Speeches & Floor Statements

Remarks of Sen. Alexander - Senate Energy bill

Posted on May 26, 2005

Mr. President, I take a few minutes to speak about natural gas prices: the prices at the pump, blue-collar workers, farmers, and homeowners. The reason I do that is because the Senate Energy Committee earlier today did a good piece of work that I hope the American people know and understand. By a virtually unanimous vote, I believe 21-1, the committee, after five months of work, reported to this body what I hope will be called the "Clean Energy Act of 2005." I suppose people outside of the Senate get tired of hearing senators compliment one another, but I do that today because this would not have happened had it not been for the leadership of Chairman Pete Domenici, the Republican chairman of the Senate Energy and Natural Resources Committee, and the ranking Democrat, Jeff Bingaman. We tried to do this in the last session of Congress and we did not get it done in the Energy and Natural Resources Committee. We were not able to pass an energy bill to give this country a comprehensive energy policy. Senator Domenici deliberately set out to do things a different way in this session of Congress. He sat down with Senator Bingaman and the Democratic staff and pledged to work with them, to share everything with them. Senator Domenici visited every member of the committee, Republican and Democrat. We worked together on a variety of major hearings and roundtables. The coal roundtable lasted three or four hours; one on natural gas lasted three or four hours. He encouraged a variety of committee members to become involved. On the Subcommittee on Energy, which I chair, he encouraged me to go ahead and, working with Senator Tim Johnson of South Dakota from across the aisle, we came up with a Natural Gas Price Reduction Act of 2005 into which we put all the ideas we could think of to try to bring down the $7 natural gas price we have today, which is the highest natural gas price in the world. Senator Domenici and Senator Bingaman did their best to come up with as many of those aggressive ideas as possible. Sometimes when members set out to compromise and work together, we end up with nothing because the easiest way to compromise is to do nothing. We can all agree on doing nothing and then we will not have a bold bill. But we are almost fortunate this did not pass last year because this is a more urgent time. The natural gas prices are $7, the highest in the industrial world. We have gone from the lowest in the industrial world to the highest in the industrial world. Prices at the pump are high. We have a million blue-collar manufacturing jobs in the chemical industry alone that will go overseas if we do not find some way to deal with this. September 11 was a big surprise to our country. Our next big surprise is going to be to our pocketbooks if we do not figure out how to deal with the price of energy. We must figure out how to have a low-cost, adequate, reliable supply of clean energy that is increasingly produced in the United States of America and not overseas. That is our goal. What is exceptional about this bill, in my view, is that it attacks the problem in a much more comprehensive way than other versions of the bill have. It begins with aggressive conservation. For example, the appliance efficiency standards, which are in this year's bill, are about double the effectiveness of those that were in last year's bill. What does that mean? It simply means that by some estimates these standards could save, at peak demand, the equivalent of 45 500-megawatt power plants. If we save building 45 gas power plants, we decrease the building of natural gas and we tend to lower the price. There are a good many other examples of aggressive conservation. The second thing the bill does is to begin to change the way we produce electricity. This country produces about 25 percent of all the energy in the world. Where does that electricity come from? It comes primarily from what we call nonrenewables. It comes from: first, coal; natural gas, second; and nuclear, third. That is 91 percent of it. Now, another seven percent comes from dams from hydropower and about two percent comes from renewable power, which is windmills, solar, biomass and geothermal. If we are in competition with China and India for jobs, and an important part of every farm, every manufacturing plant, every home, is the provision of reliable, low-cost, adequate supply of energy, as a practical matter for the next 20 years, most of that will have to come from nuclear power, from coal and from gas and conservation. That is where it has to come. Of course, we want to do more with other kinds of energy. For example, I hope the tax committee, when it reports its part of this bill, does something about solar power. We have a renewable tax credit in the law today that does not do much for solar. It encourages power plants that produce electricity from sun. We almost don't have any of those. What we use solar for is putting shingles on roofs. We need to give incentives to individual owners to do more of that. That’s why I proposed an investment tax credit so individual owners can take advantage of it. We can do more research and development in biomass and more research and development in geothermal. Even if we do all that we can do for the so-called renewable energies, in the next 20 years – and there is some disagreement about this – in my view, we will still be producing about 95 percent of our power – certainly not less than 90 percent of our power – from nuclear power, from coal, from gas and hydro. Now, how many more dams are going to be built in the United States? It is limited. In fact, this bill addresses relicensing of hydro dams. There are a good number of those in Oregon where the Presiding Officer comes from. By the year 2018, according to the National Hydropower Association, there will be 30,000 megawatts of hydropower plants that need to