global action by developing countries, including China, India, and Brazil," cochair William Reilly told reporters. "Only a truly global effort that includes developing countries will succeed."

William Reilly addresses a crowd as EPA administrator on Earth Day 1990. (Photo courtesy EPA)

Central to the report’s recommendations is the view that the nation’s thirst for oil will continue to grow, regardless of short term policies.

Global oil demand is projected to grow 50 percent over the next 20 years, with U.S. demand increasing some 40 percent or nine million barrels per day by 2025.

"We can neither conserve nor drill our way to oil security," Reilly said. "The gap between what we need and what we produce is going to grow."

To bridge that gap the report calls for the government to use financial incentives and diplomatic pressure to increase and diversify world oil production and to create additional strategic petroleum reserves.

The panel balked at setting a target for increasing fuel economy, instead it suggested the federal government "significantly strengthen" standards by 2010.

It also recommended $3 billion be targeted at automakers and consumers to encourage faster deployment of more fuel efficient cars and $1.5 billion spent to expedite the development of biomass fuels.

The provisions outlined in the report could cut U.S. oil use by some three million to five million barrels per day by 2025, the panel said.

Built in 1998, an advanced coal fired power plant near Denali National Park in Healy, Alaska features state-of-the-art coal combustors and pollution controls. (Photo courtesy DOE)

It recommends $2 billion for nuclear power, $7 billion for clean coal technology and carbon sequestration research, and $3.6 billion for renewable energy.

Overall funding for energy research and development would be doubled from current outlays to total $17 billion over 10 years – the current investment in cooperative international energy research would be tripled to $5 billion over the same period.

Environmentalists welcomed the acknowledgement that carbon emissions must be addressed, but some said the totality of the report’s recommendations offer little more than continued support for a faltering energy policy.

"The report increases the country's dependence on fossil fuel and nuclear power, while falling well short of solving the environmental, consumer and economic problems presented by our current energy system," said Navin Nayak, environmental advocate for the U.S. Public Interest Research Group.