MEMORANDUM
FROM: BC'04 POLICY DEPARTMENT
Introduction
John Kerry's record on energy is one of advocating policies that would raise energy prices across the board for working families and businesses, weaken the economy, lower disposable incomes, and cause massive job losses in key industries, as well as making America more dependent on foreign sources of energy. His current efforts to fund renewable energy and conservation follow in large part exactly what President Bush is already doing, and echoes the President's energy plan that Kerry worked to block.
ENERGY BILL
The comprehensive, bipartisan energy bill died in the Senate after receiving 58 votes, 2 short of the 60 needed to clear a procedural hurdle. The bill passed the House with the support of 46 Democrats. Both Sen. Kerry and Sen. Edwards missed the vote, and both said they would have opposed the bill. Here's what they oppose:
- Reauthorization of the production tax credit for wind energy.
- Establishing a renewable fuels program to use 5 billion gallons of ethanol in gasoline by 2012.
- Providing incentives to increase environmentally sound domestic production of oil and natural gas.
- Authorizing construction of a natural gas pipeline to deliver natural gas from Alaska.
- Authorizing $200 million annually from 2004 through 2012 for clean coal technology.
- Setting a program goal to put hydrogen-powered vehicles on the road by 2020.
- Offering tax credits for the purchase of hybrid and alternative-fuel vehicles.
- Establishing mandatory reliability standards for the electricity grid.
RENEWABLES
As part of his plan to create "energy independence," John Kerry would mandate that 20 percent of U.S. electricity come from renewable sources by 2020. Yet John Kerry won't endorse a major wind energy project on Nantucket Sound.
- The wind farm project, sponsored by Cape Wind Associates, would construct 420 megawatts of wind capacity, enough to power more than half a million homes. As Kerry said: "Kerry insisted it's proper to let the environmental review continue and not to short-circuit public comment. 'I don't think it is appropriate for me (to weigh in). I think the most appropriate thing to do is listen to the people on the Cape, listen to the people who have concerns, weigh the arguments,' he said." (Kevin Landrigan, "Kerry Offers Ways to Fight Pollution, The Telegraph [Nashua, N.H.] 4/23/03)
"A key priority," according to Kerry, "will be ensuring that the federal Production Tax Credit (PTC) for wind and biomass is applicable to the full array of renewable technologies, since the unpredictability of frequent short term extensions of the PTC has greatly hindered investment and expansion of the industry in the United States." (A Plan To Explore And Develop New Energy Sources, Kerry-Edwards Website, http://www.johnkerry.com/issues/energy/sources.html, Accessed 8/6/04)
- Kerry blocked last year's energy bill that includes a critical extension of the Production Tax Credit. Without the extension, the wind industry is suffering severe economic setbacks. "Last week, the Wind Energy Association announced the loss of more than 2,000 jobs in recent months because of the expiration of the wind energy production tax credit. One project delayed until S. 2095 passes is a 310-megawatt wind farm in north-central Iowa. This $323 million wind farm will be one of the world's largest land-based wind projects." (Senate Energy Committee, March 3, 2004)
Moreover, here are some of the renewable provisions (in addition to the 5 billion gallon ethanol standard) Kerry refused to support in the comprehensive energy bill:
- The conference report requires that, of the total amount of electric energy purchased by the Federal government, not less than 3 percent must be produced from renewable energy in fiscal years 2005-2007, 5 percent in fiscal years 2008-2010, and 7.5 percent in fiscal year 2011 and each year thereafter.
- The report authorizes the General Services Administrator to establish a photovoltaic energy commercialization program toward achieving the goal of installing solar energy systems on 20,000 federal buildings by 2010.
- The bill encourages the promotion, development, and expansion of markets to use biomass removed during treatment of Federal and Indian lands to reduce hazardous fuels and the risk from disease or insect infestation.
- Provides royalty relief for geothermal uses, including on-site electricity generation. The report also amends geothermal energy leasing provisions to provide for a competitive leasing system.
COAL
As the National Coal Council observed, the "continued use of coal supports the goal of reducing our nation's dependence on imported energy." Coal-based electricity is "strategically critical to the U.S., providing economic stability and security to our citizens." The U.S. currently has over one-quarter of the world's recoverable coal, more than Russia and over twice that of China.
John Kerry says he wants to ensure that coal is used "more efficiently and cleanly" and "fully integrated into the New Energy Economy." But Kerry's record is decidedly anti-coal, and if legislation he supports became law, coal use would decline dramatically and nearly eliminate one of America's most critical energy resources.
- Last year, Kerry voted for the Climate Stewardship Act, which, according to the independent Energy Information Administration, would reduce coal-based electricity from over 50 percent today to 11 percent, or an 80 percent reduction.
- Kerry also is a cosponsor of the Clean Power Act, which, according to the Energy Information Administration, cuts coal-based electricity by 55 percent. And further, under the bill, "new coal plant additions are much lower while retirements are higher compared to the reference case," while "new coal capacity additions through 2025 amount to only 3 gigawatts." Without the bill, 74 gigawatts of capacity are expected to be built by 2025.
