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Summary of Conferences on Energy Issues (3-14-05)

  • March 10, 2005: Senate Energy and Natural Resources Committee Conference on Coal
  • January 25, 2005: Senate Energy and Natural Resources Committee Conference about Proposed Solutions to the Predicted U.S. Shortage of Natural Gas

Senate Energy and Natural Resources Committee
Conference on Coal
March 10, 2005

Witnesses
Panel 1: Consol, the Edison Electric Institute, the U.S. Energy Information Administration, the National Commission on Energy Policy, the National Mining Association, the Natural Resources Defense Council the state of Illinois Department of Commerce

Panel 2: Clean Energy Systems, Columbia University, the Florida Municipal Electric Association, Kennecott, the Interstate Mining Compact Commission, the National Commission on Energy Policy, the Natural Resources Defense Council and the Western Organization of Resource Councils.

The Senate Energy and Natural Resources committee organized a conference of 25 groups to consider the most reasonable proposals for U.S. coal production to be included in this year's energy bill. The committee devoted the first panel to future possible scenarios for coal supply and international trends, and the second panel to environmental and regulatory challenges. The third and fourth panels regarding transportation and financial and technological improvements were not heard due to floor votes and will be rescheduled.

At the outset, Alan Beeman from the Energy Information Administration reported that the U.S. faces a 25% increase in coal consumption by 2025, which would translate to an additional 87 GW of added domestic coal capacity. Despite these increases, coal imports would continue to increase under current law, adding to an already substantial energy trade deficit, and providing an impetus for improving U.S. coal generation.

All who were present at the conference recognized that further investments in coal would require utility and mining industries to face challenges posed by climate change and other environmental impacts of coal use. "We all agree that advanced technologies are crucial to the future of coal," remarked John Holdren, co-chair of the National Commission on Energy Policy. In his testimony, Holdren described NCEP's coal proposal, which is included in its bipartisan report: "Ending the Energy Stalemate." In order to reconcile climate change and coal demand, he explained, NCEP recommends that federal coal policy establish a market signal for carbon dioxide control, as in a phased cap-and-trade program, and commit $7 billion in total investments over the next decade to help commercialize coal gasification (IGCC) technologies and carbon sequestration.

Members of the committee tried to pin down the correct timing for instituting mandatory caps on CO2 and committing other investments in a sensitive market. Several industry representatives were concerned that a CO2 cap would slow market interest in coal. But Holdren stressed the importance of immediate U.S. action to establish a price for CO2 and head off the consequences of an international boom in conventional coal-fired power. "Society has a strong interest in bringing clean technology into commercial operation so that development in China and India does not lock in excessively high CO2 emissions," he reasoned. In a similar vein, David Hawkins of the Natural Resources Defense Council insisted that energy policy enacted today must be able to adapt to future policies regarding climate change.

In response to Senator Jeff Bingaman (D-NM) question asking if clean coal technologies are sufficiently mature, panelists agreed there was enough knowledge regarding CO2 storage, and clean emissions plants are being demonstrated successfully in Illinois, as well as a few projects in China. According to Holdren, there is a "very considerable chance" China would follow U.S. leadership, and the major constraint to achieving technological maturity is federal investment.

"It's pretty obvious that we've got to do something about the technology and the cleanup," said Committee Chairman Pete Domenici (R-NM), concerned that coal will be unable to compete with natural gas. However, he warned environmentalists that they would not get very far on climate change by advocating wide-spread zero-emissions plants. "We need something in the middle," he told Hawkins.

-KCA

Senate Energy and Natural Resources Committee
Conference about Proposed Solutions to the Predicted U.S. Shortage of Natural Gas
January 25, 2005

Witnesses
32 invited groups including the Natural Gas Council, Advanced Resources, National Ocean Industries Association, Western Organization of Resource Councils, New Mexico Oil and Gas Association, American Public Gas Association, State of Alaska, National Commission on Energy Policy, Dominion Energy, Center for Liquefied Natural Gas, National Association of Regulatory Utility Commissioners, Federal Energy Regulatory Commission (FERC), State of Louisiana, Interstate Oil and Gas Compact Commission, Instate Natural Gas Association of America, Consumer Federation, Independent Storage, The Wilderness Society, Natural Resources Defense Council, Independent Petroleum Association of America, Domestic Petroleum Council, Calpine, National Association of Regulatory Utility Commissioners, Nuclear Energy Institute, PPM Energy, Harvard University, Coal Utilization Research Council, American Gas Association, American Council for an Energy-Efficient Economy, Committee of Chief Risk Officers, American Electric Powe, Consumers Alliance for Affordable Natural Gas, New York Mercantile Exchange and Natural Gas Council.

On January 25th, Senate Energy & Natural Resources Committee staff invited 32 representatives from industry, environmental groups, and government agencies to discuss 38 policy proposals that would address the growing gap between natural gas supply and demand. The conference was meant to initiate bipartisan discussion and draw attention to rising gas prices before the Senate issues an energy bill draft later this Spring.

The half-day conference involved six panels devoted to policy topics including the expansion of on-shore and off-shore domestic supplies, liquefied natural gas (LNG) siting and safety, infrastructure improvement, environmental concerns, and the use of fuel efficiency and diversification programs.

Representatives from the oil and gas and utilities industries put forth numerous proposals for streamlining the permitting process and expanding domestic production, calling for a re-evaluation of environmental regulations in the face of improved technology. Many proposals sought access to restricted land around the Rocky Mountains, in the outer continental shelf, and expanded production in the Gulf of Mexico. Oil and Gas stakeholders claimed that production could be realized without creating a lasting environmental impact. The Bureau of Land Management (BLM) and USGS reported 85% of the 400 trillion cubic feet (tcf) offshore domestic natural gas supplies and 55% of the 600 TCF onshore supplies would be available with direct action from Congress.

Environmentalists testified that domestic production can be increased without surrendering restricted land and relaxing environmental standards, citing that 88% conventional natural gas resources are already currently available for leasing and development under the BLM onshore program. The continental shelf, they claimed, would simply be "too fragile" to sustain gas operations. Other policy suggestions included a targeted interest in BLM funding to improve land use mitigation and an emphasis on efficiency programs and a national renewable energy portfolio standard. Senator Jeff Bingaman (D-NM) announced a consensus that BLM and the Forest Service should receive more funding to act on drilling applications and monitoring compliance.

Many who supported the development and expansion of natural gas and LNG operations emphasized the need to grant the Federal Energy Regulatory Commission (FERC) full authority over the siting and certification process in order to minimize jurisdictional disputes among government agencies.

Proposals to promote supply diversification and energy conservation received much attention as key components of natural gas policy. A representative from the American Council for and Energy-Efficient Economy (ACEEE) testified that, with supply and demand in tight balance, a small, 4-5% improvement in efficiency could result in a much larger, 25% reduction in gas demand, translating to roughly $100 billion in savings. Among those advocating for improved diversification, coal gasification, synthesis gas, wind and nuclear were top picks for alternative fuel development.

Link for the list of groups who offered proposals and testimony, see http://www.eenews.net/EEDaily/Backissues/images/011205dr2.pdf (subscription required).

-KCA

Sources: Environment and Energy Daily, Senate Energy and Natural Resources Committee press release, conference testimony.

Contributed by Emily Lehr Wallace, AGI Government Affairs Program Staff; Katie Ackerly, 2005 AGI/AAPG Spring Semester Intern

Please send any comments or requests for information to AGI Government Affairs Program.

Last updated on January 27, 2005


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