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National Energy Strategy 2/20/91 [OA 6855]
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21
2
7
(Lange/Cawley)
February 15, 1991
11:00 A.M.
[ENERGY.DOC]
PRESIDENTIAL REMARKS:
ENERGY POLICY BRIEFING
ROOM 450, OEOB
1:15 P.M.
WEDNESDAY, FEBRUARY 20, 1991
Admiral Watkins
[acknowledgements].
This afternoon I'm pleased to release our comprehensive
National Energy Strategy -- to ensure that our energy future is
secure, efficient, and environmentally sound.
Thanks to Admiral Watkins and the heroic efforts of many,
we now have a carefully-balanced strategy that will diversify
America's energy sources; spur efficiency, conservation and
competition throughout the energy sector; give Americans greater
choice among fuels; and improve U.S. research and development in
new technologies.
The driving force behind this strategy is straightforward.
It relies on the power of the marketplace, the common sense of
the American people, and the responsible leadership of industry
and government.
Every American will benefit from the policies we're laying
out today. Over the next two decades this strategy will make
America 27 percent more energy efficient -- without energy taxes
or oil import fees. It will save consumers at least $750 billion
it will
in energy costs and assure our energy security, by reducing
projected estimated
our oil imports by a third.
Some will suggest that reducing our energy vulnerability
won't be enough that we need more drastic measures. But We're
Let's talk about somefacts:
foreign Oil consumption has been climbig for - years. and
stands
at
now
Too much of a our imports come from
sources in troubled parts of 2
the world. we also know that
a long way from total energy independence. and we must avoid
to reduce oil implocts
unwise and extreme measures that would seriously hurt American
Jone
consumers, American jobs, and American industries. Instead, we
must pursue an energy strategy that is judicious and
comprehensive.
facts us on a road to
This strategy strikes a reasonable balance, by increasing
production and reducing demand. It will help us to find more
sources of reliable energy -- through uncompromisingly safe and
environmentally sound development. And it will help us do more
with less -- by encouraging alternative fueled vehicles,
conservation, and mass transit.
With this strategy, we envision an energy future of
unprecedented choice and flexibility.
Instead of only finding gasoline at the corner station,
we want Americans to be able to choose from a range of
environmentally sound fuels -- like methanol, ethanol,
electricity, propane, and natural gas.
Where Americans were once able to buy energy for their homes
from one utility company, we want to make it easier for other
companies to enter the industry, and give consumers alternatives.
And where the nation's overall energy well-being used to be
dictated by big cartels and powerful interests, we want to build
an energy future based on a range of diverse sources.
This approach will give Americans the flexibility,
opportunity and knowledge they need to conserve, to change fuel
sources, and to cut their energy bills.
3
Finally, we believe this strategy will keep America on the
cutting edge of new energy technology. We intend to build a
joint industry-government partnership, for accelerated research
in technologies like biomass and alternative fuels, electric
vehicles, fusion, high speed rail, renewable sources like solar
and wind power, and nuclear technologies of unprecedented safety
and security.
Together with our Clean Air Act, this National Energy
Strategy will maintain our uncompromising commitment to energy
security and environmental protection. And it will put America
on the road to continued economic growth, in the decades ahead.
# # #
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 7:42am
A NATIONAL STRATEGY
How We Expect To Produce and Use Energy in the Future
tuture
The National Energy Strategy lays the foundation
concert with private markets, to appropriately
for a more efficient, less vulnerable. and envi-
incorporate these considerations. However, regula-
ronmentally sustainable energy economy. It de-
tions and other government interventions are
fines international, commercial, regulatory, and
extremely blunt tools that always impose unfore-
technological policy tools that will substantially
seen costs by reducing the flexibility of the econo-
diversify U.S. sources of energy supplies and offer
my. Therefore, government intervention in mar-
more flexibility and efficiency in the way energy is
kets must be justified by rigorous cost-benefit
transformed and used. Specifically, it will spur
analysis and rely to the maximum possible extent
more efficiency and competition throughout the
on economic incentives to allow the economy to
energy sector, expand the fuel and technology
achieve our energy security and environmental
choices available to the Nation, improve U.S.
goals at the lowest possible cost.
research and development (R&D) know how, and
support the international leadership the United
This is the framework we used to evaluate the
States exercises in energy, economic, security, and
proposals for this Strategy that were submitted by
environmental policy.
people and organizations all across the country.
These submissions were essential to building a
The objective of the National Energy Strategy, as
National Energy Strategy that fully addresses the
established by President Bush in July 1989, is-
energy challenges and opportunities before us.
achieving balance among our increasing
The Strategy also builds upon a number of Bush
need for energy at reasonable prices, our
Administration initiatives. These include the 1990 (1)
commitment to a safer, healthier environ-
revisions to the Clean Air Act; natural gas well-
ment, our determination to maintain an
head decontrol legislation in 1989; incentives (3)
economy second to none, and our goal to
provided to domestic renewable and fossil energy
reduce dependence by ourselves and our
producers in the fiscal year 1991 budget agree-
friends and allies on potentially unreliable
(4)
ment; the unprecedented international consensus
energy suppliers.
forged in the wake of the Persian Gulf crisis; the
(5)
fiscal year 1991 and 1992 realignments of the
The President directed that "a. keystone of this
Department of Energy's research and program
strategy" be continuing the successful policy of
priorities, the Administration measures in re-
Pdonicsns
market reliance. Wherever possible, markets
sponse to the Iraqi oil disruption; and the science
Energy
suppur
should be allowed to determine prices, quantities,
and mathematics education initiatives by the
and
demani
and technology choices. In specific instances where
Secretary of Energy.
(7)
adopted
markets cannot or do not work efficiently, govern-
ment action should be aimed at removing or
Future energy use will be more efficient because of
overcoming barriers to efficient market operation.
the market-driven use of new technology irr place
of older technologies and because of ongoing
The goals of a healthy environment and reduced
publices and private,sector efforts to promote
dependence on insecure suppliers represent na-
energy efficiency (for example, State efforts to pro-
tional security, foreign policy, and social benefits
mote integrated resource planning). We estimate
to which markets are unlikely to give adequate
weight. Hence, government must act, alone or in
2
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 7:42am
slightly
more than
that under current policies,¹ the amount of energy
low-priced imported oil with the foreign policy
used in the United States to create a unit of gross
risks and the security costs of ensuring oil's free
national product (GNP) will decrease by almost
flow. These two decades have shown that sudden,
12 percent in the year 2000 and more than 20
dramatic changes in world oil prices are far more
percent in the year 2010 over today's energy-
harmful to the United States and other nations
efficiency levels. This represents a savings of.13
than a persistent but gradual rise in price-even
quads2 of energy in 2000 and 00 quads in 2010.
if the average price over the long term in both sets
almost 30
of circumstances is identical. Popular opinion
The challenge of the National Energy Strategy is
aside, our vulnerability to price shocks is not
twofold: (1) to reinforce these current policy mea-
determined by how much oil we import. Our
sures to make sure that the progress we believe is
vulnerability to oil price shocks is more directly
probable is actually achieved and (2) to accomplish
linked to:(1) how oil dependent our economy is, (2)
even greater improvements in energy efficiency, in
our capacity for switching to alternative fuels; (3)
security, and in the reduction of energy environ-
reserve oil stocks around the world,' and (4) the
mental impacts than would be achieved by current
spare worldwide oil production capacity that can
policies alone. To meet these challenges, the
be quickly brought on line.
Strategy calls for action by Federal, State, and
local governments and by domestic and interna-
The contrasting experiences of Great Britain and
tional energy producers and consumers. This
Japan in 1980, after the Iranian revolution trig-
National Energy Strategy provides a roadmap to
gered an increase in oil prices to more than $40
a more secure and cleaner energy future through
per barrel, offer a classic example of how oil
greater energy and economic efficiency and new
imports alone are an inadequate gauge of "oil
technology.
vulnerability." Great Britain was almost totally
self-sufficient in oil, but it suffered economically
more from the oil-price shock than most countries
still
Achieving Greater Energy Security
Japan, which did (and D totally dependent on
does
foreign oil, experienced only a slowing of its eco-
Much of the oil on which we and the rest of the
nomic growth to a very respectable 3.4 percent
import
all the
world depend is produced in politically volatile
from 5.3 percent before the shock.
011 IT
regions of the globe. The oil fields of the Persian
uses
Gulf alone provide one-fourth of the oil the world
In short, as Figure 1 illustrates, we are part of a
presently consumes. They contain nearly two-
complex and interdependent world oil and refined-
thirds of the world's proved oil reserves.
petroleum products market. Products flow to
where the demand is greatest, as reflected by the
For nearly 20 years, U.S. Administrations have
highest price. Any increase in the world price of
sought to balance the economic benefits of using
oil, brought about by any event, in any place,
e Current Policy Base
Amendments
.
of 1990.
1. The "Current Policy Base" case depicts a hypothetical energy future based on the very unlikely scenario of no Projected
The purpose of this case is not to forecast, but to provide a reference, something to measure from. (A more detailed
change to, or a "frozen," current energy policy, including the effects of existing laws except for the Clean Air Activergy effects
explanation of the Current Policy Base case can be found in Appendix C.)
of these
is contained
amend-
2. A "quad" (1 quadrillion British thermal units, or Btu) is a standard unit used in comparing large amounts of
ments,
energy derived from diverse sources, or used in differing applications-based on converting the respective total
are
energy contents into heat equivalents. For example, 1 quad is roughly the same as years worth of oil used at the
include
rate 500,000 barrels, day,
the energy contained in the oil that
in "with
would be used on one year if daily
3. British GNP growth moved from +2.4 percent prior to the shock to -2.0 percent after the shock.
results strategy
3 hunless
3
converyton
Separate
was
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 7:42am
Figure 1. World Petroleum Market
Complex and Interdependent
Crude\and Product Trade
0
maintaining adequate
strategic reserves
Source: U.S. Department of Energy
would raise the price of U.S. oil and the price of oil
Strategy will make our country less prone to economic
to our allies and trading partners, regardless of
damage from violent fluctuations in either the
the degree of our import dependence. Recognizing
supply or the price of petroleum.
our energy interdependence allows us to focus our
efforts on those things that will enhance global
No single policy tool can substantially increase
energy security, and, by so doing, enhance our
America's energy security. The basic vulnerability
OWN, America's security.
involves oil, but reducing this vulnerability re-
quires a broad array of actions: from increasing
The National Energy Strategy review confirmed
the efficiency of our entire fleet of cars, trucks,
that no feasible combination of domestic or inter-
trains, planes, and buses; increasing U.S. petro-
national energy policy options can make us com-
leum production in an environmentally sensitive
pletely invulnerable to oil supply disruptions
manner;
further deregulation of the natural gas
during the foreseeable future. Indeed, it revealed
industry; and to using alternative transportation
that our Nation and the world are likely to depend
fuels.
more on Middle East oil suppliers under any
realistic scenario for the foresceable future. Never-
Since our vulnerability cannot be completely elimi-
theless, if fully implemented, the National Energy
nated, it is not in our interest to adopt measures
4
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 7:42am
Figure 2. Reduced Exposure to Oil Price Shocks
5
4.5
4
Barrels of Oil per Day per Million Dollars of GNP
3.5
3
Efficiency gains assumed in
Current Policy Base
2.5
2
Current Policy Base
With Strategy
1.5
1
0.5
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
move
shown in
after
that reduce imports but impose high economic or
As Figures and show the Strategy's petroleum-
next
environmental costs. Policy measures should be
supply and demand reduction measures will
π
chosen that balance economic, environmental, and
substantially reduce U.S. dependency on insecure
energy security objectives.
supplies of energy, keeping oil import levels atless
than 50 percent of U.S. consumption after 2000.
The National Energy Strategy aims to diversify
These projections, like any other in the uncertain
the sources of oil supply outside the Persian Gulf
world of energy supply and demand; should be
by encouraging environmentally sensitive produc-
regarded as illustrative, not as predictions Howev
tion in the United States (including certain areas
or, the Department of Energy estimates that NES
of the Outer Continental Shelf (OCS) and the
domestic oil production would increase by 1.8
iniatives
million barrels per day above the levels projected
could
Arctic National Wildlife Refuge (ANWR)), other
increase
parts of the Western Hemisphere, Europe, and
for the year 2000-largely because of the use of
Asia and to further develop and maintain contin-
advanced oil recovery technology made possible by
gency mechanisms (including strategic oil reserves
new investments in Federal and private-sector
and stocks) and excess world production capacity.
