Speeches & Floor Statements

Floor Remarks of U.S. Senator Lamar Alexander (R-Tenn.) -- Energy tax bill

Posted on March 28, 2012

Mr. President, I would like to make a few remarks on the subject we are debating here, which is energy.

Last week the majority leader said he was disappointed that we were not moving to the Ex-Im Bank and to postal reform and to cybersecurity, all of which he said are urgent national issues the citizens of the United States expect our Senate to deal with. The Republican leader said that, on our side, we are ready to deal with all three, and the Republican leader offered to join the majority leader in dealing with the Ex-Im Bank, with a few relevant amendments. That might be a pretty good way to begin our process of getting the Senate back to doing what the Senate is supposed to do, which is to bring up important pieces of legislation, allow Senators on both sides to offer their amendments, speak on them, and then vote on them. It is easier to do if the amendments are relevant to the legislation that is being offered.

So we were looking forward this week to dealing with a postal reform bill, which needs to be dealt with. We have a several-billion-dollar debt for the post office, which has been a part of our lives ever since our country was founded, and we have competing pieces of legislation on the issue, with very good Senators on both sides of the aisle ready to discuss it. Yet, suddenly the majority leader changed his mind, which he has a right to do, and instead, he brought up legislation repealing six tax provisions for five oil companies -- provisions that, for the most part, are tax provisions that are similar to those available to most other companies in America.

Why would the majority leader do that? Well, in the Senate it is not considered to be good form to inquire into the motivation of other Senators, and I won't do that, but I will read a paragraph or two from The National Journal this week that speculated on what might have happened this past Monday evening. I quote:

The Senate holds a procedural vote this evening on legislation sponsored by Senator Menendez of New Jersey that would repeal tax incentives for the country's biggest oil companies. It won't pass, but it will create a platform for Democrats to try to reclaim the debate on gas prices. Indeed, a memo circulated over the weekend by John Podesta, president of the liberal Center for American Progress, and Democratic pollster Geoff Garin, notes that the vote "offers a huge opportunity for progressives to frame energy policy through the gas price debate." Democrats will use familiar tactics of linking high gas prices to Big Oil, and Big Oil to Republicans, with the aim of attacking GOP presidential candidates and of putting three vulnerable Republican Senators up for reelection -- Scott Brown of Massachusetts, Richard Lugar of Indiana and Dean Heller of Nevada -- in tough spots.

That is the end of the speculation from the National Journal.

Now, maybe that was the reason the majority leader decided to bring this up, but clearly we are spending a whole week on a political exercise. If this is true - that it is being brought up to frame an issue to put Republican Senators who may be running for reelection in a difficult spot - well, then the Republicans must not think so because we all voted to bring it up. So instead of doing cybersecurity or postal reform, we are spending a whole week on something we all know is not going to pass and is a misuse of the time of the Senate. It would be much better if we were using the time on those other issues.

But as long as we are discussing lowering gasoline and fuel prices, I have a suggestion to make. Here is a plan to lower fuel prices: Double energy research. And here is a way to pay for it without adding to the Federal debt: Stop wasteful, long-term subsidies that are exclusively or mostly for both Big Oil and Big Wind.

Look at shale gas. The Senator from Oklahoma was talking about shale gas, which is being produced thanks to new technology found through energy research. This is a remarkable development in our country. But, as Daniel Yergin, the leading expert on energy, reports in his new book "The Quest," the innovation on this began over 20 years ago, some of it from the private sector, some from government funding. Basically we found a way to find natural gas and oil through a process called hydraulic fracking. It is possible all around the world. I was in Australia in January, and they are doing it and selling it to China. The remarkable difference for the United States is not just that we suddenly have a lot more natural gas but that it is cheap gasoline. Instead of being $15 a unit, which it was when we passed the last Energy bill in 2005, it is $2 a unit or $3 a unit.

