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  • An Easy-to-Follow Energy Road Map

    Faced with increasing electricity prices (as well as brownouts in some areas) and higher prices at the pump, Americans are calling for solutions that would result in affordable electricity and gas prices. The easiest way to do that is to increase supply to offset rising demand. The federal government’s role should be not to pick winners and losers among energy technologies but set the rules in place to allow companies to produce energy if it’s in their interest to do so. Rep. Devin Nunes (R–CA) released new legislation that provides an efficient path forward to increase energy supply, create jobs, and grow America’s economy while preventing the Environmental Protection Agency (EPA) from stifling economic growth with senseless regulations.

    Nunes’s legislation would open access to domestic oil and gas exploration both onshore and offshore, streamline the process to permit new nuclear power plants, and attempt to remove the special-interest politicking behind renewable energy subsidies. The bill would also prohibit the EPA from regulating greenhouse gas emissions under the Clean Air Act (CAA).

    Offshore Access

    Many of America’s offshore areas are off-limits to energy production. Beginning in 1982, Congress restricted more and more offshore areas through annual Department of the Interior (DOI) appropriations, denying funding to conduct lease sales. Nunes’s bill would improve access to America’s resources in the Outer Continental Shelf (OCS) by removing unnecessary and restrictive delays in the implementation of the Draft Proposed OCS Oil and Gas Leasing Program 2010–2015, which was put forth by the Bush Administration. The bill would require the Secretary of the Interior to conduct a lease sale 30 days after the bill’s enactment and every 270 days after that in each OCS planning region where a commercial interest exists to purchase the lease.

    Some 86 billion barrels of oil and 420 trillion cubic feet of natural gas are beneath America’s waters, and while those resources wouldn’t immediately be available, we should move forward to access those resources.

    Opening Alaska’s Arctic National Wildlife Refuge

    For the past few decades, the federal government has been a hindrance rather than a help in expanding America’s domestic energy supply. Alaska’s Arctic National Wildlife Refuge (ANWR) is likely the most infamous case. ANWR is the largest single untapped source of American oil. The U.S. Geological Survey estimates that it contains 5.7–16 billion barrels of recoverable crude oil. Assuming the middle of this range, ANWR could provide nearly a million barrels per day, every day it is in operation, for several decades.
    This drilling would occur on only 2,000 acres of ANWR’s 19 million-acre expanse and only during the time of year when the ground is frozen. Wildlife migration typically occurs during warmer periods, so drilling would not be disruptive to animals, most notably caribou. Only an act of Congress can open up ANWR to leasing for oil and gas production.

    Stopping EPA’s Global Warming Regulations

    The EPA’s endangerment finding gives the EPA justification to regulate greenhouse gas emissions, most notably carbon dioxide (CO2), under the CAA. The EPA already began targeting motor vehicles last year and will start regulating emissions from new power plants and major expansions of large greenhouse-gas-emitting-plants this year.

    Reining in the EPA’s regulatory excesses with respect to carbon dioxide and other greenhouse gas emissions is long overdue and is a critically important title in the Nunes legislation. The American people made it clear last year that they had no appetite for cap-and-trade legislation that would inflict serious economic damage while providing no environmental benefit. The EPA’s CO2 regulations would do no less.

    Moving Forward with Nuclear Energy

    Of critical importance, the Nunes bill creates a pathway to determine whether or not Yucca is suitable as a repository and puts forth a plan to find an alternative site if one is necessary. It also directs the Department of Energy (DOE) to report back to Congress on the feasibility of establishing an organization outside of the DOE to manage the Yucca repository and removing the fee that ratepayers pay to the federal government to used-fuel-management services. Removing the fee would allow a market-based system to emerge for used-fuel management.

    The proposal also would reform how new reactors are potentially permitted. The current permitting process to build new reactors is a product of a streamlining effort established by the Energy Policy Act of 1992, but it is still proving to be slow and unpredictable. The Nunes legislation would create a second permitting track that would allow for a permit to be issued in approximately two years.

    To be eligible, applicants must:

    • Construct a reactor in which the design has already been certified by the Nuclear Regulatory Commission (NRC);
    • Build the new reactor on or adjacent to a site where reactors already operate;
    • Not be subject to any NRC actions to revoke operating permits; and
    • Have submitted a completed combined construction and operating license permit application that has been docketed by the NRC.

    The expedited process would entail the issuance of a draft Environmental Impact Statement (EIS) within 12 months of the application being docketed and the final EIS within 18 months. Further, hearings over contested application issues would begin once the draft EIS is issued rather than after the final EIS. This would allow the NRC and applicant to resolve contested licensing issues within 24 months of the application being docketed. The bill also calls for the Safety Evaluation Report—NRC’s application technical review report—to be completed within 18 months of the application being docketed. While such timeframes would be tight, with close coordination between the applicant and the NRC, it should allow for a significantly shortened process.

    The bill also begins to break down one of the primary obstacles that new reactor technologies have in entering the marketplace: a lack of regulatory support. The current NRC does an outstanding job of regulating large light-water reactors, 104 of which operate in the U.S. today, but it performs inadequately in developing regulations that would allow new technologies into the marketplace.

    Without this regulation, new technologies are effectively banned because customers are hesitant to buy reactors that the NRC will not regulate, and the NRC does not want to put its resources toward a reactor technology that has no customers. The result is that new nuclear technologies are at a severe disadvantage.

    To begin changing this, the Nunes bill would direct the NRC to develop a set of guidelines for technology-neutral nuclear plant designs. Instead of mandating that a specific nuclear technology be wedded to a specific plant design, the new guidelines would allow for other nuclear reactor technologies to be used in a nuclear power plant, creating a significant step toward building a more diverse and competitive nuclear industry.