R&D and by environmentally responsible develop-
ment of promising areas like ANWR and OCS. By
Simultaneously, as Figure 2 illustrates, the Na-
2010, domestic oil production could be augmented
tional Energy Strategy would reduce the impor-
by 3.8 million barrels per day
tance of oil to the U.S. economy-through conser-
NES initiatives are expected
vation, efficiency improvements, and oil displace-
On the demand side, U.S. oil consumption in the to decreas
ment by the use of improved technologies and
year 2005 is expected to be 2 million barrels per U.S. 011
alternative fuels.
day less than it would be in the absence of Nation Sonsume:
al Energy Strategy-initiatives-largely because of 1.3
displacement of oil by alternative fuels in vehicles, milline
barrels per do, below projected year 2000
levels and baile=
5
per dr. below programs For the year
2010-
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 7:42am
Figure 3. Oil Consumption and Production
25
Current Policy Base
20
Total U.S. Consumption
Reduced Demand
Millions of Barrels per Day
15
CARRETS
Oil Imports
With Strategy
10
Increased Supply
5
Total U.S. Production
Current Policy Base
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
"Production range represents uncertainty associated with R&D.
and electric utilities. As alternative fuels (com-
The Strategy is not specifically targeted at the
pressed natural gas, electricity, and alcohol from
problems of the moment. With regard to the short
natural gas, biomass, and coal) and the technolo-
term, the Strategy builds upon a decade of energy
gies to use them become more cost-competitive,
market deregulation that has allowed the rapid
they will become available across the country to a
and appropriate market response to the Iraqi
large and growing fleet of fuel-flexible and dedicat-
crisis. In addition, the Strategic Petroleum Re-
ed alternative-fuel vehicles and gradually erode
serve, used as part of a coordinated international
petroleum's dominant role in the transportation
response, has demonstrated its capability to effec-
sector. The effects of these initi rives.
tively address shortrun oil market disruptions.
on total U.S. all con sumptim 3. IS shown IN
By reducing the volume FiGure of imports and our share
Some will suggest that this progress in enhancing
of world oil demand, National Energy Strategy
our energy security is not enough, that we should
measures would also reduce the projected cost of
embark on measures such as oil import fees; large
bil imports in 2000 by as much as $36 billion (in
taxes on gasoline; subsidies for the production of
1989 dollars). In 2010, the projected cost of oil
liquid fuels from coal, shale, and natural gas;
imports would be reduced by as much as $115
broadly mandated use of alternative transporta-
billion (again in 1989 dollars).
tion fuels; and sharply higher fuel-efficiency
the Nahmal Energy
standards that would compel the use of smaller,
As Figure 5 3 illustrates, these economic and energy
possibly less safe, cars. These and other similar
security benefits are accomplished ever the next
measures were all carefully examined in the
two decades by a sustainable, balanced strategy to
development of the National Energy Strategy. Oil
increasè supply and reduce Hemand. This first
imports could be reduced substantially, depending
words
National Energy Strategy will be adjusted over
on the level, type, and phasein of subsidy, taxa-
time as technologies, markets, and knowledge
tion, or mandate. But the cost would be very
change.
high-in higher prices to American consumers, lost
approace
jobs, and less competitive U.S. industries. More-
Strategy embodies
6
SENT BY:Xercx Telecopier 7020 ; 2-12-91 ; 3:40PM :
OPD->
202 586 5313:# 4
Figures. Summary of the Effects of National Energy Strategy Actions
on U.S. Oil Production
25
20
Millions of Barrela per Day
15
With Strategy
10
5
Current Policy Base
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
B
Figure, X, Summary of the Effects of National Energy Strategy Actions
on U.S. Oil Consumption
25
U.S. OI Consumption,
Current Policy Base
&
Millions of Berrels per Day
15
With Strategy
10
5
=
0
1970
1975
1980
1985
1990
1895
2000
2005
2010
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 7:42am
Figure 4. Reduced Oil Imports
16
14
Current Policy Base
65%*
12
Millions of Barrels per Day
10
Reduced Imports
42%
8
6
With Strategy
4
2
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
"Note: Imports as percent of total oil consumption.
over, as the experience of Great Britain in 1979
gy supported in this National Energy Strategy is
pointed out, these tax, subsidy, and mandate
its potential to more efficiently transform energy
measures would not necessarily shield the U.S.
raw materials into the energy services we need.
economy from the effects of future world oil mar-
Under this heading are the National Energy
ket disruptions, not even if the United States were
Strategy initiatives designed to increase the
to eliminate virtually all oil imports. The economic
efficiency with which we use energy, in the genera-
impacts depend more on price, as set by the world
tion and use of electricity, in our residences and
market, than on the level of our imports.
offices, in the industrial sector, and in
transportation.
What does the Strategy offer instead? A balanced
program of greater energy efficiency, use of alter-
Increasing Efficiency
native fuels, and the environmentally responsible
in Electricity Generation and Use
development of all U.S. energy resources.
The United States is becoming increasingly electri-
fied. By 2010, we project that 41 percent of our
/
Increasing Energy
primary energy will be consumed in electricity
and Economic Efficiency
generation, up from 36 percent today. Accordingly,
it is extremely important that we produce, distrib-
This National Energy Strategy reflects a National
ute, and consume electricity as efficiently and as
commitment to greater efficiency in every element
cleanly as possible.
of energy production and use. Greater energy
efficiency can reduce energy costs to consumers,
About 700,000 megawatts (MW) of electric gener-
enhance environmental quality, maintain and
ating capacity is now installed in the United
enhance our standard of living, increase our
States. For most of this century, U.S. electricity
freedom and energy security, and promote a strong
demand has increased at roughly the same rate as
economy. A common feature of every new technolo-
GNP. Even with aggressive conservation and
7
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
Require Federal Power
marketing government costs. Not only will electricity conservation be ennanced,
Administrations to sell power at rates that will cover 02/09/91 but 8:03am 1
Federal receipts will increase with minimum impact on PmA rates.
efficiency efforts, and assuming that the existing
consumers receive for investments they make
700,000 MW is maintained through refurbishment
in energy efficiency.
PMA
and replacement, we will need about 200,000 MW
more than the present total to meet the electricity
Reduce Federal Subsidies for Electricity.
requirements of a growing U.S. economy in 2010.
Phase out PMA debt subsidies.
The Federal-State regulatory regime that governs
investment decisions in electricity supply and
Expand Access to Electricity Transmission
demand will profoundly influence the types of new
for Wholesale Buyers and Sellers. Existing
capacity to be built, who will build it, what tech-
policies and programs under the Federal Power
nology and fuels are used, and what the full
Act will be reviewed to ensure that transmis-
consumer and environmental consequences will be.
sion services and facilities are adequate for the
emerging competitive generation market.
These new capacity decisions are further compli-
Expansion of transmission access and promo-
cated by the difficulty in finding sites for new
tion of efficient pricing for these services would
generating and transmission facilities of any kind
use existing electricity generation facilities
in many parts of the country. Moreover, outmoded
most efficiently and provide lower electricity
legislation (some from half a century ago) unneces-
prices for the Nation's industries, shops, and
sarily prevents some of the most able builders and
homes.
operators of electric powerplants from engaging in
the wholesale electricity generation business.
Improve Siting of New Generating Plants
and Transmission Lines. Joint efforts with
Specifically in the electricity area, the National
State and regional authorities are necessary to
Energy Strategy will:
Reform would
develop mechanisms to promote the timely,
efficient siting of electricity generation and
Amend the Public Utility Holding Compa-
transmission facilities without jeopardizing
ny Act of 1935 (PUHCA). Allow builders of
public participation and environmental protec-
powerplants to build, own, and operate power-
tion.
plants in more than one area, while ensuring
continued protection of consumer interests.
Increasing Residential
and Commercial Energy Efficiency
Expand Integrated Resource Planning
(IRP). IRP is a process for meeting consumer
In residential and commercial buildings, the
electricity needs by demand reduction or supply
National Energy Strategy seeks to maintain or
addition, whichever is most cost-effective. The
enhance comfort, indoor air quality, and afforda-
existing IRP Program at the Department of
bility, while reducing energy use. The National
Energy will be expanded to provide more accu-
Energy Strategy proposes the following actions:
rate and timely information and analytical
tools to consumers, utilities, and State commis-
Expand Research and Development. The
sions. In addition, the Department will promote
Department of Energy is significantly expand-
IRP by the Federal power marketing adminis-
ing its support for R&D on a wide range of
trations (PMA's), and work with the Federal
more energy-efficient building technologies.
Energy Regulatory Commission (FERC) to
Working together with private industry, uni-
foster IRP through FERC's regulation of whole-
versities, and other organizations, the Depart-
sale power markets.
ment will continue its efforts to accelerate the
development and use of such technologies.
Provide Tax-Free Treatment of Utility
Efficiency Discounts. The Internal Revenue
Continue Support of State and Utility
Service will treat as exempt from Federal
Programs. The Department of Energy and
taxation utility bill discounts that electricity
other Federal agencies will continue to provide
8
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 8:03am
assistance to States and utilities in their efforts
will strengthen building energy-efficiency
to improve energy efficiency in residential and
standards by providing technical assistance to
commercial buildings. These efforts include the
State and local governments to promulgate and
weatherization of homes occupied by low-
implement these standards. All new buildings
income households, the retrofit of institutional
subsidized by Federal funds or federally in-
buildings, incentives for the purchase of
sured mortgages will be required to meet cost-
energy-efficient appliances, and a wide range of
effective energy-efficiency standards, which, at
consumer information programs.
a minimum, are equivalent to the standards or
codes currently recognized by major national
Expand Use of Mortgage Financing Incen-
organizations.
tives for Residential Energy Efficiency. To
encourage the more widespread use of mort-
Improve Federal Energy Efficiency. The
gage financing for energy efficiency, the De-
Administration will issue and implement an
partments of Energy and Housing and Urban
Executive order directing Federal agencies to
Development will increase financial and techni-
continue and strengthen their efforts to im-
cal support to develop and encourage the volun-
prove the efficiency and management of energy
tary acceptance of efficiency ratings and their
use in Federal buildings and other facilities.
use in home financing. After at least 5 years of
support for voluntary adoption, it will be re-
Increasing Industrial
quired that information on energy efficiency
Energy Efficiency
and information on the available mortgage
financing options be provided to home buyers
The National Energy Strategy seeks to improve
prior to sale.
energy efficiency and flexibility in the industrial
sector, thereby reducing petroleum use and overall
Improve the Efficiency of Public Housing.
production costs. Industrial waste generation is
The Department of Housing and Urban Devel-
targeted through support of increased waste
opment, with technical support from the De-
recycling and measures to increase our ability to
will
partment of Energy, would energy
use wastes as feedstocks.
indicators to identify public housing projects
where significant savings can be achieved,
The National Energy Strategy proposes the follow-
develop innovative incentives for managers and
ing actions:
tenants to use energy more efficiently, and
more thoroughly monitor and evaluate the
Increase Funding for Industrial Process
savings from significant energy-related invest-
Efficiency Research and Development.
ments.
Funding for cost-shared R&D projects to im-
prove industrial energy efficiency and produc-
Set Cost-Effective Appliance and Equip-
tivity will be increased. These efforts will
ment Standards and Provide Information
concentrate on major energy-using industries
to Consumers Through a Labeling Pro-
and processes.
to minimize industrial wastes.
gram. The Department of Energy has estab-
lished efficiency labeling and standards for
Minimize Industrial Waste. Industrial R&D
13 categories of residential appliances and for
funding will be increased to sponsor cost-shared
fluorescent lighting system ballasts. The Ad-
projects with industry Reducing the generation
ministration will support legislation to require
of wastes and using wastes as feedstocks im-
energy-efficiency labeling for certain other
prove the competitiveness of industry and
types of equipment, including light bulbs.
reduce the consumption of oil. In addition,
improved energy and material efficiency reduc-
Develop and Encourage Use of Building
es the cost of pollution control. Process innova-
Efficiency Standards. The Administration
9
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 8:03am
tions, modification of feedstocks and products,
encourage State and local governments and the
and recycling promise substantial payoffs.
private sector to establish such programs.
Expand and Develop Energy Audits. States
Evaluate Corporate Average Fuel Econo-
and utilities will be encouraged to expand or
my (CAFE) Program. A comprehensive analy-
develop programs to speed up adoption and use
sis of feasible fuel economy levels, considering
of existing improved energy-using technologies.
safety, technology, economics, and the impacts
Many cost-effective opportunities to reduce
of the new Clean Air Act Amendments and
industrial use of energy currently exist. Audits
other recent regulatory requirements will be
of manufacturing plants can identify opportuni-
undertaken. Should these studies warrant
ties to improve efficiency. Current industrial
them, changes to the current standards will be
\
energy use audit programs are being expanded.
considered, including 'providing credit trading
and averaging among manufacturers, eliminat-
1
Examine Regulatory Policy. Federal regula-
ing distinctions between import and domestic
tory programs will be examined in cooperation
vehicles; revising noncompliance penalties; and
with the Environmental Protection Agency to
establishing alternative forms of corporate
ensure that the use of waste minimization
average fuel economy standards (for example,
technologies is not discouraged. New legis-
standards based on vehicle size). These changes
lation or modification of regulations will be
may permit cost-effective improvements in
proposed where needed.
vehicle fuel economy without compromising
highway safety.
Increasing Transportation
Energy Efficiency
Improve Consumer Information on Fuel
Economy and System Efficiency. Additional
The National Energy Strategy seeks to reduce the
efforts will be undertaken to increase the
amount of energy we use to move people and goods
distribution of the Gas Mileage Guide, encour-
by improving the efficiency of all the vehicles on
aging Americans to "drive smart" and adopt
the road, and by increasing the overall efficiency
more energy-efficient driving and commuting
of the transportation system itself.
habits. A yearlong advertising campaign will
inform the public about simple, commonsense #
Specifically, the National Energy Strategy will:
measures that can help reduce oil use. The
cooperative efforts with private foundations and
Expand Efforts to Develop Advanced
educational institutions will be expanded to
Technologies. Advanced transportation
promote greater awareness of energy-efficiency
technologies-including intelligent vehicle-high-
opportunities.
way systems, magnetic-levitation and other
high-speed trains, and advanced air traffic con-
Promote Mass Transit and Ride Sharing. A
trol systems-can save significant energy in the
series of measures will be implemented to
transportation sector.
encourage increased use of carpools, vanpools,
in the long-term
and transit. These measures will include the
Accelerate Scrappage of Older Cars. Older
ability of employers to provide increased tax-
vehicles have higher emissions and, generally,
free transit subsidies, increased availability of
lower fuel economy than new cars. This initia-
high-occupancy vehicle right-of-way, and
tive will promote State and local government
improved public transportation services.
and private-sector programs that offer a "boun-
ty" for older cars of a designated model year.
mass
Implementation of the Clean Air Act Amend-
ments of 1990 will provide the opportunity to
aas turbines electric vehicles
10 fuel 2nd low-hear- jechne
dure charges in the mid-term, and
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Securing Future Energy Supplies
ogies for the production and use of alternative
fuels.
Oil
Measures To Increase Domestic Production
For the foreseeable future, oil will remain a criti-
cal fuel for the United States and all other indus-
Open Access to Environmentally Responsi-
trialized nations. In 1990, imported off accounted
ble Development of the Coastal Plain of
for 43 percent of U.S. oil use, the highest percent-
the Arctic National Wildlife Refuge and to
age since 1979. During 1990, payments for net oil
Certain Offshore Areas. ANWR and new-
imports exceeded $55 billion. In the absence of
areas in are potentially major sources of
offshore
new energy policy initiatives, U.S. oil imports are
domestic oil and gas production, both now and
projected to rise to 57 percent of domestic oil
for the future.
Environmentally Responsible
donsumption by the year 2000 and to 65 persent in
2010. The net U.S. oil import bill could double by
Facilitate, Development of New Alaskan
2000 and increase to nearly $200 billion by 2010
North Slope Resources. Five major discov-
(in 1990 dollars
ered fields on the Alaskan North Slope are
undeveloped. These fields could add an estimat-
In addition to the measures previously discussed
ed 1 billion barrels of recoverable oil or conden-
and
that will make the U.S. economy less dependent
sate to domestic oil production over the next
on oil, the National Energy Strategy proposes
several decades.
initiatives to (1) reduce the economic consequences
of disruptions in world oil markets, and (2) increase
Lease Elk Hills Reserve. Operation of the
domestic oil and petroleum product supplies.
producing Elk Hills Reserve field by market-
driven private companies will lead to increased
Measures To Reduce Impact of Oil Market
oil and natural gas production at lower costs.