be relicensed. That’s half of the hydropower in the United States. This landmark, bipartisan agreement on hydro-relicensing is both urgent and meaningful So if one puts all of that aside, if we want to compete for our jobs with people from around the world and if the price of energy is a big part of it, what do we have to do? Nuclear, coal and gas. Over the last 10 years, almost all of the new power plants in America that make electricity have been built from natural gas. Now, how wise is that? Here we are with $7 a unit natural gas, the highest price in the industrialized world, our chemical companies, our blue-collar companies using this, some of them as a raw material. Dow Chemical estimates that 40 percent of the cost of its production is energy. Now, if in other parts of the world natural gas is significantly lower, we will have a problem. We will have jobs moving from here to there. We do not want to make all of our power from natural gas. We do it because we know how to do it and because it is clean. That leaves us with two sources of what we call base load energy; the two things that we must find a way to use and use in a clean way if we want to have a low-cost supply of American-produced energy. One of those is nuclear, and one of those is coal. Nuclear power is a technology that we invented in the United States, the peaceful uses of the atom. We figured out how to do that in the 1950s. One of the remarkable technological stories in the United States is our Navy and its nuclear-powered vessels. I suppose it is a classified matter exactly how many we have, but we have dozens of them. Some of them have small reactors. Some of them have a couple of big reactors on them. Since the 1950s, there has never been one single nuclear reactor accident in the U.S. Navy, not one. They are underwater. When they are above water, they dock at ports all around the United States, and we use them. In our country today, 20 percent of all of our electricity and 70 percent of our carbon-free electricity is produced by nuclear energy. Yet we have not built a nuclear power plant in the United States since the 1970s, not one new one. How wise is that? Other countries in the world are. Eighty percent of France's electricity is now produced by nuclear power. Japan, ravaged by nuclear weapons in World War II, relies on nuclear power. They build one or two new plants a year. We are in competition to keep jobs here. We want clean power. We increasingly want carbon-free power. If 70 percent of our carbon-free electricity is nuclear, then what is keeping us from going ahead? This bill will help us move ahead because it makes it easier for investors to build nuclear power plants that are safe. Senator Domenici has come up with an imaginative loan guarantee program that would help launch an entire new generation of nuclear power plants. Senator Craig, Senator Domenici, and Senator Bingaman have come up with a program that will be based in Idaho for advanced research on how we build lower cost, more effective nuclear power plants for our country. There is a growing consensus, especially as the Kyoto Treaty and the need to be concerned about global warming persuades more and more people of the importance of capturing carbon, that nuclear power for the next 15 or 20 years is the only logical first step to having a low-cost, adequate, reliable supply of American-produced clean energy. Britain has recently been coming to the same conclusion: that nuclear is a necessity for a carbon-free emissions future. What is the other step? The other step is coal. We instinctively think coal is dirty, and it is a source of a lot of problems because of the pollution it causes. I live two miles away from the Great Smoky Mountains National Park. It is the most polluted national park in America. The Knoxville area where I live is one of the most polluted parts of our country. Why is that? There is too much sulphur, too much nitrogen, and too much mercury in the air. Much of that comes from coal-fired power plants, not just from the Tennessee Valley Authority, which has a number of them in the area, but from all over America. The wind blows the air in, and it backs up against the Great Smoky Mountains, which are the highest mountains in the East, and we breathe the dirty air. So any energy bill has to be a clean energy bill so we can solve our air pollution problems. There is an even larger issue with coal-fired power plants. India and China, with their huge economies, a couple of billion more people, are going to be building hundreds of power plants in the next few years. The conventional coal plant is what many of those plants will be. If India, China, Malaysia, Brazil and the rest of the world build only conventional coal plants, it will not matter very much what our clean air policies are in the United States because they will produce so many pollutants around the world that when the wind blows them around the world and over the air in the United States, we will suffer from that. So if we solve the problem of how to burn coal in a clean way, then the rest of the world is likely to pick up our innovation and solve their problem because they do not want to have polluted air either. So how do we do that? Well, there seems to be a way to do it. We call it coal gasification. There are several technologies. I like to call it clean coal gas because that makes it a little easier to talk about. The New York Times business section had an excellent article on this on Sunday that Senator Domenici gave to all of us. It talked about this idea of taking coal, turning it into gas and then burning the gas. That solves a great amount of the pollution. It solves the sulphur, the nitrogen, and the mercury part of the pollution, but it does not solve the carbon part. Then what we need to try to do is to advance the technology of capturing and sequestering the carbon -- in other words, getting rid of the carbon. If we are ever able to do that, we