    Finally, the proposal allows for the provisional certification of new reactor designs. While the provision does not eliminate or reduce any requirements for reactor design approval, it would allow for a reactor plant permit applicant to move forward with the permitting process. To get provisional certification, the legislation would direct the NRC to consider such factors as whether a design is commercially viable in other markets or if it has been certified in other countries.

    Reverse Auction for Renewable Energy Subsidies

    The goal of Congress should be to allow all energy sources to compete subsidy-free in an open market. Such an approach would yield innovation and cost reductions and maximize energy supplies. The massive infrastructure of subsidies, set-asides, restrictions, preferences and mandates that currently plague America’s energy policy is at the heart of most of America’s energy policy problems. Part of that is because special interests, lobbyists, and parochial agendas have largely determined how energy subsidies and preferences are distributed.

    Nunes’s bill introduces a better way to distribute energy subsidies by creating a system where renewable energy producers would bid on subsidies. Those with the lowest costs would get the subsidy. While The Heritage Foundation remains committed to its position that all energy subsidies should be abolished, we do recognize that the Nunes idea for distributing subsidies through a reverse auction is a better mechanism than is currently in place. It could be improved even further if, instead of using royalty funds from new gas and oil exploration, it took funding from current subsidy payments.

    Co-authored by Heritage Research Fellow Jack Spencer.

    Posted in Energy [slideshow_deploy]

    10 Responses to An Easy-to-Follow Energy Road Map

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    3. Monica, Louisiana says:

      This article pretty much sums it up. We need to get Congress on board and moving fast on these issues. Ken Salazar and Obama need to stop the de facto moratorium on drilling in the Gulf of Mexico. This has halted oil and gas production in the United States and the price of oil will keep rising until permits are issued and drilling and production begins to turn the tide around. 1 permit in deep water drilling since April 2010 is not going to cut it. Thousands of jobs have been lost because of this. Obama is intent on breaking our backs economically. That is the reality in Louisiana!

    4. Bobbie says:

      There must be a mental disorder to put any government entity before reality itself. America is being deprived of her God given, natural resources for no reasons significant. As other countries are freely living off their's, all the while America's president would rather use "fossil" fuels to import foreign 'fossil" fuels at outrageous costs, than use America's own. Doesn't seem like America is his first priority, in a positive context, anyway. And in my opinion, if it is being used, fossil is the wrong adjective used in the wrong way for distorted and manipulative reasons. Wonder what college degree thought of that one…?

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    7. Tom Sullivan in FL says:

      Gut the departments of Energy, EPA, Education, Agriculture, Commerce, and HUD. Start over from scratch on Agriculture, Commerce, and EPA. Keep them small and humble, to serve America instead of serving the leftist agenda.

    8. Tom Stacy of Zanesfi says:

      The bill has very positive elements. Yet the waste and inefficiency associated with the wind energy business would potentially increase dramatically, even with the fabricated marketplace auction rules' market manipulating provisions for "balance" between renewables.

      It is so simple to construct a renewable energy model that maximizes rate and tax payer value. all that needs to be done is to stop focusing on RAW ENERGY and start focusing on contribution to peak load and on dependable delivery. It is the wild swings in output – strongly negatively correlated with demand that necessitate a two to one energy relationship and a one to one nameplate rating relationship between natural gas and wind.

      Value is commonly measured by the components of price, quality and delivery. But the more perishable the commodity, the higher weighting goes to delivery timing. With electricity perishability very high, and storage costs to match, having a bill which ignores this component of value is imprudent.

      So do we allow "potentially hundreds of billions" of new funding to flow into low value generation sources like wind, which ratchet up our dependence on natural gas (contrary to the myth in the original Pickens Propaganda) – just to try to get enough bipartisan support to pass H.R. 909? Probably. But with wind in particular of such low value and such enormous project areas, the compromise seems to many – a very high price to pay.

      Both democrats

    9. Mitch, OR says:

      I like the suggestions on Nuclear power. Thats definetly somthig that could get us on track but it very hard to see how little knowledge is out there about our environmental impacts through using our "God-given" coal and oil. Thank you for trying to fix the economy today, but you are dumping a much larger issue on your youth such as myself. I am 21 years old and seriously concerned for the future of the United States. We can't just choose the economy or environment. There are ways to promote both while still keeping an open market. Oh and Bobby, oil and coal are called fossil fuels because they are made out of plant and animal decay, which can widely be called fossils. And when did getting a college degree become a bad thing? P.S. I'm a conservative student working on a Geology degree.

    10. Bobbie says:

      college educated Mitch age 21, I know what fossil is and the recycling of creates energy that is NOT FOSSIL! That's when getting a college degree amounts to nothing but the fact you have one. Nuclear power is God given, Mitch.

      What environmental impacts through using our God given, natural resources? The ones you've been indoctrinated to believe? Open your mind to reality.

      What larger issue is being put on you, Mitch? Facts? Freedom? Responsibilities?

      I don't mind alternative energy in the private sector of accountability, where my freedom of choice makes the call. It's extreme to dismiss what works and replace with force of what remains questionable, clearly inefficient, highly controversial, totally unsustainable and because of the inconsistencies, crisis driven! All expensed on the tax payers BY FORCE!

      Mitch, since you are studying geology, what happens when oil isn't derived from the earth? How would the world be or what would it look like if there was never drilling for oil? Could it or would it erupt naturally from the earth? Question I sincerely would like an answer to. What a mess, eh? Or why is it okay to drill all over the world but here? Good luck with your studies, Mitch.

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