Disruptions
Deregulate Oil Pipelines. Eliminating oil
Increase Oil Production in Countries
pipeline regulation, except for pipelines not
Outside the Persian Gulf. Barriers to invest-
subject to competition, will reduce consumer
ment in petroleum development will be ad-
costs and encourage the most efficient use of
dressed on a priority basis, thereby increasing
the oil pipeline system.
and diversifying world production capacity.
Improve Emergency Preparedness. Expand
Implement Oil and Gas Tax Incentives. The
the Strategic Petroleum Reserve (SPR) to
oil and natural gas tax measures enacted in
Steft
1 billion barrels assess whether regional petro>
1990 as part of the budget reconciliation legisl-
leum reserves are needed for Hawaii, and test
ation will raise production by about 400,000
Trefined-product reserves.
barrels per day oil equivalent by the year 2000.
Diversify Transportation Fuels. To reduce
Promote Horizontal Well Drilling. Increased
the dependence of the transportation sector on
levels of domestic production will be encouraged
oil, the Strategy will: (1) remove the umpt on
by removing State regulatory barriers to hori-
CAFE credits for manufacturers of vehicles
zontal drilling and by facilitating transfer of
capable of operating on alternative fuels; (2)
horizontal drilling technology.
accelerate the purchase of alternative-fuel
vehicles for the Federal fleet; and (3) require
Increase Production of California Heavy
the use of alternative fuels in car, truck, and
Oil. Lack of demand in the United States for
bus fleets. These measures will complement
California heavy oil and the existing prohibition
aggressive R&D efforts to improve the technol-
against export of this oil are inhibiting Califor-
nia heavy oil production. Access to export
that can be can cd by
11
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technical and
02/09/91 8:03am
instrutional issues such as
by legis lation
an information clearinghouse and closer liaison
Specifically, the National Energy Strategy will-tm :
with U.S. representatives in other countries.
Interagency coordination of Federal programs
Reform the Nuclear Power Licensing
pertinent to these exports will be strengthened.
Process. The licensing process for new nuclear
Current programs and policies for facilitating
powerplants must be reformed to provide for early
the financing of coal-related projects abroad
resolution of emergency planning issues prior to
(The duration
will be reviewed and improved.
construction and to reduce uncertainty associat
of and
ed with the postconstruction hearing while
Remove Barriers to Construction of Coal
improving the public's opportunity.in the licens-
Slurry Pipelines. Coal slurry pipelines, using
ing process to address valid safety questions
must (educed be:
a mixture of water and coal, can compete effec-
The Depar of Energy will also supports
tively with railroads and barges as a low-cost
renewing the licenses of existing nuclear plants,
way to transport coal, but proposed pipelines
where this can be done safely.
during
must obtain rights-of-way to cross competing
Administration
railroad lines. They also raise water use con-
Properly Manage and Dispose of High-
cerns in areas where water is scarce. The
Level Nuclear Waste. All Federal agencies
Administration supports legislation to grant
must fully support the Department of Energy's
Federal eminent domain to applicants that
efforts under current law to site and license a
have satisfied regional and State water use
permanent waste repository and a monitored
retrievable storage facility. Federal agencies
concerns.
also must assist the Nuclear Waste Negotiator's
Nuclear Power
efforts to identify potential hosts for these
facilities. In addition, Federal legislation should
Nuclear power can cleanly and safely meet a
be enacted that, while preserving existing due-
substantial portion of the additional base-load
process and regulatory requirements, will
electricity generating capacity the United States
ensure that the Nation's need for facilities to
will require by 2030(1) the operating lifetimes
isolate high-level waste is met in a timely
of existing nuclear plants are extended (where this
manner. Finally, the Department of Energy will
can be done safely with appropriate Federal
consider alternatives to current Federal man-
oversight and technical support), and (2) utility
agement of the high-level radioactive waste
executives once again consider the "nuclear option"
program, including management by a federally
technically, politically, and economically feasible
chartered, independent corporation.
when new capacity is planned.
and
Develop New Passively Safe Designs. The
The State-Federal impasse on construction of a
Department of Energy is working toward Nu-
high-level nuclear waste repository, an impossibly
clear Regulatory Commission certification for
cumbersome nuclear licensing process, and the
two "next generation" light-water reactors (with
loss of full public confidence in our ability to
simplified designs and better engineered safety
manage civilian nuclear power technology have all
systems) and two more advanced light-water
contributed to the hiatus in the construction of
reactors (incorporating the concept of "passive
new nuclear capacity. The National Energy Strate-
safety") by 1995. The Department also will
gy proposes a number of measures to address
continue R&D on other advanced nuclear
these issues that would, if implemented, increase
systems that show promise.
nuclear power generation in 2010 by almost
10 percent and in 2020 by more than double above
Standard reactor designs, combined with licensing
that in the Current Policy Base case projection.
reform and improved construction management,
could reduce the cost of électricity/generated.via
nuclear power by as much as one-third. Without
successful implementation of the Strategy initia-
14
nuclear
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tives, the contribution of nuclear power to our
my. Their long-term contribution is predicated on
electricity supply could decline substantially after
overcoming remaining technical and cost barriers,
2010. With the Strategy initiatives, nuclear power
mainly through intensified R&D.
could be generating, safely and cleanly, as much as
21 percent of our total electricity needs by the year
The National Energy Strategy's renewable energy
2030.
initiatives are based on these conclusions and on
a clear understanding of the contributions that
Renewable Resources
renewable energy can and cannot be expected to
make. For example, given policies to address
Public comment received during development of
existing regulatory barriers and market imperfec-
the National Energy Strategy revealed virtually
tions, solar thermal or photovoltaic electricity
unanimous support for the development and use of
technologies can compete today to provide electrici-
renewable energy resources because of their
ty generation in remote locations and for peaking
environmental and energy security advantages. As
purposes. In addition, wind, geothermal, and
a result of this overwhelming interest and support,
biomass energy systems already can make limited
extensive analytical efforts have been made to
contributions to meeting base and intermediate
better understand the potential of each renewable
electrical loads. However, additional technical
energy resource and the barriers-technological,
progress is needed to reduce the costs and enhance
marketplace, or otherwise-that might block
the competitiveness of renewable electric options,
renewable energy resources from achieving their
particularly for base-load applications.
full potential
meeting
needs
Finally, the National Energy Strategy is based-on
This analysis leads to several important conclu-
the premise that for renewables, as for other
sions. First of all, renewables can play a larger
emerging technologies, investment in R&D to
role in our energy economy. The fraction of our
increase technology performance and reduce costs
energy supplied by renewables has been increas-
is a more appropriate role for the Federal Gov-
ing, and that increase-is projected to continue.
ernment than is using taxes or regulations to
Second, we can accelerate the growth in renewable
subsidize or mandate the use of particular technol-
supplies over the next 40 years without resorting
ogies.
to permanent subsidies or mandates. This is
because several renewable technologies are on the
Specifically, the National Energy Strategy will
verge of successful commercialization into the
support renewable energy electricity and transpor-
mainstream energy marketplace. These technolo-
tation fuel technologies through eight measures:
gies have experienced significant technical prog-
ress over the past 10 years. Their commercializa-
Electricity
tion does not require scientific breakthroughs.
translate
What is needed is the opportunity to reduce R&D
Extend and Expand Investment Tax Cred-
progress to practice, removal of market barriers to
its for Emerging Renewable Technologies.
renewables, and continued, focused R&D to realize
The existing investment tax credit for solar and
the full potential of these technologies
geothermal technologies will be extended until through
through the export of new
2
products and technol
1993 and broadened to apply to investments in
Adding renewable technologies to the menu of agies,
wind and certain biomass technologies.
of 1978
available energy choices can contribute to a grow-
ing economy-domestically, by spurring competi-
Amend PURPA To Extend Benefits to
tion and innovation, and internationally, by pro-
Larger Renewable Facilities. The Public
viding new products and technologies for export
Utility Regulatory Policy Act (PURPA) should
and contributing to the balance of trade Renew-
be amended to remove permanently the quali-
able technologies represent an important opportu-
fying size limit imposed on small power produc-
nity, but not a panacea for the U.S. energy econo-
ers, but only in States that use competitive
Efforts
to
Develop
Advanced
Technologies.
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procurement programs for new electricity
Develop New Energy Crops. An accelerated
generating facilities.
program carried out by the Departments of
Energy and Agriculture will aim to develop
Amend PURPA To Allow More Flexibility
"energy crops"-nonfood feedstocks for liquid
in Renewable Plant Design. In addition to
fuels-and the technology to use these feed-
legislative removal of the size cap, PURPA
stocks to produce cost-competitive transporta-
should be amended to ease its restrictions on
tion fuels by the year 2000.
the percentage mix of renewable resources and
other fuels qualifying small power producers
Develop and Use Cost-Competitive Alter-
are allowed to use, but only in States that use
native Fuels and Technologies. Provisions
competitive procurement programs for new
in the Clean Air Act Amendments of 1990 and
electricity generating facilities.
the National Energy Strategy alternative fuel
initiatives, which would provide greater incen-
Reform Hydropower Regulation. FERC
tives for manufacturers to produce alternative-
should be designated as the sole decision-
fuel vehicles and use them in Federal and
making agency for non-Federal projects at
private fleets, will provide significant new mar-
existing dams while ensuring the disciplined,
ket opportunities for renewable alternative
nonduplicative participation of State and other
fuels and electric vehicles.
Federal agencies. FERC should not regulate
combined with provisions in the
small hydro projects (up to 5 MW). These
Fusion Energy clean Air Act Amendments of
actions are intended primarily to replace out-
1990, the Strategy
dated equipment) facilitate relicensing of,
For the longer term, the National Energy Strategy
and promote construction of additional capacity
looks to fusion energy as an important source of
at existing hydroelectric facilities.
electricity-generating capacity. The Department of
Energy will continue to pursue safe and environ-
Convert Municipal Solid Waste to Energy:
mentally sound approaches to fusion energy,
The Department of Energy will work with the
pursuing both the magnetic confinement and the
Environmental Protection Agency, States, local
inertial confinement concepts for the foreseeable
jurisdictions, and industry to collect and dis-
future. International collaboration will become an
seminate information and to conduct research
even more important element of the magnetic
on technologies to integrate waste-to-energy
fusion energy program and will be incorporated
systems into comprehensive waste manage-
into the inertial fusion energy program to the
ment programs.
fullest practical extent. The current National
Energy Strategy goal is to have an operating
These measures would increase renewable elec-
demonstration plant (using either technique) by
tricity generation in the year 2000 by 14 percent,
about 2025 and an operating commercial power-
and 'In 2010, renewable electricity generation would be
plant by 2040.
increased by 18 16 percentras compared with
the Current Policy
Enhanced Research and
Transportation Fuels
Base case
Development for Energy Security
projections.
Support Ethanol and ETBE. The ethanol
Any meaningful effort to ensure future energy
and ethyl tertiary butyl ether (ETBE) tax
supplies must address the role of advanced tech-
credits passed in 1990 as part of the budget
nology. The National Energy Strategy deems three
reconciliation legislation will support the use of
areas of technology development particularly vital:
ethanol and the ethanol-based additive ETBE
as transportation fuel components over the
Technologies to reduce the transportation
next decade.
sector's near-total reliance on oil, by making oil
use more efficient, by introducing alternative
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02/09/91 8:18am
fuels and technology, or by diversifying travel
on fuel-cell vehicles to produce cost-effective
modes;
alternatives over the long term.
Technologies that increase the environmentally
Electric Vehicle Technology. Expand R&D
protective production of domestic energy re-
on batteries and electric vehicles, in conjunction
sources; and
with an industry-led consortium that has just
been formed.
Technologies that improve energy efficiency
and increase the range of economical, clean
Aeronautical Technologies. Enhance long-
technology choices.
term R&D on new, more energy-efficient air-
craft technologies.
A major element of the National Energy Strategy
will be increased investment in advanced energy
High-Speed Rail and Magnetic Levitation.
technology R&D. The fiscal year 1992 budget
The Department of Transportation, the Depart-
above
includes $903 million, an increase of $227 million,
ment of Energy, and the Corps of Engineers
the
or 34 percent, for increased investments in R&D in to
will pursue high-speed rail technologies and the
fiscal
support of the Strategy's R&D initiatives govern-
National Maglev Initiative, to explore alter-
year
mentwide. The budget proposes $653 million for
natives for both long-distance automobile travel
1991
budget)
Department of Energy National Energy Strategy-
and short-haul air travel.
related R&D, an increase of $134 million, or
26 percent. Over the 5-year period 1992 through
Intelligent Vehicle/Highway Systems
1996, the Department of Energy would invest
(IVHS). The Department of Transportation, a
$3.5 billion in National Energy Strategy R&D
number of States, and the auto industry will
initiatives discussed in this section. This initiative
work cooperatively to advance IVHS technology
looks to a future where alternative technologies
in the United States. IVHS has the potential to
are available to reduce energy consumption and
reduce congestion, improve traffic flow, reduce
increase fuel-flexibility.
idling at traffic signals, and allow drivers to
choose more efficient routes to their destina-
To ensure that the R&D efforts pursue useful
tions, all of which can improve the energy
goals and result in ultimate commercialization of
efficiency of transportation.
the technologies, the National Energy Strategy
R&D initiatives will utilize industry cost-sharing
Telecommuting. R&D on faster, easier-to-use computer
will
and be carried out as joint government-industry
networks and software can help make tele-
programs in which industry participants have a
commuting more widespread.
significant say in the nature, organization, and
locus of research efforts.
Air Traffic Control Systems. The Federal
Aviation Administration's Air Traffic Control
A brief description of the major initiatives follows:
System can enhance its efficiency and perfor-
mance, with a significant impact on fuel use.
Advanced Transportation Fuels From
Biomass. Accelerate research, development,
Advanced Oil Recovery Technologies.
and demonstration of new feedstocks and
Enhance R&D on technologies that will permit
conversion technologies to provide initial com-
greater-production of the two-thirds of known
mercialization of cost-competitive alcohol fuels
U.S. oil reserves not normally recovered using
by the year 2000.
techniques.
production
Vehicle Propulsion Technologies. Enhance
Industrial Technologies. Accelerate R&D for
R&D on gas turbine engines, low-heat-rejection
improved industrial processes and equipment
diesel engines for use in heavy-duty trucks, and
and for alternative fuels and feedstocks.
