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I
n his second week in office, President America in the year 2001 faces the
George W. Bush established the Na most serious energy shortage since the oil
tional Energy Policy Development embargoes of the 1970s. The effects are al
Group, directing it to “develop a ready being felt nationwide. Many families
national energy policy designed to face energy bills two to three times higher
help the private sector, and, as necessary than they were a year ago. Millions of
and appropriate, State and local govern Americans find themselves dealing with
ments, promote dependable, affordable, rolling blackouts or brownouts; some em
and environmentally sound production and ployers must lay off workers or curtail pro
distribution of energy for the future.” This duction to absorb the rising cost of energy.
Overview sets forth the National Energy Drivers across America are paying higher
Policy Development (NEPD) Group’s find and higher gasoline prices.
ings and key recommendations for a Na Californians have felt these problems
tional Energy Policy. most acutely. California actually began the
1990s with a surplus of electricity generat
Figure 1 ing capacity. Yet despite an economic
Growth in U.S. Energy Consumption boom, a rapidly growing population, and a
Is Outpacing Production corresponding increase in energy needs,
(Quadrillion Btus)
140
California did not add a single new major
Energy Consumption electric power plant during the 1990s. The
result is a demand for electricity that
120
greatly succeeds the amount available.
A fundamental imbalance between
100 supply and demand defines our nation’s en
Projected Shortfall
ergy crisis. As the chart illustrates, if energy
80 production increases at the same rate as
during the last decade our projected energy
Energy Production at 1990-2000 Growth Rates
needs will far outstrip expected levels of
60
production.
This imbalance, if allowed to con-
40 tinue, will inevitably undermine our
economy, our standard of living, and our
20 national security. But it is not beyond our
power to correct. America leads the world
0
in scientific achievement, technical skill,
2000 2005 2010 2015 2020
and entrepreneurial drive. Within our coun
Over the next 20 years, growth in U.S. energy consumption will increasingly try are abundant natural resources, unri
outpace U.S. energy production, if production only grows at the rate of the last
10 years. valed technology, and unlimited human cre
________ ativity. With forward-looking leadership
Sources: Sandia National Laboratories and U.S. Department of Energy, Energy Information and sensible policies, we can meet our fu
Administration.
ture energy demands and promote energy buildings and automobiles. New technology “America must
conservation, and do so in environmentally allows us to go about our lives and work have an energy
responsible ways that set a standard for the with less cost, less effort, and less burden on
world. the natural environment. While such ad policy that plans
vances cannot alone solve America’s energy for the future,
The Challenge problems, they can and will continue to play but meets the
an important role in our energy future.
America’s energy challenge begins
The second challenge is to repair and
needs of today.
with our expanding economy, growing
population, and rising standard of living. expand our energy infrastructure. Our cur I believe we
Our prosperity and way of life are sustained rent, outdated network of electric genera can develop
by energy use. America has the technologi tors, transmission lines, pipelines, and refin our natural
cal know-how and environmentally sound eries that convert raw materials into usable
fuel has been allowed to deteriorate. Oil resources and
21st century technologies needed to meet
the principal energy challenges we face: pipelines and refining capacity are in need protect our
promoting energy conservation, repairing of repair and expansion. Not a single major environment.”
and modernizing our energy infrastructure, oil refinery has been built in the United
and increasing our energy supplies in ways States in nearly a generation, causing the
— President
that protect and improve the environment. kind of bottlenecks that lead to sudden George W. Bush
Meeting each of these challenges is critical spikes in the price of gasoline. Natural gas
to expanding our economy, meeting the distribution, likewise, is hindered by an ag
needs of a growing population, and raising ing and inadequate network of pipelines. To
the American standard of living. match supply and demand will require some
We are already working to meet the 38,000 miles of new gas pipelines, along
first challenge: using energy more wisely. with 255,000 miles of distribution lines.
Dramatic technological advances in energy Similarly, an antiquated and inadequate
efficiency have enabled us to make great transmission grid prevents us from routing
strides in conservation, from the operation electricity over long distances and thereby
of farms and factories to the construction of avoiding regional blackouts, such as
California’s.
Overview • Reliable, Affordable, and Environmentally Sound Energy for America’s Future ix
Increasing energy supplies while pro Increases on this scale will require
tecting the environment is the third chal preparation and action today. Yet America
lenge. Even with successful conservation has not been bringing on line the necessary
efforts, America will need more energy. supplies and infrastructure.