could burn coal as cleanly as we can burn gas, capture the carbon and put it in the ground, and we would never have to worry about the Kyoto Treaty. We would never have to worry about the McCain-Lieberman bill or the Carper-Chafee-Gregg-Alexander bill or caps on carbon because we would not be producing carbon. We would be producing it and recapturing it. Nuclear power is free of it, and clean coal gasification with carbon sequestration captures it and gets rid of it. The other thing is that we are the Saudi Arabia of coal. We have a 500-year supply of it. So if we can move ahead with nuclear and clean coal gas, we can lower the price of natural gas, and we can have more American-produced energy. So this legislation begins with aggressive conservation. As I said, the appliance efficiency standards alone would save the building of 45 500-megawatt gas plants, but then it begins to change the way we make electricity by research and development in advanced nuclear technology, by the loan guarantee support which could be for nuclear plants of that kind. It also has loan guarantees that I hope would help launch a half dozen coal gasification power plants and a half dozen coal gasification plants at industrial sites. It also has research and development support for carbon sequestration and for other technologies that hold promise. We still have some issues to work on. We began with what we could agree on, worked five months on it under the leadership of Senators Domenici and Bingaman, and reserved a few issues to the floor. Senator Domenici announced that we will be coming to the Senate floor shortly after the recess, in a completely different spirit than last year, with all of us hoping to get a result. We will then put that bill with the House bill and present to this country a clean energy act of 2005 that will lower natural gas prices, begin to produce more American energy at home, include more aggressive conservation, change the way we make electricity, and focus especially on advanced technologies for nuclear, coal gasification, and the supply of gas. In the short term, we are going to have to bring more gas in from around the world in liquefied natural gas. I’m pleased that the committee adopted the ideas that Senator Johnson and I had on LNG siting in the energy bill. There is one other area I want to mention without dwelling on it too much. One of the things I hope happens as we debate this bill is that it doesn't change from a national energy policy into a national windmill policy. I say that because one of the issues we have pushed out to be debated on the floor is something called a renewable portfolio standard, renewable energy. That all sounds very good. The proposal was, let's make 10 percent of all of our electricity by the year 2025 from renewable energies. That sounds good, too. The problem is— I don't think it will work because all we are talking about is geothermal -- that is hot water from the ground -- solar, which our incentives today don't help much, and biomass, which is burning wood chips and other such technologies. According to a Department of Energy analysis, even if we had such a requirement of all our electric companies that they produce 10 percent of their energy from renewable fuels, they couldn't do it. They could only get to five percent due to the way the Bingaman price caps are structured. So what utilities would do realistically is buy credits in a complicated scheme which would then raise the price of our electricity. We should be in the business of lowering energy prices, not raising them for nothing. The other concern I have is that a renewable portfolio standard is really a wind standard because geothermal and solar and biomass will only increase it a tiny bit. This information I have is from an analysis that the Energy Information Agency did on Senator Bingaman’s bill shows clearly that the impact of a Bingaman RPS is growing wind power. The only way to go forward is with windmills. So the effect of continuing the current policy is to take this country from about 6,700 windmills to 40-, 60-, 80,000, depending on estimates that you believe. My point is not to make a big discussion about the windmills themselves. I don't like to see them. I think most people don't. The Governor of Kansas has put a moratorium on some windmills, as has the Governor of New Jersey, and so have communities in many parts of America, such as Vermont and Wisconsin. I asked the Tennessee Valley Authority to put a 2-year moratorium on new wind power on Tennessee until we could assess the damage it might cause to our tourism industry and to our electric rates and to our view of the mountains. People think of windmills and think those are nice. Grandma had one on her farm. It was by the well. My grandparents did. But these aren't your grandmother's windmills. We have the second largest football stadium in the United States in Knoxville, TN. We call it Neyland Stadium. One hundred seven thousand people can sit there, and it has sky boxes that go up as high as you can see. Just one of these windmills would fit into Neyland Stadium. The rotor blades would extend from the 10-yard line to the 10-yard line. The top of the windmill would go twice as high as the sky boxes or more. And on a clear night you could see the red lights 25 miles away. There are significant problems with this power. It only works 25 to 40 percent of the time. You don't get rid of any nuclear or coal plants when you have the windmills because you still need the power. You can't store the energy for your lights or your computer and all the things you use electricity for going all the time. So there are many problems. But here is the biggest problem, the one I want to mention today. I will just leave it for the members of the Finance Committee upon which the Presiding Officer serves and others. This Energy bill will have three parts to it. It will have some things from the Energy Committee, which we have finished