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Advanced Light-Water Nuclear Reactors.
supplies of affordable energy while enhancing the
Advanced light-water nuclear reactors will
quality of our environment.
incorporate major advances in design, including
passive safety features. The Department of
Motivating our technology and resource choices
Energy is currently supporting first-of-a-kind
must be an improved understanding of total fuel-
engineering work that will assist companies in
cycle costs of all energy sources (that is, the total fuel cycle
their efforts to have the Nuclear Regulatory
costs of producing, transporting, dispensing, and
costs
Commission certify the new standardized
using a given energy resource, including the costs
are the
designs.
of health and environment impacts). Existing
entire
Nuclear
analytical tools are not capable of doing this with
Advanced Reactor Concepts. Advanced
any reasonable precision; however, developing and
nuclear reactor concepts will have safety features that
sharing the capability to make such total fuel-cycle
go beyond the standardized designs currently
cost assessments is a National Energy Strategy
envisioned. Researchers have demonstrated
priority. Building on what we know now, the
that both high-temperature gas-cooled reactors
National Energy Strategy proposes action that will
and liquid-metal reactors can shut themselves
improve public health; the quality of our air,
down safely under conditions that would be
water, and land; and the global environment.
extremely serious for present-day reactors. The
Department of Energy continues R&D support
Energy and the Quality
for both of these advanced concepts.
of Our Air, Water, and Land
prizes
In addition to these specific initiatives, a national
In air quality, the National Energy Strategy seeks
awards program will be created, offering large
to reduce energy-related emissions to achieve and
cash grants for major innovations in energy tech-
maintain the National Ambient Air Quality Stan-
nologies that can reduce U.S. oil vulnerability. The
dards for carbon monoxide and ozone; to develop
program will set forth specific energy-related
cost-effective, flexible control strategies to reduce
technological challenges and award prizes for
energy-related emissions of sulfur dioxide (SO₂)
meeting those challenges.
and nitrogen oxides (NO₂); and to ensure that
By 2030, this R&D initiative s will save between
these
could
other air-quality concerns are incorporated into
policies for energy supply and use.
5 million and 8 million barrels per day of oil,
depending on the success of the proposed R&D
In waste management, the National Energy
programs. will improve U.S. competitiveness in
Strategy seeks to develop technologies, procedures,
They
world markets and help make this Nation a
and safeguards to ensure that wastes are treated,
cleaner, safer, more desirable place than ever in
stored, and disposed of in a manner that protects
which to live and work.
human health and the environment, and the
Strategy supports efforts to develop cost-effective,
environmentally sound techniques to reduce the
Enhancing Environmental
quantity, persistence, and toxicity of energy-relat-
Quality
ed and other industrial wastes.
Concern for the environment runs throughout the
In water and land use, the National Energy
National Energy Strategy and is reflected in all
Strategy seeks to ensure that activities associated
the initiatives previously discussed. Reasonable
with energy production and use protect surface-
and sustainable energy policies will benefit both
water and groundwater resources, and to develop
the environment and the economy. The keys are
andimplement improved procedures to incorporate
advanced technology and improved energy use
environmental concerns into energy facility siting
practices that can help us maintain adequate
and land use. will also be developed
and implemented.
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Figure 5. Reduced Emissions of Sulfur Dioxide
35
30
Current Policy Base
25
Million of Tons
20
15
chart
10
With Strategy
5
0
1970
1975
1978
1980
1985
1987
1990
1995
2000
2005
2010
30
The 1990 Clean Air Act Amendments, which are
reduce SO₂ emissions by 40 percent, in the year
an integral component of the National Energy
2030, NO, by 25 percent, and volatile organic com-
Strategy, will limit the major air pollutants from
pound emissions by 25 percent from the projected
powerplants, vehicles, and industry. In many
levels of emissions in 2030, based on policies that
cases, pollutants will be reduced from current
were in place prior to 1990. In addition, the Na-
levels-despite economic growth and increased use
tional Energy Strategy includes a pledge to devel-
of energy.
op new technologies that minimize wastes. It also
recognizes that current inefficiencies in the way
As Figures 5 and 6 illustrate for air emissions,
wastes are regulated contribute to the problem
National Energy Strategy initiatives (coupled with
and should be eliminated.
existing Department of Energy R&D pro-
grams-such as the development of alternative
The National Energy Strategy proposes the follow-
fuels for transportation, clean coal technologies,
ing actions to better harmonize energy and envi-
and improvements in energy efficiency) should
ronmental objectives and protect our air, land, and
reduce air and water pollutants and waste even
water:
further from projected levels. For example, while
advanced propulsion technologies will significantly
Use Market Mechanisms. Make maximum
increase efficiency, they should also reduce vehicle
use of market-based mechanisms (informed by
pollutant emissions by as much as 90 percent.
full fuel-cycle cost analyses) to most effectively
National Energy Strategy measures are expected
protect the environment, minimize costs, and
reduce
to out down emissions of carbon dioxide (CO.) by
provide the flexibility necessary to maintain
an estimated 1.0 billion tons, SO₂ by 12.2 million
ample energy supplies.
tons, and NO, by 5,0 million tons in the year 2010.
Increase Efficiency. Increase efficiency in
Itis projected that the Clean Air Act Amendments
every phase of energy production, transforma-
of 1990 and the National Energy Strategy would
tion, and use.
are
19
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02/09/91 8:18am
Figure 6. Reduced Emissions of Nitrogen Oxides
so
Current Policy Base
NEW
25
CHART
20
Millions of Tons
With Strategy
15
10
5
0
1970
1975
1978
1980
1985
1987
1990
1995
2000
2005
2010
Increase the Use of Natural Gas. Increase
Minimize Wastes. Develop cost-effective,
the availability and use of natural gas.
environmentally sensitive techniques to reduce
energy-related and other industrial wastes and
Develop Cost-Competitive Renewable
improve environmental restoration.
Energy Supplies. Increase R&D and invest-
ment incentives for renewable energy tech-
One goal of these measures is to protect and
nologies.
enhance environmental quality while minimizing
the projected costs of environmental regulation in
Develop and Use Alternative Transporta-
this country (now more than $100 billion per year
tion Fuels. Develop and promote the use of
and growing) through more efficient management
cleaner transportation fuels, including reformu-
of environmental compliance.
lated gasoline.
Energy and Global
Develop and Use Clean Coal Technologies.
Environmental Issues
Develop and facilitate the use of clean coal
technologies.
Despite large uncertainties regarding potential
Improve Cumulative of Energy Impact As-
climate change, there is sufficient credible scientif-
ic concern to start acting to curb the buildup of so-
sessments. Improve analyses of the effects of
called greenhouse gases-several of which are
environmental regulation on energy supply and
related to the production and use of energy. These
demand.
gases include carbon dioxide, carbon monoxide,
methane, and chlorofluorocarbons Figure 7 illus-
Improve Siting Processes. Drawing upon
trates the greenhouse gas emission reductions that
State model programs, improve the processes
would be produced by the National Energy Strate-
used to site energy facilities, including refiner-
gy. These reductions are achieved by:(1) greater
ies.
use of nuclear power and renewable energy and
20
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02/09/91 8:18am
Figure 7. Reduced Potential for Global Warming
12
Current Policy Base
(With Montreal Protocol)
10
Reduced Emissions
Global Warming Potential
in Billion Tons of CO2Equivalent
8
6
New
With Strategy
Chart
4
2
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
Note: Global Warming Potential (GWP)-Unit of 100-year global warming potential measured in million metric tons of CO2
equivalents. Greenhouse gases vary in their atmospheric lifetimes and in their ability to absorb and reradiate heat. This
chart is based on converting the projected volumes of greenhouse gases to one common measure, Global Warming Potential.
If indirect gases that form tropospheric ozone (nitrogen oxides and volatile organic compounds) were to be included, a slightly
lower GWP for the National Energy Strategy scenario would result.
improved energy efficiency in both the electricity
reforestation, greater energy efficiency, and reduc-
and the transportation sectors and (2) other
ing the emission of chlorofluorocarbons and other
actions already taken by the United States (for
substances that deplete the Earth's protective
example, the Clean Air Act Amendments of 1990).
ozone layer).
With all of these initiatives, the United States'
contribution to potential global warming would, in
Taken together, these actions accomplish both
the National Energy Strategy scenario,
reductions in emissions from the sources of green-
dix 6) remain at or below present levels for the
house gases and enhancement of sinks (for exam-
foreseeable future. While the accuracy of any
ple, trees) that absorb gases. Consideration of both
future projections diminishes as the time horizon
sources and sinks of all greenhouse gases allows
under consideration lengthens, the National
for a comprehensive approach to the climate
Energy Strategy will significantly reduce green-
change issue, including scientific and economic
house gas emissions relative to any current policy
research, monitoring, technology development, and
baseline.
action plan development.
The National Energy Strategy actions are consis-
tent with the recommendations of the United
Nations' Intergovernmental Panel on Climate
Change. Under its precepts, this country has taken
a lead in adopting prudent strategies to reduce
greenhouse gases that are also justified on
grounds other than climate change (for example,
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 8:18am
Fortifying Foundations
and engineering research, estimated to be in
excess of $11 billion annually across 10 Federal
Fundamental Science
agencies.
and Engineering Research
Establish Federal Research and Develop-
The key to new knowledge and innovation in
ment Priorities. Establish a continuing inter-
energy and arenas is basic science
agency review of energy-related applied Federal
and research. Of course, there must also be fo-
R&D, estimated to be approximately $3 billion
cused R&D-both to advance new technologies and
in annual investments across seven Federal
to assess the effects on existing technologies, of
agencies, to identify top-priority technical
opportunities and ensure that research invest-
new-issues.
better understand
ments support key Strategy goals and technical
A major part of the National Energy Strategy is to
objectives.
expose and expand the role that science and
technology can play in achieving U.S. objectives for
Encourage Industrial Research. Encourage
energy security, economic growth, and enhanced
industry to increase its energy research invest-
environmental quality. History is full of instances
ments through financial incentives for research
where technology revolutionized both our energy
consortia, permanent tax credits for research
sources and our effectiveness in putting them to
and experimentation investments, increased
human service. New insights about geology, new
use of personnel exchanges, and prizes and
extraction techniques, and the exploration of new
awards.
geographical frontiers more than once have "re-
stocked" domestic petroleum reserves, notwith-
Strengthen University Research. Strength-
standing declarations that those reserves were
en individual investigator capabilities, increase
about to be exhausted. During the 1980's, new
cost sharing in funding proposals, and upgrade
technology helped to break the one-to-one relation-
university equipment and instrumentation.
ship that had long existed between total primary
energy consumption and economic growth.
Maintain User Facilities. Ensure the viabili-
ty of top-priority, world-class research facilities
The private sector is primarily responsible for
that are available to university and private
developing and commercializing technology, but
investigators, and explore alternative means for
the Federal Government has a critical role in basic
supporting them in the longer term.
and applied scientific research. The extensive
system of national research laboratories and
International Collaboration. Pursue bilat-
Federal support of academic and private research
eral and multilateral international agreements
can profoundly influence the focus, scope, and pace
to construct and operate high-cost, long-term
of energy technology development.
experimental research facilities.
Accordingly, the National Energy Strategy seeks to
Technology Transfer
(1)
maintain U.S. preeminence in fundamental science
and engineering research, sharpen the focus of
In the area of technology transfer, the National
Strategy-related research in energy science and
Energy Strategy seeks to;increase the use of joint
technology, and promote excellence and productivi-
industry-government efforts in R&D and in the
ty throughout the U.S. research establishment.
commercialization of new technologies; (increase
C2j
The following areas are particularly important:
the participation of the Federal Government in the
technology transfer process; and accelerate the
Maintain Basic Research Portfolio. Main-
process of transferring technology to private
tain a balanced and diverse Federal portfolio of
industry and commerce,
(3)
research investments in fundamental science
in order to
enhance
22
U.S.
competitiveness.
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 8:18am
The National Energy Strategy proposes the follow-
Education:
ing actions:
Investing in Human Resources
Increase Industry Participation. Increase
Without a population literate in matters mathe-
industry participation in R&D and in the
Intitioual and scientifie, we cannot expect to develop,
commercialization of new technologies by
manage, or properly appreciate the new energy
making the 20-percent tax credit for industrial
technologies we will need to provide a secure,
research and experimentation permanent and
clean energy future for all Americans. It is for
by encouraging collaborative, cost-shared R&D.
these reasons that the National Energy Strategy
contains key recommendations for improving
Ensure Adequate Protection for Intellectu-
math, science, technology, and engineering educa-
al Property. Provide copyright protection for
tion. The Federal role-a modest but critical 6
technical data and software, both at home and
percent of total funding at the precollege level—
abroad. Broaden the National Cooperative
must be integrated with those of the States and
Research Act of 1984 to include certain types of
the private sector to achieve the best results.
product development activities, and reform
Special emphasis must be placed on recruiting
product liability laws. Revise classification
women and underrepresented minorities into the
policies to improve industrial access to labora-
technical work force, to recruiting and preparing
tories and facilities that could contribute to
qualified math and science teachers for our
enhancing U.S. competitiveness, while continu-
schools, and to broadening the base of "science
ing to protect national security interests. Final-
literacy" among the U.S. public.
ly, revise Federal procurement regulations and
practices to promote greater efficiency and
The President and the Governors provided a
innovation.
framework for achieving excellence in U.S. educa-
tion following the Charlottesville Education Sum-
Promote Technology Exports. Improve the
mit. This part of our "national strategy" has
coordination of Federal agencies in export
already been well publicized, and it includes the
promotion efforts, particularly for developing
goal that "by the year 2000, U.S. students will be
and Eastern Europeanfcountries.
and
first in the world in science and mathematics
achievement."
Increase the Participation of the Federal
Government in Technology Transfer.
The Secretary of Energy chairs the Committee on
Develop and implement comprehensive agency
Education and Human Resources of the Federal
policies supporting technology transfer as a
Coordinating Council on Science, Engineering, and
for
fundamental mission of the Federal Govern-
Technology (FCCSET-CEHR). This 16-agency
ment. Provide adequate funding for technology
group prepared the first coordinated report and
transfer, including support for cost-shared
budget for direct Federal spending on math,
programs that help demonstrate the technical
science, and engineering education, which accom-
feasibility of generic, enabling technologies and
panied the President's fiscal year 1992 budget
that provide technical assistance for the devel-
submission to Congress.
opment of spinoff applications by industry.
education the National Energy Strategy seeks
Accelerate the Technology Transfer Pro-
to increase Americans' understanding of the role of
cess. Improve the delivery of technology trans-
energy in their lives, and its attendant costs and
fer services nationwide through careful reform
benefits, and to ensure a reliable supply of highly
of the infrastructure. Ensure that Federal
skilled scientists, engineers, and technicians in
approval for procurement and technology trans-
energy-related fields. The National Energy Strate-
fer activities are sufficiently speedy and flexi-
gy proposes the following actions:
ble.
en phosizes the need to:
23
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
02/09/91 8:18am
Improve precollege mathematics and science
supply, for specific aspects of environmental
education in support of the National Education
quality, and in building a firm foundation for the
Goals.
future in both general and expert understanding of
how energy can be applied to our best overall
Encourage precollege reform through govern-
national interest and welfare.
ment agencies and school partnerships.