More than that, while Australians are selling their gas to China and paying the world price at home for their own natural gas, in the United States it appears likely we will be able to buy our gas at a U.S. price rather than a world price. What does that mean? That means that natural gas in Europe and in Asia is going to be worth four to five times what natural gas is here. So chemical companies that were thinking about moving overseas 5 years ago in order to be able to buy cheap natural gas for their feedstock, their raw materials, are staying here, expanding here, thinking about moving back. Older people who need to heat and cool their homes can use natural gas at a cheaper price. Manufacturing companies that are adding up the costs to make a decision on whether to put a plant in Mexico or some other place in the United States can put cheap energy in there with the natural gas. For the foreseeable future, it appears that natural gas in Europe and Asia is going to be four or five times what it is in the United States, giving us a tremendous advantage.

So energy research, both in the government and in the private sector, has given the United States the advantage that, if truth be told, has been our advantage ever since World War II. The principal reason we have produced 25 percent of all the money in the world is because of the innovation, technology, and research that have come since World War II, and it is hard to think of an important advance in biological or physical sciences without support from government research. So shale gas is one example of that.

So shale gas is one example of that. Here is another example: I drive an all-electric Nissan LEAF and pay about $3 for the electricity to travel 100 miles -- better than spending an equivalent $20 on gasoline. Researchers at battery maker Envia have invented a way to double the density of lithium ion batteries, hastening the arrival of the $20,000 electric cars that travel 300 miles per charge. That research is permitting us, in the case of shale gas, to find more American energy and in the case of electric batteries, to use less of it.

That is why I argue that the United States should launch a series of mini Manhattan Projects with the same focus and determination of the original World War II Manhattan Project, this time with the goal of finding more energy and finding ways to use less of it.

The United States has a resource no other country has -- dozens of major research universities and 17 national laboratories that can advance research on cheaper solar, better batteries, recapturing carbon from coal plants, biofuels from crops we don't eat, better ways to dispose of nuclear fuel, offshore winds, green buildings, and even fusion. To pay for doubling the $5 billion the United States now spends on energy research, Congress should end current tax breaks that are exclusively or mostly for both Big Oil and Big Wind and of every $3 saved, use $1 for more research and $2 to reduce the Federal debt.

For all we hear about Big Oil -- and we hear a lot about it -- you may be surprised to learn that special tax breaks for Big Wind are even greater. During the 5 years between 2009 and 2013, Federal taxpayer subsidies for wind power developers equaled $14 billion, according to the Joint Committee on Taxation and the U.S. Department of Treasury.

Here, I am only counting the production tax credit and the cash grants that the 2009 stimulus law offered to wind developers in lieu of the tax credit. An analysis of that stimulus cash grant program, which this legislation offered here would extend, found that 64 percent of the 50 highest dollar grants awarded -- or about $2.7 billion in subsidies -- went to projects that had begun construction before the stimulus measures started. Steve Ellis, vice president of Taxpayers for Common Sense, told Greenwire: “It's essentially funding economic activity that would have occurred. So it's just a pure subsidy. “

It sounds like, in the President's budget, Big Oil receives multiple tax subsidies that are exclusively for Big Oil. Doing away with them, they say, would save about $4.7 billion next year or about $22 billion to $24 billion over 5 years. So far, it sounds as though Big Oil with $22 billion is bigger with its subsidies than Big Wind with only $14 billion. But here is the catch: Many of these subsidies the President is attacking oil companies for receiving are regular tax provisions that are the same or similar to tax provisions that are available to hundreds, even thousands of companies in America. For example, Xerox, Microsoft, and Caterpillar all benefit from tax provisions such as the manufacturing tax credit, amortization or depreciation of used equipment that the President is counting as Big Oil subsidies. And of course wind energy companies also benefit from many of these same provisions, but the production tax credit that benefits mostly wind is in addition to the regular Tax Code provisions that benefit many companies. So the only way to make a fair comparison is to look at subsidies that mostly benefit only oil or mostly benefit only wind, and by that measure, Big Wind gets more tax breaks than Big Oil.

So the bill proposed by the Senator from New Jersey that is limited to just five big oil companies is limited to them even though many of the tax breaks they receive are the same or similar to tax breaks many other companies receive. This bill also extends many tax breaks, including the wind production tax credit and the 1603 grant program for renewable energy, which mostly benefits wind.