today. It will have a contribution from the Finance Committee, which will come in June, and it will have a contribution from the Environment and Public Works Committee, which will also come in June. We will put all those parts together. We are told that this whole bill, when it is put together, can't cost, our Budget Committee says, more than $11 billion. The president hopes we won't spend more than $8 billion. But the production tax credit in the current policy provides $3.9 billion over 5 years, almost all of which will go to windmills unless we change the policy. In other words, if we have $11 billion to spend and we spend $3 billion on ethanol or renewable fuel, we will only have $8 billion left to spend on everything else, and nearly $3.5 to $4 billion of it will go for windmills. That is what I mean by a national windmill policy. My hope is that my colleagues will take a fresh look at our tax credit for renewable fuels and make sure that we use it wisely because that is a lot of money to create the largest amount of carbon-free clean energy. Here are some of the suggestions for better use: For example, $1.5 billion for consumer incentives for 300,000 hybrid and advanced diesel vehicles. That would give 300,000 Americans a $2,000 deduction to purchase a hybrid car or an advanced diesel vehicle. Those operate about 40 percent more efficiently than conventional cars. That saves a lot of energy. For $750 million, we could give manufacturing incentives for building those hybrid cars and advanced vehicles in the United States. Unfortunately, as it stands now, we aren't doing that. They would all be built overseas because most of the good hybrid technology has been invented overseas and is being rented to the United States. That would be 39,000 jobs in the United States. I have with me a copy of the National Commission on Energy Policy which recommends both of these ideas, the $2,000 tax deduction and the incentive for manufacturing of hybrid cars. That would be a wise way to spend money for clean carbon-free energy. There are many more good ideas: $2 billion in tax incentives for energy-efficient appliances and buildings, suggested by Senators Snowe and Feinstein. Senator Johnson and I had suggested $2 billion for tax incentives to commercialize coal gasification for power plants and $300 million to make more effective support of another renewable energy, solar energy, which has basically no support the way our laws are written today. The National Commission on Energy Policy has several other recommendations: Build in tax incentives to commercialize carbon capture and geologic sequestration in a wide array of industries. As soon as we figure out how to capture carbon, we can use coal gasification in a big way to reduce dependence on foreign energy and to lower the cost of natural gas. They also recommend $2 billion in tax incentives for nuclear deployment, $1.5 billion for biodiesel and non-petroleum, low-carbon fuels. I have suggested those in the order in which I like them. I am not a member of the Finance Committee so I won't have a chance to be a part of that discussion in that committee. My point is simply that if we have $8 billion to spend or $11 billion to spend, we may have already spent a couple of billion in what we are doing with renewable fuel, then we have a lot more good ways to spend money in support of carbon-free energy than we have money for. I respectfully suggest that if we are spending most of $3.7 billion over the next 5 years as a national windmill policy and not a national energy policy, that ought to be reasonably adjusted. Let me not emphasize the disputes that we have yet to come. I am here today to say, particularly, after a time in the Senate when people who watch us must wonder if we are speaking to each other; the answer is, yes, we are. We have been meeting for five months on this Energy bill. We have been working together, as Senator Bingaman said today. I don't remember a party-line vote in the 5 months. We had some close votes, but it wasn't Republican versus Democrat. It was just different ones of us with different opinions. And there must have been half the committee there today when Senators Domenici and Bingaman announced the results at a press conference. So I honor them for their leadership. I think the American people are proud of Domenici and Bingaman as senators. New Mexico ought to be proud. It has both of them from the same State. Even though we have CAFE standards still to debate, MTBE still to debate, we have some final work to do on how do we site terminals for liquefied natural gas, further increasing the supply of natural gas, and we will be debating the so-called renewable portfolio standard for how many windmills we should have -- all that will be sometime in June. That is what we are supposed to do as senators. That is why we are here, to take both sides of this issue and see if we can come to a good result. So far, I think we have. I ask unanimous consent to have printed in the Congressional Record following my speech the article on coal gasification from the New York Times business section on Sunday; a letter I wrote to the directors of the Tennessee Valley Authority, asking them to put a 2-year moratorium on wind power until we had an opportunity -- we in Congress and local officials -- to consider the effect of these large wind farms on our tourism industry, on our view of the mountains, on our gas prices; and finally, an article from the Guardian Unlimited, which is an interesting discussion of what is going on in Great Britain, as they consider how to meet the Kyoto standard for carbon-free electricity production, and how many of the people who formerly had favored large windmills are concluding they don't want them destroying the rural areas of Britain, and they are looking at nuclear power in a fresh way which, as I mentioned, is the way we in the United States today produce 70 percent of our carbon-free electricity.