Strengthen
Emphasize and update the math and science
curriculum.
Promote positive images of mathematics and
the sciences.
Initiate and expand incentives for careers as
mathematics and science teachers.
Make math and science teachers full partners
in the scientific community.
Maintain close linkages with the States and
the private sector through FCCSET-CEHR.
Support public science literacy through mass
media and parent-child programs.
Continue to assist energy education through
development of materials and school curricula.
Broaden public science literacy programs.
Provide fellowships and equipment to colleges.
Provide technical and on-the-job training.
Increase programs relating to undergraduate
curriculum and materials development in the
sciences.
Support the increased participation of all
population groups, including women, minori-
ties, and the disabled, in science and technolo-
gy careers.
complete
The rest of this document gives more detail of
specific actions to be Itaken to implement the
National Energy Strategy various areas of
energy consumption, in diverse sources of energy
24
For Internal Use Only-Not To Be Duplicated
will remove regulation, except
EXECUTIVE SUMMARY
Working Draft
where necessary to protect consumers,
02/09/91 8:03am
while enabling all segments of the industry
to expand by taking advantage of market opportunities,
markets would increase California heavy oil
would still have to comply with all applicable
production, further diversifying world oil pro-
State and Federal environmental laws, but would
duction and providing capital for investment in
not be subjected to delay by competitors,
additional domestic production.
Streamline the National Environmental
Policy Act Process Associated With Natu-
Evaluate Effects of Environmental Regula-
ral Gas Pipeline Construction. FERC would
tions on Domestic Refining Capacity. The
be the sole agency responsible for administering
Department of Energy has commissioned the
National Environmental Policy Act (NEPA)
preparing
National Petroleum Council to conduct a two-
environmental reviews of proposals to build
phase study. The first phase will produce a
new natural gas pipelines FERC would still be
required to consult and solicit comments from
and
report by June 1991 that will address the
could
capabilities of the U.S. refining industry to
other agencies, but other agencies would not be
charge
meet consumer needs, considering especially
allowed to delay the approval process by failing
applicants
the requirements of the Clean Air Act Amend-
to meet deadlines or by preparing independent
for related
ments of 1990. The second phase, to be com-
NEPA documents
pleted in 1992, will provide analysis of the time
Transportation and
when
expenses.
no
and investments necessary to meet new envi-
Deregulate) ipeline Sales Rates. Unless a
ronmental regulations, and their effects on
pipeline is found to have market power in the
petroleum product supply and prices.
sale of natural gas, the price at which a pipe-
line sells natural gas would be deregulated if
Natural Gas
designed to protect the consumer
This regulation, Initially
the pipeline provides comparable ransportation
frequently has the opposite impact.
and other services to all customers, regardless
Natural gas is a domestically abundant source of
of whether they are purchasing gas from the
clean energy. Although All price controls on natu-
pipeline or from other sources.
ral gas at the wellhead will be eliminated by
January 1993, under the Wellhead Decontrol Act
Reform Natural Gas Pipeline Rate Design.
owever
of 1989. the natural gas industry continues to be
The traditional pricing structure for pipeline
hampered by inefficient and outmoded regulation.
services would be reformed to ensure that
The National Energy Strategy addresses the
existing pipeline and storage facilities are
regulatory barriers currently preventing natural
operated efficiently Rate reform initiatives
gas from reaching its full potential in the U.S.
would include deempting natural gas pipelines
bachin
energy mix. If fully implemented, the National
from rate regulation except for pipelines found
Energy Strategy measures would increase U.S.
to have market power in their transportation
consumption of natural gas by almost 1 trillion
function, promoting incentive regulation for
cubic fcet (approximately 5 percent) over what it
pipelines found to have market power in their
would have been in the year 2000 under pre-
transportation functions, authorizing capacity
Strategy policies.
holders to resell capacity rights, and allowing
greater pricing and contracting-flexibility-for
Specifically, the National Energy Strategy will;-
new pipelines:
Expedite
Allow Gas Pipeline Construction, Without
Improve Access to Natural Gas Pipeline
are
Federal Certification New natural gas
Transportation Services. Remaining impedi-
pipelines could be built without a certificate of
ments to third-party use of pipeline facilities on
public convenience and necessity from FERC.
an open-access basis would be removed by
Pipelines constructed under this approach
promoting the use of pricing mechanisms
hel unity discriminatory.
conditions
The measures are á tax credit for enhanced oil récovery, a12-year extension of the section 29 credit, modifications
the percentage depletion rules, and alternative minimum tax relief for independent producers.
12
yunder Several options, including
PIPE' nes would or. given the
Shortening or E: ating the
opper unity to negotiate arrangement firs
process for obtaining
the transpor
01
sale
of
the
gas without
approved. Portner
Unable I-
covid Seria requel
agreements of theme
For Internal Use Only-Not To Be Duplicated
EXECUTIVE SUMMARY
Working Draft
Producers and other Shippers could seek orders
02/09/91 8:03am
derecting pipe nes to receive gas into their facilities
rather than government rules to balance supply
gies to enter the marketplace quickly, especially
and demand. Efficient pricing would be facili-
given the tight deadlines of the Clean Air Act
tated by unbundling transportation, marketing,
Amendments of 1990. The Clean Coal Technology
gas purchasing, and storage services. Franspor
Program, the single largest technology develop-
tation services should be offered to these pur
ment program in the Department of Energy, is
chasing gas from other suppliers comparable to
designed to help overcome this risk by offering the
those provided by the pipeline when it is the
Federal Government as a financial partner in
seller of gas
demonstrating worthy projects.
Eliminate the Department of Energy's
By promoting the export of clean coal technologies,
Import and Export Regulation. The Depart-
the National Energy Strategy will also help other
ment of Energy would end its regulatory over-
nations (especially in Eastern Europe and the
sight of natural gas import and export trans-
developing world) to achieve common goals: a
actions.
cleaner environment and less dependence on oil.
Encourage the Use of Natural Gas as an
Specifically, the National Energy Strategy will+:
Alternative Transportation Fuel. Through
accelerated purchases of alternative-fuel vehi-
Accelerate Use of Clean Coal Technology.
cles for the Federal fleet and through a nation-
The Administration will encourage State regu-
wide private-fleet alternative-fuel program, the
latory authorities to act in concert with appro-
National Energy Strategy will expand market
priate Federal agencies and provide regulatory
opportunities for natural gas as a transporta-
incentives for utilities to invest in projects us-
tion fuel.
ing innovative clean coal technologies. The
object of the regulatory incentives would be to
Coal
offset the additional risks associated with
investment in technologies that are not fully
If we as a nation are to benefit in the future from
proven on a commercial scale.
our enormous, low-cost coal reserves, a variety of
efforts are necessary to (1) develop and demon-
Clarify Applicability of the Clean Air Act's
strate new "clean coal" technologies; (2) reduce
Prevention of Significant Deterioration
uncertainty over environmental regulation and
(PSD) and "New Source Review" Provi-
allow electric powerplants (which use more than
sions to Existing Powerplants. Current PSD
four-fifths of all the coal consumed in the United
and new-source-review policy discourages
States) maximum flexibility in their actions to
certain types of maintenance, repair, and fuel-
comply with the Clean Air Act Amendments of
switching activities by deeming these actions to
1990; (3) provide regulatory incentives to offset
be "modifications," thus subjecting an existing
financial risks in commercial deployment of new
powerplant that undertakes such an activity to
clean coal technology; (4) reduce the cost, invest-
stringent "new source" and PSD requirements.
ment risks, and environmental impacts of produc-
This policy would/be altered by Environmental
ing liquid fuels from coal; and (5) confront head-on
Protection Agency administrative action (and,
the need to reduce carbon dioxide emissions
if necessary, by new legislation) to clarify what
associated with the use of coal.
substannally
changes in plant equipment or operation should
trigger PSD and new source review.
New clean coal technologies can improve efficiency
and reduce emissions from powerplants, substan-
Create Favorable Export Climate for U.S.
tially. Until they are proven at commercial scale,
Coal and Coal Technology. To improve the
however, their use entails more risk for utilities
climate for coal-related exports, the National
than conventional technologies. This additional
Energy Strategy will improve the visibility of
risk could make it difficult for these new technolo-
U.S. firms and their products by establishing
13
SENT BY:LABAT-ANDERSON Inc. ; 2-13-91 ; 10:33 ;
703-525-7975-
202 586 5342;# # 2
Figure 2. Reduced Exposure to Oil Price Shocks
5
4.5
4
Barrels of Oil per Day per Million Dollars a
3.5
3
Efficiency gains assumed
in Current Polloy Base
2.5
Current Policy Base
2
With Strategy
1.5
1
0.5
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
Nate: The vertical strokes OR the Strategy's projections indicate the imprector nature of creamating future impacts
SU-G
6.5in. X 3.5h
61621
Beep
1547 (Abe)
Beep
(x
SENT BY:LABAT-ANDERSON Inc. ; 2-13-91 ; 10:34 ;
703-525-7975+
202 586 5342:# 3
Figure 3. Summary of the Effects of National Energy Strategy Actions
on U.S. Oil Consumption
25
Current Policy Base
20
Millions of Barrels per Day
15
With Strategy
10
Consumption
5
o
1970
1975
1980
1985
1990
1995
2000
2005
2010
Note: The vertical strokes on the Strategy's projections indicate the imprecise nature of entimating future Impacia.
SU-M
6.5inW X 3.5 InL
SENT BY:LABAT-ANDERSON Inc.
; 2-13-91 ; 10:35
;
703-525-7975-
202 588 5342:# 4
Figure 4. Summary of the Effects of National Energy Strategy Actions
on U.S. Oil Production
25
20
Millions of Barrels per Day
15
With Strategy
10
5
Production
Current Policy Base
0
1970
1975
1960
1985
1990
1995
2000
2005
2010
Note: The vertical strokes on the Strategy's projections indicate the imprecise nature of estimating future impacts.
SU-N
6.5inW X 3.5inL
SENT BY:LABAT-ANDERSON Inc. ; 2-13-91 ; 10:35 ;
703-525-7875-
202 586 5342:# 5
Figure 5. Reduced Emissions of Sulfur Dioxide
35
so
Current Policy Base
25
Millions of Short Tons
20
15
10
With Strategy
5
o
1970
1975
1990
1955
1990
1995
2000
2005
2010
SU-J Also ALW-A
6.5inW X 3.5inL
SENT BY:LABAT-ANDERSON Inc. ; 2-13-91 ; 10:36 ;
703-525-7975-
202 586 5342:# 6
Figure 6. Reduced Emissions of Nitrogen Oxides
30
Current Policy Base
25
20
Millions of Short Tons
With Strategy
15
10
5
o
1970
1975
1980
1985
1990
1995
2000
2005
2010
SU-L also ALW-B
6.5inW X 3.5inL
SENT BY:LABAT-ANDERSON Inc.
; 2-13-91 ; 10:37 ;
703-525-7875-
202 586 5342;# 7
Figure 7. Reduced Potential for Global Warming
12
Current Policy Base
no
(With Montreal Protocol)
10
8
Global Warming Potential
in Billions of Tone of CO2 CO2Equivalent
Reduced Emissions
4
With Strategy
4
2
o
1990
1995
2000
2005
2010
2015
2020
2025
2030
Notes: Global Warming Potential (GWP)-Unit of 100-year global warming potential measured in billion metric tons of CO2
equivalents. Greenhouse gases Vary in their atmospheric lifetimes and in their ability to absorb and reradists heat. This
chart is based on converting the projected volumes of greenhouse gases to one common measure, Global Warming Potential
If indirect gases that form tropospheric ozone (nitrogen oxides and volatile organic compounds) Were to be included, a alightly
lower GWP for the National Energy Strategy scenario would result. The vertical strokes on the Strategy's projections indicate
the imprecias nature of estimating future impacts.
SU-K Also GL-B
6.5inW X 4.25inL
(Lange/Grossman)
February 19, 1991
6:30 P.M.
[ENERGY.DOC]
PRESIDENTIAL REMARKS:
ENERGY POLICY BRIEFING
ROOM 450, OEOB
1:15 P.M.
WEDNESDAY, FEBRUARY 20, 1991
Congressmen Dingell, Wallop, Johnston Lent, Sharp, and
Sendton
Moorhead; Governors Hickel, Ashcroft, Sinner, and Romer; Admiral
Summer
Watkins Henson Moore, and Linda Stuntz -- thank you all
fosher
Sheila Wathing youthret.al. Deland
This afternoon I'm pleased to release our comprehensive Jim
Tompar
Edward
National Energy Strategy a strategy for an energy future that atall
is secure, efficient, and environmentally sound.
the
issued
Thanks to Admiral Watkins and the efforts of many, we now
gest afted
estate
have a carefully balanced energy strategy, designed to diversify
America's energy sources; encourage efficiency and conservation;
spur competition throughout the energy sector; give Americans
greater choice among fuels; and enhance U.S. research and
development in new technologies.
The driving force behind this strategy is straightforward.
It relies on the power of the marketplace, the common sense of
the American people, and the responsible leadership of industry
and government.
that
Every American will benefit from the policies we're laying
out today. 4 Over the next two decades, this strategy will make
America more energy efficient -- without new energy taxes. of It
l
will mean savings for consumers in energy costs. And it will
improve our energy security, and reduce our vulnerability in the
years ahead.
2
Let's talk about reality. We've already made progress
the
toward reducing that energy vulnerability. We've diversified our
suppliers, so that we are not unduly reliant on any single
5PR
source. What's more, through the Strategic Petroleum Reserve, we
have vastly improved our ability to respond flexibly to supply
interruptions. And we have already begun moving on the path
toward improved energy efficiency.
are It
But we're a long way from total energy independence. Our
imports of foreign oil have been climbing since 1985, and now
stand at 42 percent of our total consumption. Too many of those
oil imports come from sources in troubled parts of the world.