Two weeks ago, during the debate on the Transportation bill, the Senate wisely refused to extend the 20-year-old temporary production tax credit which mostly benefits wind. That was the correct decision. We should allow this tax provision to expire. Congress made a much more difficult decision last year to allow the ethanol tax credit to expire, and we should hold our ground and do the same thing for the wind production tax credit.

There are three reasons Big Wind subsidies should go the way of the $5 billion annual ethanol subsidy. First, we can't afford it. The Federal Government borrows 40 cents of every dollar we spend.

It can't justify such a subsidy, especially for what the U.S. Energy Secretary calls a mature technology.

According to a 2008 Energy Information Agency report, Big Wind received in subsidies 25 times as much per megawatt hour as all other forms of electricity production combined.

Second, wind turbines produce a relatively puny amount of unreliable, expensive energy. Wind produces about 2.3 percent of all of our electricity. A better alternative is clean natural gas. An even better alternative is cleaner nuclear power. Nuclear power reactors power our Navy and produce 70 percent of our pollution-free electricity. Using windmills to power a country that uses one-fourth of the world's electricity would be the energy equivalent of going to war in sailboats.

The Tennessee Valley Authority has erected 18 massive wind turbines on 3,300-foot Buffalo Mountain outside Knoxville. Other than deface the landscape and waste ratepayer dollars, the turbines have done little. The wind there blows 19 percent of the time, usually at night when we don't need it, and its unused electricity production cannot be stored.

Finally, there is the question of whether, in the name of saving the environment, wind turbines are destroying the environment. These are not your grandma's windmills. They are taller than the Statue of Liberty. Their blades are as long as a football field, and their blinking lights can be seen for 20 miles. In Nashville, Vanderbilt and the Metro water system is about to erect a small wind turbine as tall as the Parthenon replica we have in Nashville. It would take 1.1 million of these eyesores to equal the production of TVA's new Watts Bar 2 nuclear reactor. Building that many turbines would cost 15 times the cost of the nuclear reactor, and you would still need the nuclear plant for when the wind doesn't blow.

When wind advocate T. Boone Pickens was asked whether he would put turbines on his Texas ranch, he answered, "No. They're ugly."

Birds must think of turbines as Cuisinarts in the sky. Eagle killing has become so commonplace that the U.S. Department of the Interior has set up a process to grant licenses for eagle takings, sort of a hunting license. A new documentary, "Windfall," chronicles the despair of upstate New York residents debating whether to build giant turbines in their town.

So I ask the question: If wind has all these drawbacks, is a mature technology, and receives subsidies greater than any other form of energy per unit of actual energy produced, why are we subsidizing it with billions of dollars and why are we not including it in this debate? Why are we talking about Big Oil subsidies and not Big Wind subsidies?

Our energy policies should be, first, to double the $5 billion Federal energy research budget we now have and focus it on new forms of cheap, clean, reliable energy. I am talking about the 500-mile battery for electric cars; commercial uses of carbon captured from coal plants; solar power installed at less than $1 per watt; or offshore wind turbines. That would be research.

Second, we should strictly limit a handful of jumpstart research and development projects to take new technologies from the R&D phase to the commercial phase. I am thinking here of projects such as ARPA-E, modeled after the defense department's DARPA agency that led to the Internet, to the stealth, and to other remarkable technologies; or the 5-year program for small modular nuclear reactors; or incentives for the first 200,000 electric vehicles purchased in America. These are a strictly limited number of jumpstart R&D projects.

Third, we should end wasteful, long-term, special tax breaks, such as those for Big Oil and those for Big Wind. I am talking about the tax breaks that are exclusively mostly for Big Oil and Big Wind and not similar to what other industries receive. These savings from those subsidies should be used to double clean energy research and to reduce our Federal debt.

But that is not what this bill does. This bill ends subsidies for five companies that many other companies receive, and it extends subsidies for a few companies that other industries don't get.

This debate isn't even about an energy plan, which is what we should be debating when gas is around $4 a gallon right now.

Here is a very specific plan: Increase energy research -- double it -- to find more American oil and more American natural gas and more American alternative forms of energy, and increase energy research to find ways to use less of that energy. I have highlighted the best ways to use less, and I have highlighted a way to pay for it.