WASHINGTON, May 19, 2015 -Tuesday’s Senate Energy Committee hearing on energy supply issues considered 26 legislative proposals vying for inclusion in a comprehensive energy bill package.
On the plus side, there was bipartisan agreement on the need to unleash the full potential of hydropower. There was even some agreement on the need to streamline the federal permitting process for energy projects.
But there was sharp disagreement over Republican proposals to open up new areas in the Gulf of Mexico, the Atlantic, and in Alaskan waters for offshore drilling – and over Republican proposals to give coastal states larger shares of the federal revenue from offshore oil leasing.
And while there was agreement that permitting has become too slow and too costly, Democrats pointed out that one cause of delays has been that Republicans have forced crippling budget cuts and staffing shortages within the permitting agencies.
There was also disagreement over one of the Democrats’ priorities – creating a federal renewable electricity standard to increase the use of non-polluting renewables like wind and solar. Sen. Tom Udall, D-N.M., has proposed the “Renewable Electricity Standard Act” (S. 1264) to require electric utilities to increase their use of renewable sources from 7.5 percent in 2015 to 30 percent by 2030.
Susan Kelly, president and CEO of the American Public Power Association, testified that based on the fact that electric utilities have already made progress in reducing carbon emissions, “there is no need for legislation to create a federal renewable energy standard. State and local governments are best placed to implement these policies.”
Senate Energy Committee Chair Lisa Murkowski, R-Alaska, opened the hearing by saying that “it is in our national interest to make energy abundant, affordable, clean, diverse and secure. Today’s hearing – like the bill that we are assembling – is not designed to pit energy resources against each other, but instead to view energy supplies holistically, and to find areas where we can come together.”
But after the hearing’s sharp exchanges over offshore drilling and oil revenue-sharing in particular, Murkowski ended the hearing by warning against continuing to “lock up our oil and gas resources.”She pointed out that along with pushing to increase oil and gas production in Alaska and to remove the ban on U.S. crude oil exports, she’s also very much in favor of what Alaska is already doing – increasing the use of geothermal, biomass, wind and solar power. She noted that Alaska is committed “to invest the earnings from nonrenewable resources into our renewable resources.”
Murkowski concluded on a confrontational tone, however, by warning that federal policy should not “focus on renewables at the expense of fossil fuels.”
In sharp contrast, committee Ranking Member Maria Cantwell, D-Wash., pointed out that while coal and natural gas prices are expected to increase steadily, “with renewable technology, the fuel is free.” She called for focusing energy policy on reducing CO2 emissions, “given the tremendous costs our changing climate is already imposing on businesses and communities across our country.”
Citing “questions about the adequacy of our oil spill response capabilities and potential environmental impacts,” Cantwell warned against any increase in offshore drilling and rejected the argument that coastal states deserve a larger share of federal oil leasing revenues. She also called for policy changes to end the practice of having U.S. taxpayers subsidize coal production through below market value leases and through paying the health and environmental costs of CO2 pollution.
Erik Milito, group director for upstream and industry operations at the American Petroleum Institute, explained that despite projections of global demand growing significantly, U.S. government policy blocks access to vast amounts of U.S. oil and gas. “The U.S. Outer Continental Shelf (OCS) is estimated to contain some of the greatest quantities of undiscovered oil and natural gas resources,” he testified. “Unfortunately, the federal government has placed most of the OCS – approximately 87 percent of it – off-limits to oil and natural gas development.”
Milito said that “fortunately,” three of the supply bills under discussion would effectively move the U.S. past “self-imposed energy prohibitions.” The bills (S. 1276, sponsored by Bill Cassidy, R-La.; S. 1278, sponsored by Murkowski; and S. 1279, sponsored by Tim Scott, R-S.C., and Mark Warner, D-Va.)would open highly promising areas in Alaska, the Gulf of Mexico, and the Atlantic OCS to energy exploration and production. Provisions are also included to provide revenue sharing to coastal states, he said.
Milito said that opening up the eastern area of the Gulf of Mexico would provide an additional $70 billion in federal revenue from offshore drilling activity.
Promoting his bill, S. 1276, the “Offshore Energy & Jobs Act,” Cassidy, said “We as a nation need greater access to fossil fuels to strengthen our energy security and independence.” He concluded that “This legislation would create 230,000 working class jobs for Americans who currently are underemployed or unemployed, $70 billion in new revenue . . . What’s not to like?”
Sen. Al Franken, D-Minn., answered Cassidy’s question. He explained that “Climate scientists are telling us that the vast majority of known fossil fuels reserves need to actually remain in the ground if we want to avoid the worst impacts of climate change.”
Despite the hearing’s sharp disagreements over issues including offshore drilling and revenue sharing, both Murkowski and Cantwell remain hopeful that the committee will agree on comprehensive energy legislation by late June and that a bipartisan bill will be debated on the Senate floor this fall.
The joint Murkowski/Cantwell goal is to rewrite energy policy to reflect major changes in the U.S. energy mix since the last major bill was signed into law in 2007. The changes include a surge in oil and natural gas production, rapid advances in wind and solar power, and proposedEPAregulations to reducecoal powerplant emissions.
Tuesday’shearing on Energy Supply issuesfollowed earlier hearings which focused on 22 proposed Energy Efficiency bills and 22 Energy Infrastructure bills. Next up is a June 4 hearing on Energy Accountability and Reform Legislation, due to consider 14 more proposed bills, including two bills from Murkowski:
· S. 1221, the “Bulk-Power System Reliability” bill to require “an assessment of the potential impact of any major federal regulation on the reliability of the nation’s bulk power system,” and
· S. 1230, the “State Oil and Gas Programs” bill to order the Bureau of Land Management (BLM) “to coordinate with states to create consistent rules and processes for the management of oil and natural gas production” on federal lands.
Robert Dillon, spokesman for Murkowski, tells Agri-Pulse that with both House and Senate committees hard at work on energy legislation, “there is a good opportunity to get bipartisan energy legislation passed.” But he says that whether the bill achieves what Murkowski intends – solid bipartisan support both in the committee and on the Senate floor – depends on how many Democrats are willing to support the bipartisan approach being taken by Ranking Member Cantwell.
Dillon concludes that “I don’t think that Sen. Reid (the Senate Minority Leader) has made any secret that he’s not interested in having this Congress be successful.”
Dillon’s warning that the Democratic leadership might block the Murkowski/Cantwell bipartisanship is echoed by others. One GOP leadership staffer working on energy issues tells us that “Cantwell is not the issue. I think she will be pressured by her leadership to not cooperate.” The staffer concludes that “I’ve seen the way these guys play ball. They don’t want us to have legislative successes, so I would not be shocked if the leadership pulls Cantwell away.”
Speaking for a key Democrat, one staff member explained that writing a bipartisan energy bill depends on just one thing: a Republican willingness to abandon divisive demands – such as opening more offshore areas to drilling and the “North American Alternative Fuels Act” (S. 1026) proposed by Sen. John Barrasso, R-Wyo. Barrasso’s bill would repeal the current ban on any federal purchase by the military or other agencies of any fuel (such as fuel from Canadian tar sands oil) with greenhouse gas emissions greater than conventional fuels.
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