We know that for domestic oil production, certain areas are
justifiably off limits for environmental reasons. Developing
new, alternative energy sources takes time. Some sources of
power face political problems. So America will have to continue
to import energy for years to come.
We also know that unwise and extreme measures to reduce oil
the
in the in C, webj of
imports would seriously hurt American consumers, American jobs,
and American industries.
In the face of these realities, we need must to act with care --
for
and we need must to act comprehensively. Our National Energy
Strategy strikes a sound, reasonable balance -- and it will
unduly
achieve greater energy security without burdening consumers or
the economy.
To minimize our vulnerability to foreign oil disruptions, reliaure that
this strategy takes a multifaceted approach. It will help us to
3
find more reliable sources of energy -- through uncompromisingly
safe and environmentally sound development. Domestic oil
production will rise by 3.8 million barrels a day.
This strategy will also help us use energy more efficiently
-- by encouraging new technologies, alternative fueled vehicles,
and conservation.
With this strategy, we're working to give Americans
unprecedented choice and flexibility. Instead of only finding
gasoline at the corner station, we want Americans to be able to
choose from a range of environmentally sound and cleaner fuels
- like ethanol, methanol, electricity, propane, natural gas, and
cleaner gasoline. Alternative transportation fuel production
will rise by up to 2.5 million barrels of oil equivalent per day.
Where America's towns and cities were once able to buy
electricity for their homes from only one utility company, we
want to help spur competition in the electric power business --
and bring lower prices to consumers. And we plan for electricity
produced from renewable sources to rise by 16 percent. 11
We want to build an energy future based on a range of
diverse sources, so that never again will this nation's energy
well-being be swayed by events in single foreign country.
Our approach will give Americans the flexibility,
opportunity and knowledge they need to conserve, to change fuel
down
sources, and to cut their energy bills.
meconvined
Finally, we believe this strategy will keep America on the
cutting edge of new energy technology. It promotes partnerships
4
between industry and government, for accelerated research in
technologies like biomass and alternative fuels, electric
vehicles, high speed rail, renewable sources like solar and
geothermal power, and nuclear technologies of unprecedented
safety and security.
recently have
Together with our Clean Air Act, this National Energy
Strategy will maintain our uncompromising commitment to energy
security and environmental protection. And it will put America
on the road to continued economic growth. nothave Am cont to who
Nobody should assume that meeting our needs for abundant
grow
energy, a strong economy, and a sound environment will be easy.
This strategy strikes a delicate balance. As always, there will
be critics in every corner --- but none of them will propose a
may new
plan that is more comprehensive, or more carefully thought out.
I believe this strategy is a good one, because along with
our
our abundant natural resources, it draws on this nation's
remarkable resourcefulness.
From the company that finds more energy-efficient ways to do
business -- to the scientist who makes a new power source
new
practical -- to the individual American at home, who finds a way
to save energy -- I think we can rely on the most remarkable
source of power choke the world has ever seen: the American people.
So Thank I fully you endoyse all this -- and assuee may Wallof- God bless toodopt the United WH popus States write of fully wodged
America.
We will stayly
# # #
asuait to get it
love right
Phday
my port
(Lange/Cawley)
February 15, 1991
5:45 P.M.
[ENERGY.DOC]
PRESIDENTIAL REMARKS:
ENERGY POLICY BRIEFING
ROOM 450, OEOB
1:15 P.M.
WEDNESDAY, FEBRUARY 20, 1991
Admiral Watkins
[acknowledgements].
This afternoon I'm pleased to release our comprehensive
National Energy Strategy -- to ensure that our energy future is
secure, efficient, and environmentally sound.
Thanks to Admiral Watkins and the efforts of many, we now
have a carefully-balanced strategy that will diversify America's
energy sources; spur efficiency, conservation and competition
throughout the energy sector; give Americans greater choice among
fuels; and improve U.S. research and development in new
technologies.
The driving force behind this strategy is straightforward.
It relies on the power of the marketplace, the common sense of
the American people, and the responsible leadership of industry
and government.
Every American will benefit from the policies we're laying
out today. Over the next two decades, this strategy will make
America more energy efficient -- without energy taxes or oil
import fees. It will mean savings for consumers in energy costs.
And it will improve our energy security in the years ahead.
Let's talk about some facts: We're a long way from total
energy independence. Our imports of foreign oil have been
2
climbing since 1985, and now stand at 42 percent of our total
consumption. Too many of those oil imports come from sources in
troubled parts of the world.
A few more facts: We know that for domestic oil production,
certain areas are justifiably off limits, for environmental
reasons. Developing new, alternative energy sources takes time.
Some sources of power face political problems. So America will
have to continue to import millions of gallons of oil, for years
to come.
We also know that unwise and extreme measures to reduce oil
imports would seriously hurt American consumers, American jobs,
and American industries.
In the face of these facts, our strategy strikes a
reasonable balance -- and starts us down the road to real
security.
To minimize our vulnerability to foreign oil, this strategy
increases domestic production -- and reduces demand. It will
help us to find more reliable sources of energy -- through
uncompromisingly safe and environmentally sound development. And
it will help us do more with less -- by encouraging alternative
fueled vehicles, conservation, and mass transit.
With this strategy, we're working to give Americans
unprecedented choice and flexibility.
Instead of only finding gasoline at the corner station, we
want Americans to be able to choose from a range of
3
environmentally sound fuels -- like methanol, ethanol,
electricity, propane, and natural gas.
Where Americans were once able to buy energy for their homes
from one utility company, we want to make it easier for other
companies to enter the industry, and give consumers alternatives.
And where the nation's overall energy well-being used to be
dictated by big cartels and powerful interests, we want to build
an energy future based on a range of diverse sources.
This approach will give Americans the flexibility,
opportunity and knowledge they need to conserve, to change fuel
sources, and to cut their energy bills.
Finally, we believe this strategy will keep America on the
cutting edge of new energy technology. It promotes partnerships
between industry and government, for accelerated research in
technologies like biomass and alternative fuels, electric
vehicles, fusion, high speed rail, renewable sources like solar
and wind power, and nuclear technologies of unprecedented safety
and security.
Together with our Clean Air Act, this National Energy
Strategy will maintain our uncompromising commitment to energy
security and environmental protection. And it will put America
on the road to continued economic growth.
Does this strategy have all the answers? Not at all.
Nobody should assume that meeting our needs for abundant energy,
a strong economy, and a sound environment will be easy.
4
But I believe we'll do it. Because along with our abundant
natural resources, we can draw on this nation's resourcefulness.
From the company that finds more energy-efficient ways to do
business -- to the scientist who makes a new power source
practical -- to the individual American at home, who finds a way
to do more with less -- I think we can rely on the most
remarkable source of power the world has ever seen: the American
people.
Thank you all -- and may God bless the United States of
America.
# # #
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02/19/91
14:09
DOE -PE-1
001
OF
Department of Energy
STATES DELIVERY
Washington, DC 20585
Facsimile Cover Sheet 91 FEB 19 P1:18 P
for
The Office of Policy, Planning and Analysis
Date:
2-19-91
To:
Jennifer
Organization:
WH
Phone/Fax Number: 456-7750
From:
Mark Kenigan
Subject/Comments:
This fax contains 10 pages, including this cover. If you did
not receive ann all of the pages or if illegible, please phone
at (202) 586-4159. 4159.
02/19/91
14:10
DOE -PE-1
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Revised
9:15 am
Office of the Press Secretary
For Immediate Release
February 20, 1991
FACT SHEET:
THE NATIONAL ENERGY STRATEGY
President Bush today proposed a comprehensive and balanced
program to ensure all Americans an energy future that is secure,
efficient, and environmentally sound. By providing leadership in
international, regulatory, and technological arenae, the National
Energy Strategy will diversify U.S. sources of energy supplies
and offer more efficiency and flexibility in the way energy is
used.
The National Energy Strategy will accomplish these goals without
sacrificing economic growth. A keystone of the National Energy
Strategy is continuing the successful policy of market reliance.
Over the next two decades, the Strategy will make the U.S. more
energy efficient--without resorting to heavy-handed regulations
or import fees that can hurt consumers and our allies.
Implementation of the Strategy will lead to greater opportunities
for developing energy supplies. A goal of the National Energy
Strategy 1s to reduce the U.S.' vulnerability to oil supply
disruptions. Yet the Strategy scknowledges that the U.S. is part
of an energy interdependent world. It is not in our interest to
adopt measures that may reduce imports but inflict severe
economic or environmental damage. Therefore, the National Energy
Strategy balances economic, environmental and energy security
objectives.
Over the next twenty years, this balanced approach to production
and conservation will yield a U.S. economy less dependent on
energy. At the same time, the U.S. will produce more of the
energy it uses. By the year 2010
38/16
the U.S. will consume 33 percent less oil for each unit of
GNP we produce today.
domestic oil production will rise by 3.8 million barrels per
day.
electricity produced from renewable sources will rise by as
percent.
16
#- 38 percent includes base case projected
improvements. specifically. 16 percent is NES measures
02/19/91
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of ort equivalent
alternative transportation fuel production will rise by up
to 2.5 million barrels per day.
Not only WILL U.S production climb, but the environment will
benefit. By 2010, the National Energy Strategy will contribute
to
0
reducing the potential threat of global warming by reducing
U.S. emissione of greenhouse gases at or below 1990 levels.
enhancing air quality by reducing emissions of pollutants
check there fequires wis
contributing to acid rain and emog. Sulfur dioxide
emissions fall by 40 percent, nitrogen oxide emissions by 2520 20
percent, and volatile organio compounds by at percent.
20
D
enhancing water quality by scaling down solid effluent
e
addressing solid waste problems by reducing coal ash waste
25 million tons per year, and buy lowering coal cleaning
Wastes by 50 million tons par year by
The Strategy builds on a number of Bush Administration
initiatives. These include (1) the 1990 revisions to the Clean
Air Act; (2) natural gas well-head decontrol legislation; (3)
incentives provided to domestic renewable and fossil energy
producers in fiscal year 1991 budget agreement; (4) the
unprecedented international consensus forged in the wake of the
Persian Gulf orisis; (5) the fiscal year 1991 and 1992
realignments of the Department of Energy's research and program
priorities; (6) the Administration's domestic energy supply and
demand measures adopted in response to the Iraqi oil disruption;
and (7) the Administration's science and mathematics education
initiatives.
To meet the challenges shead, the National Energy Strategy calls
for action by Federal, State, and local government and by
domestic and international energy producers and consumers. This
National Energy Stretegy will provide a more secure and cleaner
energy future through greater energy and economic efficiency and
new technology.
INCREASING ENERGY AND ECONOMIC EFFICIENCY
Transportation Efficiency
Highlights
The National Energy Strategy will increase transportation
efficiency by:
o
scrapping high pollution, low efficiency vehicles
02/19/91
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increasing use of public transit, vanpooling and ridesharing
through larger tax-free commuter subsidies
requiring centrally-fueled fleets to use alternative fuel
vehicles, by increasing Federal purchases of such vehicles,
and by lifting the cap on CAFE incentives for automakers who
build alternative fuel vehicles.
accelerating research and development of more efficient
technologies, including electric, gas turbine, and high
efficiency siroraft engines
o
reducing technological barriers to MAGLEV and high-speed
reil and by widely implementing Intelligent Vehicle/Highway
systems
These measures will displace 1.8 million barrels of oil par
day by 2010, reduce the transportation sector's total reliance
on 011, and increase consumer choice without penalizing consumers
of U.S. industry competitiveness. The number of passenger miles
driven could rise 60 percent, but the volume of gasoline
purchased by consumers would fall 13 percent.
60
from
1990
Electricity Generation and Efficiency
Highlights
The National Energy Strategy will raise electricity efficiency
by:
o
amending the Public Utility Holding Company Act (PUHCA) to
enhance competition in the electricity industry and allow
power suppliers to build, own, and operate plants in more
than one area.
o
expanding efforts to treat electricity conservation programs
equitably with power plant additions (Integrated Resource
Planning).
o
reforming the Public Utility Regulatory Policies Act (PURPA)
to modify size and fuel use restrictions for emall power
producers.
D
providing tax-free treatment of utility discounts on
consumers' electricity bills for efficiency investments.
0
expanding access to electricity transmission for utility and
non-utility wholesale buyers and sellers.
0
phasing-out Federal subsidies to the debt of Federal Power
Marketing Administratione.
These measures w122 reduce electricity demand growth by guads
in 2010 and save consumers $26 billion in electricity costs
F27
02/19/91
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through greater use of competitive forces and new technologies.
Residential and Commercial Building Efficiency
Highlights
The National Energy Strategy will raise efficiency levels for
residential and commercial buildings by:
accelerating research for building technologies and
supporting State and utility programs that use it.
o
homes. expending mortgage financing incentives for energy efficient
0
setting cost-effective appliance and equipment standards and
expanding labeling programs to include light bulbs land other
equipment.
strengthening building efficiency standards and providing
technical assistance to States to expand their use.
0
improving Federal energy efficiency.
0.5
These measures will reduce building energy demand in 2010 by at
least 0.4 quads. The amount of floor space in malls, office
buildings, and other commercial building will grow by 57 percent,
but the energy needed to heat, 0001, and light that space will
grow by less than helf that amount. The U.S. will have 24
percent more occupied housing than today, but we will use only 10
percent more power to service the housing. At the same time,
these measures will increase the affordability of housing,
espacially for low-income consumers, and improve indoor comfort
and air quality, energy
Industrial Energy Efficiency
Highlights
The National Energy Strategy will raise industrial energy
efficiency by:
0
increasing research and development for industrial processes
and industrial waste minimization.
expanding the use of energy audits and speeding up adoption
of high efficiency technology.
removing regulatory disincentives to using waste
minimization technology.
By the year 2010, these measures will help industrial output grow
80 percent, yet use only 27 percent more energy to power all of
our factories, plants, mills, and similar facilities. In
02/19/91
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DEN, DISABROX lelecopier 7020 : 2-16-91 ; 2:21PM ;
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202 588 53131# 6
addition, the environmental impacts of industry will deoline.
SECURING FUTURE ENERGY SUPPLIES
Securing Petroleum Supplies
Highlights
supply disruptions by:
The National Energy Strategy will reduce our vulnerability to 011
0
removing institutional and trade barriers to oil production
outside the Persian Gulf, with emphasis on Western Hemisphere
energy cooperation.
expending worldwide strategic stocks.