John Kerry's professed support for clean coal technologies rings hollow, especially considering he opposes President Bush's New Source Review reforms, which would encourage installation of those technologies.
- Kerry joined Sen. Hillary Clinton's anti-NSR reform legal brief.
- Kerry voted last year for John Edwards' amendment to delay President Bush's reforms and vows to "immediately reverse the Bush-Cheney rollbacks of the Nation's Clean Air Program."
- Most critically, returning to the Clinton NSR program, as Kerry favors, would thwart installation of clean coal technologies. According to the National Coal Council, uncertainty over the Clinton NSR policy "has had a direct and chilling effect on all maintenance and efficiency improvements and clean coal technology installations at existing power plants." (National Coal Council, "Increasing Electricity Availability in the Short Term," 5/01)
Kerry also opposed the energy bill that included several provisions promoting development of clean coal technologies.
- Authorizes $200 million annually for fiscal years 2004 through 2012 for clean coal research and coal-based gasification technologies.
- Authorizes funding to the Department of Energy for loans, and authorizes the Department to make loan guarantees for a variety of clean coal projects around the country, including coal gasification; integrated gasification combined cycle technology; petroleum coke gasification; integrated coal/renewable energy systems; and electron scrubbing demonstration.
NATURAL GAS
As a result of Kerry's anti-coal policies, coal will play a minimal role at best in America's energy future, and natural gas will have to make up the difference. Notably, Kerry's command-and-control mandates will increase demand for natural gas beyond increases already projected by independent analysts (50 percent over the next two decades, according to EIA), placing severe strains on domestic gas supplies. And because John Kerry has no meaningful plan to expand domestic natural gas supplies, he would force the U.S. to import more natural gas from foreign sources.
- According to EIA's analysis, the Climate Stewardship Act would force the U.S. to import an additional 2 trillion cubic feet of natural gas by 2020 (28 percent increase) and 3 trillion cubic feet (38 percent) by 2025. This is equivalent to building roughly 10 new liquefied natural gas terminals (LNG).
- LNG will play an important role in supplying America's natural gas needs. As Federal Reserve Chairman Alan Greenspan noted during the July 20th Senate Banking Committee hearing, the U.S. "must markedly increase" its supplies of LNG. (Senate Banking Committee Hearing, 7/20/04)
- But John Kerry barely mentions LNG in his energy plan. In short, John Kerry's policies will force America to import more natural gas (above increases already anticipated) yet Kerry has no specific plan to develop the capacity and infrastructure to receive it.
Kerry supports construction of the Alaska natural gas pipeline, which was in the energy bill he opposed. Also, he supports developing existing leases in the central and western Gulf. But developing those areas won't suffice to meet growing demand.
- According to the National Petroleum Council's 2003 study on natural gas, in order to meet demand, the U.S. must increase natural gas production in the Rocky Mountains and the deepwater Gulf of Mexico. Kerry ignores both.
- The 1995 Deepwater Royalty Relief Act has been extremely successful promoting activity in the deepwater Gulf, yet Kerry voted against it.
- Moreover, a sizeable amount of the resource base (69 tcf, according to the NPC) in the Rockies is either off-limits or under tight restrictions. Does John Kerry support removing obstacles to production in these areas?
ANWR
John Kerry boasts that he blocked opening just 2,000 acres of ANWR's coastal plain to energy development. Here's what he denied America:
- ANWR holds a mean estimate of 10 billion barrels of recoverable oil. USGS estimates say there's a chance it holds 16 billion barrels. That's enough oil to replace Saudi imports for over 20 years.
REFINERIES
No new refinery has been built in the United States since 1976 and prospects for building new refineries are bleak at best. According to John Kilduff, senior vice president of Energy Risk Management Group, "Besides the challenging economics, permitting issues appear to be formidable and make it unlikely any new refineries will be built in the United States in the future." (Senate Energy and Natural Resources Committee, Hearing: "What Drives Fuel Prices," 6/15/04).
- President Bush proposed improvements to the New Source Review program that would provide certainty and encourage environmentally sound refinery capacity expansions.
- According to Bob Slaughter, president of the National Petrochemical and Refiners Association, President Bush's NSR reforms "should facilitate new domestic refining capacity expansions" and "encourage the installation of more technologically-advanced equipment and provide greater operational flexibility while maintaining a facility's environmental performance." (Bob Slaughter, Senate Testimony, "Environmental Regulations on Refining," Committee on Environment and Public Works, 5/12/04)
- John Kerry voted against bipartisan NSR reform last year and is supporting a lawsuit blocking the President's reforms in court. ("Clean Air: Kerry Joins Senate Colleagues in Court Challenge of Bush NSR Reforms," Greenwire, 5/19/04)
- John Kerry's support for Kyoto-style regulations puts America's refining industry at risk. According to a study by the Department of Energy's Argonne National Lab during the Clinton Administration, climate change policies "that increase costs" will send refining operations overseas and "threaten existing refineries." (Argonne National Laboratory Study: "The Impact of Potential Climate Change Commitments on Energy Intensive Industries," July 1997, summary by Unions for Jobs and the Environment)
HYDROGEN
John Kerry will create a new "Hydrogen Institute" to unite scientists and researchers to develop a New Energy Economy by 2020. But Kerry's plans on hydrogen simply ape what President Bush is already doing.