0
increasing Federal and private investment in enhanced oil
recovery technology.
providing environmentally responsible access to discrete
areas of the coastal plain of ANWR and resolving technical
development. and regulatory barriers to greater Alaska North Slope oil
allowing environmentally responsible access to discrete
Outer Continental Shelf areas.
deregulating oil pipelines in competitive markets.
increasing production of California heavy oil and allowing
access to export markets.
o
evaluating the refining sector's ability to meet future
demand for a variety of liquid fuels.
These measures will increase domestic oil production by up to 3.8
million barrels per day in 2010, and raise economically
recoverable resources by 25 to 70 billion barrels.
Securing Natural ORE Supplies
Highlights
The National Energy Strategy will promote domestic and
international natural gas production by:
streamlining gas pipeline construction reviews and
developing more efficient environmental review procedures.
dersgulating pipaline seles retes in competitive markets
and reforming gas pipeline rate designs.
02/19/91
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supporting environmentally responsible exploration and
development in certain currently restricted areas
services. improving third party access to pipelines transportation
eliminating certain import/export regulations
expanding use of natural gas in alternative fuel vehicles
and enhanced oil recovery
These measures will displace up to 300,000 600,000 barrels of oil par day
by 1995, and increase natural gas consumption by almost 1
trillion cubic feet in 2000. Residential consumers will save
D/C
stet
0140 million in 2000 and 81 billion in 2010
$ 200
except
850 million
Securing Future Coal Supplies
number
Highlights
The National Energy Strategy will promote the use and export of
clean coal resources by:
accelerating use of clean coal technology through Federal
and State regulatory incentives.
clarifying the applicability of New Source Review provisions
for refurbished power plants under the Clean Air Act,
creating favorable export markets for U.S. coal and coal-
burning technologies.
removing barriers to constructing coal slurry pipelines.
pursue research and development on environmental protection
during implications. mining and studying global climate change
These measures will achieve Clean Air Act objectives at lower
cost and minimal disruption to regional coal markets, jobs, and
economic activity. They will also allow the U.S. coal industry
to capture a major share of the growing international coal and
coal technology markets, while maintaining our ability to take
advantage of large U.S. supplies of low cost coal.
Securing Nuclear Power
Highlights
The National Energy Strategy will promote new nuclear power
capacity by:
reforming the nuclear plant licensing process, as well as
02/19/91
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the process for siting and licensing of waste facilities.
developing stendardized designs for current generation power
plants.
o
accelerating research and development of advanced
technology, inherently safe resotors.
These measures will enhance the nuclear technology option by
reducing costs and increasing safety and reliability. Nuclear
power production would increase by 10 percent by 2010 and the
U.S. would maintain its technological leadership and its
leadership in achieving global climate change mitigation
objectives.
Securing Renewable Resources
Highlights
The National Energy Strategy will promote the development and use
of renewable resources by:
extending the current investment tax credit through 1992.
streamlining hydropower licensing processes and eliminating
unwerranted Federal regulation of small hydro projects.
amending PURPA to encourage renewable power production by
small power producers.
supporting conversion of municipal solid waste to energy as
part of a comprehensive waste management strategy.
developing cost-competitive liquid fuels from non-food crops
with high priority research and development investments.
These measures will increase electricity generation from
renewables by 1.1 quade in 2010 and production of liquid fuels
from biomase by 0.4 quade in 2010 and 3.3 quade in 2030. In
addition, they will reverse the losses of hydropower generation
capacity and increase fuel and technology choices for
transportation.
Securing Fusion Technology
The National Energy Strategy will intensify international
colleboration in fusion research and focus investments in
magnetic and inertial confinement reactor concepts.
Through these efforts a demonstration plant could be developed by
2025 and an operating commercial plant could cost-effectively
supply power by 2040.
Enhancing Research and Development for Energy Security
02/19/91
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The National Energy Strategy includes a major commitment to
advanced energy technology. The fiscal year 1992 budget includes
6903 million, or 34 percent above 1991 levels.
To ensure ensure that research and development efforts pursue
useful goals and result in ultimate commercialization of
technologies, these initiatives will utilize industry cost-
sharing and will be carried out as joint government-industry
programs. In addition, a national ewards program will be
created, offering lerge cash prizes for energy-related
innovations that meet specific technological challenges.
Major research initiatives include: advanced transportation
fuels from biomass, vehicle propulsion technologies, electric
vehicle technology, aeronautical technologies, high speed rail
and magnetic levistion, intelligent vehicle/highway systems,
telecommuting, air traffic control, edvanced oil recovery
technologies, industriel technologies, and advanced light water
nuclear reactors concepts.
By 2030 these research and development initiatives could save
between 5 million and 8 million barrels par day of oil. They
will improve U.S. competitiveness and help make the U.S. e
cleaner, safer, more desirable place than ever in which to live
and work.
ENERGY AND THE QUALITY OF AIR, LAND AND WATER
Highlights
The National Energy Strategy will enhance environmental quality
by:
0
making maximum use of market mechanisms, informed by fuel
cycle costs analysis, to protect the quality of air, land,
end water.
D
increase the use of natural gas, renewable, and alternative
energy.
o
improve energy impact assessments and regulatory
structures.
o
develop model programs for energy facilities siting.
minimize waste from energy production, transformation,
and use.
These measures, in conjunction with the Clean Air Act Amendments,
will reduce sulphur dioxide emissions by 40 percent, nitrogen
oxides by 30 percent, and volatile organic compounds emissions by
25 percent from projected levels, In addition, they will improve
the economics and efficiency of environmental compliance, which
by 2030
02/19/91
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SENT BYPXerox Telecopier 7020 ; 2-10-81 i 2:23PM i
UFD*
202 500 5318,810
currently costs over $100 billion per year and is rising.
ENERGY AND THE GLOBAL ENVIRONMENT
The National Energy strategy and previous Bush administration
actions, coupled with ongoing Federal research aimed at reducing
scientific uncertainty on the potential for global climate
change, will reduce greenhouse gas emissions and demonstrate U.S.
international leadership on this issue.
In 2010, U.S. greenhouse gas emissions will remain at their 1990
levels, despite steady increases in U.S. economic growth.
FORTIFYING FOUNDATIONS: Science and Engineering Research. Technology
Transfer, Science and Math Education
The National Energy Strategy will continue the administration's
commitment to science and engineering research, technology
transfer, and science and math education by:
maintaining Federal basic science research portfolio valued
at over $1 billion annually.
making Federal research and development priorities congruent
with National Energy Strategy goals.
o
ensuring the viability of world class U.S. facilities and
pursing international agreements to support high-cost
facilities.
o
increasing industry participation in research and
development and commercialization.
o
protecting intellectual property rights.
D
promoting technology exports
c
strengthen and update math and science currioula and
expanding career incentives for teachers.
providing Federal technical assistance and on-the-job
training for teachers.
o
broaden public science literacy programs.
These measures are but a few of the many initiative aimed at
securing an energy future in which the U.S. has skilled
professionals that can develop and enhance new technologies,
which Will increase economic growth and the quality of life.
02/14/91
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DRAFT
FEB 14 1991
HOW THE NATIONAL ENERGY STRATEGY (NES) BENEFITS ALL AMERICANS
Energy is basic to our quality of life au to the standard of living expected by all Americans.
Because of this, we have developed a NES dedicated to the goals of assuring that the nation
secure supplies of reasonably priced energy produced and used in environmentally responsible
ways.
The NES harnesses the strength of market forces, the common sense of the American people,
responsible leadership of industry and government, and the unique advantages provided by our
natural and human resources.
The NES benefits all Americans by reducing energy costs.
Between now and 2010 consumers will save $750 billion1 in gasoline, home heating oil,
and other liquid petroleum fuel expenditures.
Consumers will save over $130 billion1 in electricity bills between 2000 and 2010.
The NES benefits all Americans by enlarging and diversifying the nation's energy supply base.
Increases electricity produced from renewable sources by 18 percent in 2010.
Expands alternative transportation fuel production by up to 2.5 million barrels per day in
2010.
Speeds development and use of clean coal and safe nuclear power technologies.
The NES benefits all Americans by protecting the environment.
In conjunction with other Administrative actions, reduces U.S. greenhouse gas emissions,
measured by their potential to warm the atmosphere, to 1990 levels or below.
Reduces emissions of air pollutants contributing to acid rain and smog.
Reduces the need to build new power plants through more efficient use of energy and
new technologies.
Makes us 27 percent more energy efficient than today by the year 2010 through new
polices and enhancement of existing programs.
The NES benefits all Americans by enhancing energy security.
Shrinks oil demand by 3.4 million barrels per day in the year 2010.
SET
May more than double our domestically producible oil resources.
114
Reduces projected oil imports in 2010 by one-third, from 65 to 40-45 percent of
consumption.
1
In 1989 dollars.
02/14/91
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DRAFT
FEB 14 1991
HOW THE NATIONAL ENERGY STRATEGY (NES) WILL BENEFIT
THE ENVIRONMENT
The production and use of the energy we need to maintain our quality of life substantially
affects the environment. The NES will lessen those impacts first by reducing the overall
amount of energy we need. Second, by reducing air pollution, cutting down on the
generation of solid wastes, limiting water pollutants, and lessening risks to sensitive
environments.
The NES results in less energy use.
Allows us to power an economy in 2010 that is 77 percent larger than today with
only 30 percent more energy through new Initiatives and enhancement of existing
programs.
Lowers the amount of energy needed in 2010 by the equivalent of 3.5 million
barrels of oil per day.
NES results in the production of 11 percent more environmentally advantageous
renewable fuels in 2010.
The NES in conjunction with other Administration initiatives, reduces the potential threat of
global warming by reducing U.S. emissions of greenhouse gases at or below 1990 levels.
The NES enhances air quality by reducing emissions of pollutants contributing to acid rain
and smog by 2010:
Achieves a 40 percent reduction in annual emissions of SO2.
Results in a nearly 25 percent reduction in annual emissions of NOₓ.
Yields a 30 percent reduction in annual emissions of VOC's.
NES benefits water quality.
Scales down total suspended solid effluents.
Cuts oil and grease effluents.
NES addresses our solid waste problem -- by 2010:
Brings down production of coal ash waste by 25 million tons per year.
Lowers generation of coal cleaning wastes by 50 million tons per year.
NES shrinks the threat of oil spills in our coastal waters by reducing our future import
requirements thereby lessening visits by foreign oil tankers by 1,700 per year in 2010.
02/14/91
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FEB 14 1991
DRAFT
HOW THE NATIONAL ENERGY STRATEGY (NES) WILL BENEFIT THE CONSUMER
Everybody is an energy consumer. At home, at work, and at play we depend on the
availability of reliable supplies of energy at reasonable prices to maintain our standard
of living.
The NES contains no new taxes there is no gasoline tax, no oil import fee, and no
carbon tax.
The NES reduces consumer energy costs:
Home heating oil and gasollne prices each decline almost by 10 percent in the
year 2010.
Between now and 2010 consumers will save about $750 billion1 in gasoline,
home heating oil, and other liquid petroleum fuel expenditures.
Consumers will save over $130 billion1 in electricity bills between 2000 and
2010.
The nation will save $500 billion1 in total energy costs.
Consumer costs are kept down by NES policies that:
By the year 2010, will make us 27 percent more energy efficient than today
through new initiatives and enhancement of existing policies.
Lower costs by streamlining facility siting and permitting process.
Produce a more competitive market place with more energy options.
Leave choices up to consumers rather than attempting to dictate consumer
decisions through new taxes or regulations.
The NES keeps oil dollars at home and reduces vulnerability to world oil market
disruptions by:
Lowering demand for oil by 3.4 million barrels per day in 2010.
Increasing our domestic production by 3.8 million barrels a day by 2010.
A
by Tailbinfresele alay
Cutting our oil Import bill in half in 2010 thereby preventing more than 300
million dollars' a day from being sent overseas to buy foreign oll.
Enhancing oil reserves and increasing production capability around the world.
1
In 1989 dollars.
02/14/91
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DRAFT
FEB 14 1991
HOW THE NATIONAL ENERGY STRATEGY (NES) BENEFITS ENERGY SECURITY
The Iraqi invasion of Kuwait reminds us of our vulnerability to world oil market disruptions.
Because oil will continue to play a pivotal role In maintaining our quality of life for decades to
come, a broad effort is necessary to reduce dependence by ourselves and our allies on
insecure energy suppliers.
Import reductions are achieved by an approach balanced between lowering oil demand on
the one hand and increasing domestic production on the other.
The NES will reduce demand for oll in the year 2010 by 3.4 million barrels per day by:
Encouraging the manufacture of alternative fueled vehicles.
Using alternative fuels instead of petroleum products.
Promoting conservation and mass transit.
Developing cleaner, more efficient automobile, airplane and truck engines, along with
high speed trains.
The NES will Increase domestic oll production by up to 3.8 million barrels per day in 2010 by:
Developing and using better technology to recover the oil left behind by conventional
production methods.
Providing access to the coastal plain of the Arctic National Wildlife Refuge under strict
environmental safeguards.
Providing environmentally sound access to the Outer Continental Shelf, consistent with
the President's decisions on the need for additional study and data for certain OCS
areas.
Remove regulatory barriers to greater use of horizontal drilling.
The NES will better prepare us for future world oil market disruptions by expanding
worldwide production capacity and strategic stocks.
The NES will reduce projected oil Imports In 2010 by 1/3, from 65 to 40-45 percent of
consumption.
Import reductions will be 7 million barrels per day in 2010.
In 2010, import reductions save more than $300 million1 per day from going overseas
to buy oil.
1
In 1989 dollars.
02/14/91
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DRAFT
FEB 14 1991
HOW THE NATIONAL ENERGY STRATEGY (NES) ENHANCES CONSERVATION
Conservation means wise and careful use, the avoidance of waste.
The NES results in significant Improvements in energy conservation and does so while
allowing the public the freedom to make Its own energy choices.
The NES relies on the common sense and enterprise of our citizens and the market
place -- the very factors that allowed the United States economy to grow by almost
one-third percent with only a 9 percent increase In energy use between 1980 and
1990. The NES keeps us on this conservation path through new initiatives and
enhancement of existing policies.
The NES consclously rejects policies that substitute the judgment of the Federal
government for that of individual energy consumers. It does not contain legislative or
regulatory targets and proposals Intended to force the public to make energy choices
deemed "correct" by anybody other than the individual actually making the decision.
Instead, the NES accomplishes its conservation gains through efforts that make the
market place work better; that expand energy choices available to consumers; through
research and development that improves the efficiency with which we use energy; and
by eliminating present regulatory barriers blocking conservation efforts.
Between 1990 and 2010 this approach yields the following results:
A 77 percent growth in our economy requiring only 30 percent more energy.