- President Bush is leading a federal effort to make hydrogen technologies a reality. Last year, during the State of the Union address, President Bush unveiled the Hydrogen Fuel Initiative, which will invest $1.2 billion to bring hydrogen and fuel cell technologies from the laboratory to the showroom. In 2002, President Bush launched FreedomCar, a cooperative effort between the federal government and private industry to develop hydrogen-fuel cell vehicles. In total, President Bush has proposed $1.7 billion over the next five years to develop hydrogen-powered fuel cells, hydrogen infrastructure and advanced automotive technologies.
- As part of the President's Hydrogen Research Initiative, Energy Secretary Spencer Abraham recently announced in Detroit $350 million in nationwide funding for science and research projects to establish a hydrogen economy. (Department Of Energy Press Release, 4/27/04)
Again, Kerry opposed the energy bill that included hydrogen measures he professes to support:
- Directs the Department of Energy to develop a coordinated plan to launch a hydrogen energy research program, which will address production of hydrogen from diverse energy sources; use of hydrogen for commercial, industrial, and residential electric power generation; safe delivery of hydrogen or hydrogen-carrier fuels; advanced vehicle technologies; storage of hydrogen and hydrogen-carrier fuels; development of safe, durable, affordable, and efficient fuel cells; and so on.
- The report sets a program goal to put a hydrogen-powered automobile on the road by 2020 along with necessary infrastructure to provide for safe delivery of hydrogen fuels.
- It establishes an interagency task force on hydrogen, as well as an outside advisory committee. The report authorizes $2.15 billion for the program for fiscal years 2004 through 2008.
NUCLEAR POWER
Nuclear power currently fuels 20 percent of the nation's electricity. It provides an essential, emissions-free source of energy, and will play an important role in meeting America's future energy needs.
- Kerry doesn't address the promise of nuclear power, and opposes establishing a waste repository at Yucca Mountain. Resolving this issue in a timely fashion is critical for the continued viability of the industry, yet Kerry wants to start over, throwing out 20 years of research and study on Yucca Mountain.
- According to Moody's Investment, "One of the greatest impediments to new construction is the lack of a clear long-term disposal option for nuclear waste. Nuclear plants already in operation and any prospective new plants both require a credible nuclear waste disposal program. In the long run, this necessitates the operation of a permanent spent nuclear fuel storage facility." (Moody's Investment, "Standardized Designs for Nuclear Plants Beneficial for U.S. Power Industry, But Waste Disposal Is An Unresolved Problem," December 2003)
- Top officials in the European Union are agitating for increased use of nuclear power. Why? To meet the requirements of the Kyoto Protocol. "Last week Tony Blair, the Prime Minister, indicated that Britain might have to build a new generation of nuclear power stations. Mr Blair said that the aim would be to reduce carbon dioxide emissions - as required by the Kyoto convention - produced by other forms of electricity generation and declared that the only obstacles to nuclear power were the issues of safety and cost" ("Nobel prize-winner's reactor offers safer, cleaner nuclear power," Sunday Telegraph, 7/11/04).
- How does Kerry expect to address climate change - which he says he will, even calling for "reengaging the international community" on Kyoto - without more robust support for nuclear power?
FUEL EFFICIENCY
John Kerry proposes $10 billion over ten years to the domestic auto industry to retool production plants to build the next generation of fuel-efficient vehicles. Yet the industry is already building hybrid vehicles, which are garnering considerable consumer interest.
- "At Ford's annual meeting Thursday, Bill Ford said the company is 'pouring enormous resources' into developing more hybrids and other alternative fuel vehicles.' Ford Motor won't start selling its Ford Escape Hybrid sport-utility vehicle until August. And it plans to sell only 20,000 a year. But it already has 30,000 potential buyers." ("Hybrid SUV Getting Big Response," USA Today, 5/13/04)
John Kerry proposed offering up to a $5,000 tax credit to buy hybrid vehicles. Once again, he's a step behind.
- President Bush, in his FY 2005 budget, offers a $4,000 tax credit for the purchase of a hybrid car, while the energy bill, which Kerry blocked, includes tax credits for hybrid and alternative vehicles.
Kerry has backed away from his CAFE plan, which would raise fuel economy standards to 36 mpg by 2015. In fact, Kerry has removed that specific target from his website, probably because it was roundly opposed by auto manufacturers and the United Auto Workers.
- According to the Energy Information Administration, Kerry's CAFE bill destroys 450,000 jobs and costs the economy $170 billion.