The number of passenger vehicle miles driven increases by about 60 percent
and the number of passenger vehicles grows by 35 percent while the amount of
energy used in the transportation sector increases by 29 percent and the
volume of gasoline used declines 13 percent.
The amount of floor space in malls, office buildings, and other commercial
buildings grows by 57 percent but the energy needed to heat, cool, and light
that space grows by only 26 percent.
Industrial output increases some more than 80 percent yet the amount of
energy needed to power the industrial sector -- all our factories, plants, mills
and similar facilities -- increases by only 27 percent.
In 2010 we expect to have 24 percent more occupled housing than today yet
we will use only 10 percent more energy to heat It, cool it. light It and to power
all the appliances in it.
02/14/91
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DRAFT
FEB 14 1991
PETROLEUM AND THE ARCTIC NATIONAL WILDLIFE REFUGE (ANWR)
Arctic National Wildlife Refuge:
ANWR is 19,000,000 acres In size, of which 8 million acres are wilderness. Overall,
Alaska contains more than 100 million acres in parks, preserves, wildlife refuges, and
wilderness areas.
Within ANWR, the 1.5 million acre coastal plain is the region of potential oil and gas
development. The most promising areas are about 65 miles east of the existing
producing oil fields at Prudhoe Bay that presently provide about 25 percent of the
nation's domestic oil production. If oil were found in commercial quantities in the
coastal plain, full development is expected to directly impact 13,000 of its 1,500,000
acres.
Very few species of large animals reside on the coastal plain year around and those
that do are present in small numbers. The most numerous species Is musk ox of
which there are some 350 Individual animals. Fewer than ten brown bears are
thought to use the area in winter while three polar bear dens have been identified.
Except for caribou, the number and kind of large animals is also small in the summer
with populations of wolf, brown bear, and moose being under 100 Individuals.
The Porcupine Caribou Herd numbers 180,000 individuals and during the summer
uses portions of the coastal plain for calving. Its full range covers 60,000,000 acres in
the U.S. and Canada.
Several species of migratory birds are present in large numbers during summer
months.
ANWR's oil potential:
If oil is discovered, there is a 46 percent chance of finding at least 3.6 billion barrels of
oil in ANWR and a 5 percent chance of finding at least 8.8 billion barrels. A 46
percent chance of success is extremely high in an industry where a 10 percent chance
of finding oil in commercially producible amounts is often judged a good risk. The 3.6
to 8.8 billion barrels of potentially producible oil make the area the most promising in
the U.S. for major new oil finds.
At present consumption rates, 3.6 billion barrels represents over 200 "days" of total
current national oil consumption. Over the past 100 years, more than 80 percent of all
onshore oll fields ever discovered in the U.S. contained less than one day's supply of
oil.
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7968 Buchos
Policy
Tod Thereva Cormer
DRAFT
FEB 14 1991
The total value of 3.6 billion barrels is over $100 billion 6554 and that of 8.8 billion barrels is
over $250 billion¹.
The oil we will need must come from somewhere. If It comes from ANWR, then our
oil import bill will be reduced between 100 and 250 billion dollars.
ANWR production will create large numbers of jobs at home and generate billions in
tax revenues to pay teachers, build roads, buy park land, and for other public
purposes.
Oil and the environment on Alaska's North Slope:
At Prudhoe Bay, adjacent to ANWR's coastal plain, oil exploration and production has
occurred for over 20 years.
The Prudhoe Bay area is used by the Central Arctic Caribou Herd every summer and
the members of today's herd have not known life without oil development -- without
pipelines, roads, drilling pads, and the sights, sounds, and scents of human activity.
Since the advent of oil activities, the population of the Central Arctic Caribou Herd has
tripled.
Wildlife studies completed to date show that oll development at Prudhoe Bay has not
adversely impacted the population of any specles of wildlife that uses the North Slope
of Alaska.
Full development of ANWR's coastal plain would directly effect 13,000 acres through
the building of infrastructure such as pipellnes, roads, and drilling pads. That is
0.9 percent of the plain or 07 percent of ANWR. For perspective, 0.9 percent of a
1,200 square foot home with living room, dining room, three bedrooms, and 2 baths is
11 square feet -- about the size of a bathtub -- while .07 percent is 1 square foot,
smaller than the welcome mat at front door.
The environmental record of oil development at Prudhoe Bay and the numerous
studies done concerning the potential environmental impacts of oil development on the
coastal plain, have clearly established the fact that the nation can obtain the extensive
benefits associated with oil development In an environmentally responsible way.
1
In 1989 dollars.
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009
DRAFT FEB 14 1991
THE NATIONAL ENERGY STRATEGY (NES) AND ELECTRICITY
The nation is becoming increasingly electrified. Energy used to generate electricity is
projected to grow by 30 percent over the next two decades. The NES reduces the
amount of fuels needed to generate electricity, increases the diversity of those fuels,
increases the efficiency with which we use electricity and reduces the environmental
impact of electricity production.
The NES lessens electricity demand growth by 4.5 quads in 2010.
The NES results in a national savings of $26 billion in electricity costs in the year 2010
through greater use of competitive forces and new technologies in the industry.
The NES promotes competition and flexibility in electricity supply.
Amends the Public Utility Holding Company Act to allow firms to build and
operate power plants in more than one area.
Utilizes existing FERC and DOE authority to promote expanded transmission
access and efficient pricing of transmission services.
Provides support for electricity conservation and efficiency programs by State
regulators, utilities, the Federal Power Marketing Administrations, and the
FERC.
Modifies the Public Utility Regulatory Policies Act to reduce size and fuel use
restrictions on small power producers utilizing renewable energy resources.
Modifies and streamlines Federal licensing procedures for non-Federal
hydroelectric facilities.
Supports nuclear licensing reform and development and implementation of a
high-level radioactive waste management program.
The NES provides for diversity in electricity technologies and fuel choices.
Provides support for research, development, and demonstration of electricity
technologies, such as clean coal, advanced design nuclear power plants,
renewable energy and waste-to-energy technologies, electricity storage and
transmission technologies.
Supports development of methods to determine the full costs and benefits of
various technologies used to generate electricity.
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DRAFT
FEB 14 1991
HOW THE NATIONAL ENERGY STRATEGY (NES) WILL ADVANCE
RENEWABLE ENERGY
The NES will stimulate renewable energy development. This will increase our energy
security, contribute importantly to our supply of reasonably priced energy, and lessen
the impact of energy use on the environment.
NES will provide for the production of 11.8 quads of energy from renewable sources
by 2010, 11 percent greater than would be provided otherwise.
The NES will encourage additional Investment in renewable energy facilities by:
Extending through 1992 the investment tax credit for emerging renewable
technologies.
Removing legislative impediments to renewable energy development.
Regulatory barriers to the use of renewables will be reduced by:
Streamlining licensing and relicensing procedures that will yield a 12 percent
Increase In electricity generated by hydroelectric power by the year 2010.
Overcoming regulatory constraints on the development of municipal waste-to-
energy systems, yielding potentially a more than 100 percent increase in
electricity generation by the year 2010.
NES research and development aims to decrease cost and increase performance of
emerging renewable technologies. These forms of renewable energy could contribute
8.1 quads to the nation's energy base in 2010, including:
Biomass fuels
Geothermal
Solar thermal
Photovoltaics
Wind
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DRAFT
FEB 14 1991
HOW THE NATIONAL ENERGY STRATEGY (NES) WILL ENCOURAGE
ALTERNATIVE FUEL USE
The NES will Increase the use of alternative transportation fuels in the U.S., thereby
reducing oil imports and encouraging new cleaner vehicle and fuel production
technologies.
The NES will create incentives for about 10 million alternative fuel vehicles each year.
Fuel economy credits will be available to car and truck manufacturers for
producing alternative fuel vehicles.
Private and Federal fleet purchases will create a market demand for almost 2
million alternative fuel vehicles per year.
The NES could increase alternative fuel use by 2.5 mmB/D by 2010.
Having alternative fuel vehicles on the road will break the "chicken and egg"
dilemma and create a ready market for cost competitive alternative fuels:
Ethanol, ETBE
-
Methanol, MTBE
-
Propane
-
Natural gas
Combined with the Clean Air Act, the NES will result in reduced emissions.
The NES initiatives complement Clean Air Act requirements for cleaner fuels by
providing a larger market and improved technology at potentially lower cost.
Early use of fuel flexible vehicles will lead to an expanded fuel distribution
infrastructure and ease the transition to very low emission dedicated alternative
fuel vehicles.
NES Increases the potential for domestically produced biomass-based fuels through
cost reduction and increased market opportunities.
02/14/91
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DRAFT
FEB 14 1991
THE IMPORTANCE OF PETROLEUM TO THE
NATIONAL ENERGY STRATEGY (NES)
Petroleum will remain a vital component of the nation's energy base for decades to
come. It presently supplies 42 percent of our nation's energy, and almost 97 percent
of the energy needed for transportation. NES policies result in a strong domestic
petroleum industry that will make a significant contribution to our national energy
security and our economy.
The NES calls for exploration and development in carefully targeted portions of frontier
areas that could Increase producible resources by more than 16 billion barrels.
Arctic National Wildlife Refuge -- as much as 8.8 billion barrels valued at over
$250 billion in 1989 dollars.
Outer Continental Shelf -- as much as 7.5 billion barrels valued at over $200
billion in 1989 dollars.
NES addresses existing Information vacuums that inhibit informed decision making
when trying to balance energy and environmental goals by:
Establishing a process to provide new guidance on how to assess and consider
the effects of environmental regulations on domestic energy production.
Initiating a National Petroleum Council study to help determine the impact of
environmental regulations on the domestic refining Industry and its ability to
meet future U.S. refined product needs.
NES provides for increased production of oil reserves from existing fields through R&D
that could
Lead to the additional production of 20-65 billion barrels.
Improve oil recovery in underdeveloped reservoirs.
Reduce well abandonment.
The NES promotes removal of regulatory and other barriers that impede:
Transfer of horizontal drilling technology to producers.
Drilling of horizontal.
Development of 5 major Alaskan fields containing up to 1 billion barrels of oll.
02/14/91
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DRAFT
FEB 14 1991
THE IMPORTANCE OF COAL TO THE NATIONAL ENERGY STRATEGY (NES)
Coal, which currently provides about one-fourth of our nation's energy needs, is also
our most abundant fossil energy resource. The energy contained In U.S. coal
exceeds that of all the oil in Saudia Arabia, Kuwalt, Iraq, Iran, and Libya combined. In
1989, 86 percent of U.S. coal consumption was for electricity generation. Coal
accounted for 55 percent of total domestic electricity generation.
The NES contains measures designed to ensure that coal can continue to be a stable
and economic energy resource, while meeting our national objective of increased
environmental quality. The NES also promotes the export of U.S. coal and coal
technologies.
The NES supports our continued ability to produce coal at competitive prices while
complying with all environmental regulations.
Continues the strict enforcement of existing regulations governing coal mining,
land reclamation and mine safety.
Maintains the Federal Coal Leasing Program to ensure the timely use of federal
coal lands.
Improves mine safety and productivity by implementing productivity-based
safety standards, where appropriate.
The NES promotes the continued, and expanded, use of coal in compliance with all
evolving environmental standards.
Promotes commercialization of advanced Clean Coal Technologies through the
Clean Coal Technology Demonstration Program.
Removes barriers to the construction of coal slurry pipelines.
Promotes a regulatory environment which will reduce the risks of deploying new
clean coal technologies.
Addresses global climate change concerns through the development of high-
efficiency coal technologies that reduce CO₂ emissions.
The NES promotes the export of U.S. coal and coal technologies,
Enhances the visibility of U.S. firms by creation of a coal technology export
clearinghouse, and establishing a closer liaison with U.S. embassies.
Improves coordination among U.S. agencies to support exports.
Facilitates financing of export projects, and encourages the use of export
trading companies.
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014
DRAFT
THE IMPORTANCE OF NATURAL GAS TO THE
NATIONAL ENERGY STRATEGY (NES)
FEB 14 1991
Natural gas is domestically abundant and clean burning. It currently provides nearly
one-fourth of the energy consumed In the United States. The NES will remove
impediments that are presently preventing natural gas from better serving American
consumers.
Natural gas consumption Is projected to increase from 18.4 Tcf in 1990 to about 24.2
Tcf in 2000, partially in response to NES initiatives.
The NES will promote an efficient natural gas market by:
Expediting the building of new pipelines.
Eliminating rigid and unnecessary regulation.
Improving access for third parties to pipeline transportation and other services.
Removing regulatory barriers to international natural gas trade.
The NES enhances domestic production by supporting:
Exploration and development in some currently restricted areas.
Research and development to promote technological improvements in natural
gas exploration and production.
President Bush's recently enacted natural gas production tax incentives.
Actions to better Inform the public with regard to the adequacy of the natural
gas resource base.
Increased use of natural gas will:
Help the environment because natural gas emits fewer pollutants than other
fossil fuels.
Promote energy security by diversifying the energy supply mix and reducing the
need for oll imports.
Provide an alternative fuel source In the generation of electricity and for
vehicles in fleets.
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015
FRAFT
1991
THE IMPORTANCE OF NUCLEAR POWER TO THE NATIONAL ENERGY
STRATEGY (NES)
Even with aggressive conservation, the United States will need 200,000 MW of new
installed generating capacity by the year 2010 to meet growing electricity demand.
There are substantial benefits to producers and consumers alike by keeping all
electricity supply options open.
Nuclear power presently provides 20 percent of our electricity. Without NES, nuclear
power would drop below 10 percent of electricity production by 2015 and virtually
cease by 2030. With the NES, nuclear power's contribution to electric generation
could grow from today's levels.
NES has established strategic objectives for revitalizing nuclear power and target
dates for meeting those objectives.
Certify four standardized Advanced Light Water Reactor designs with enhanced
safety features by 1995, so that a plant can begin operating by 2000.
Continue R&D on Advanced Reactors (i.e. Advanced Liquid Metal Reactor and
Modular High Temperature Gas Reactor) with special features that could be
Important in post-2000 period.
Set attainable milestones for implementing nuclear waste management
solutions.
NES shows that Government is willing to support the industry and share costs of
developing and certifying new nuclear plant designs.
Programs to demonstrate provisions of NRC's new license reform rule, which
includes early site permits and certification of new reactor designs.
DOE and industry co-funding a program to produce standardized designs.
NES provides for the introduction of legislation to improve the nuclear plant licensing
process.
Seeks stable and predictable licensing process, while retaining public
participation and strong emphasis on safety.