Renewable and alternative fuels offer Extraordinary advances in technology
hope for America’s energy future. But they have transformed energy exploration and
supply only a small fraction of present en production. Yet we produce 39 percent less
ergy needs. The day they fulfill the bulk of oil today than we did in 1970, leaving us
our needs is still years away. Until that day ever more reliant on foreign suppliers. On
comes, we must continue meeting the our present course, America 20 years from
nation’s energy requirements by the means now will import nearly two of every three
available to us. barrels of oil – a condition of increased de
Estimates indicate that over the next pendency on foreign powers that do not al
20 years, U.S. oil consumption will increase ways have America’s interests at heart. Our
by 33 percent, natural gas consumption by increasing demand for natural gas – one of
well over 50 percent, and demand for elec the cleanest forms of energy – far exceeds
tricity will rise by 45 percent. If America’s the current rate of production. We should
energy production grows at the same rate reconsider any regulatory restrictions that
as it did in the 1990s we will face an ever-in do not take technological advances into ac
creasing gap. count.
Figure 2
Figure 3
U.S. Oil Consumption Will Continue to U.S. Natural Gas Consumption Is Outpacing Production
Exceed Production
(Trillion Cubic Feet)
(Millions of Barrels per Day)
30 40
30
20 25
Projected Shortfall
Projected Shortfall
20
Natural Gas Production at 1990-2000 Growth Rates
15
15
10 10
2000 2005 2010 2015 2020 Over the next 20 years, U.S. natural gas consumption will grow by over 50 percent.
Over the next 20 years, U.S. oil consumption will grow by over 6 million barrels At the same time, U.S. natural gas production will grow by only 14 percent, if it
per day. If U.S. oil production follows the same historical pattern of the last 10 grows at the rate of the last 10 years.
years, it will decline by 1.5 million barrels per day. To meet U.S. oil demand, oil ________
and product imports would have to grow by a combined 7.5 million barrels per Sources: Sandia National Laboratories and U.S. Department of Energy, Energy Information
day. In 2020, U.S. oil production would supply less than 30 percent of U.S. oil Administration.
needs. erview chart 1
________
Sources: Sandia National Laboratories and U.S. Department of Energy,
Energy Information Administration.
160
• The Policy will advance new, envi
ronmentally friendly technologies
140 Energy Use at
to increase energy supplies and en
Constant 1972 E/GDP
courage cleaner, more efficient en
120
ergy use.
40
Applying these principles, we urge ac
tion to meet five specific national goals.
20
America must modernize conservation, 0
modernize our energy infrastructure, in
1950 60 70 80 90 00 10 20
crease energy supplies, accelerate the pro
Improvements in energy efficiency since the 1970s have had a major impact in meet
tection and improvement of the environ ing national energy needs relative to new supply. If the intensity of U.S. energy use
ment, and increase our nation’s energy se had remained constant since 1972, consumption would have been about 70 quadril
curity. lion Btus (74 percent) higher in 1999 than it actually was.
________
Overview • Reliable, Affordable, and Environmentally Sound Energy for America’s Future xi
did in 1972, while new refrigerators require with due consideration to the National
just one-third the electricity they did 30 Academy of Sciences study of CAFE
years ago. As a result, since 1973, the U.S. standards to be released in July, 2001.
economy has grown by 126 percent, while
energy use has increased by only 30 per Modernize Our Energy Infrastructure
cent. In the 1990s alone, manufacturing The energy we use passes through a
output expanded by 41 percent, while in vast nationwide network of generating fa
dustrial electricity consumption grew by cilities, transmission lines, pipelines, and re
only 11 percent. We must build on this fineries that converts raw resources into us
progress and strengthen America’s commit able fuel and power. That system is deterio
ment to energy efficiency and conservation. rating, and is now strained to capacity.
The National Energy Policy builds One reason for this is government
on our nation’s successful track record regulation, often excessive and redundant.
and will promote further improvements Regulation is needed in such a complex
in the productive and efficient use of field, but it has become overly burdensome.
energy. This report includes recom Regulatory hurdles, delays in issuing per
mendations to: mits, and economic uncertainty are limiting
• Direct federal agencies to take appro investment in new facilities, making our en
priate actions to responsibly conserve ergy markets more vulnerable to transmis
energy use at their facilities, espe sion bottlenecks, price spikes and supply
cially during periods of peak demand disruptions. America needs more environ
in regions where electricity shortages mentally-sound energy projects to connect
are possible, and to report to the supply sources to growing markets and to
President on actions taken. deliver energy to homes and business.
• Increase funding for renewable en To reduce the incidence of electricity
ergy and energy efficiency research blackouts, we must greatly enhance our
and development programs that are ability to transmit electric power between
performance-based and cost-shared. geographic regions, that is, sending power
“For the electric • Create an income tax credit for the to where it is needed from where it is pro
ity we need, we purchase of hybrid and fuel cell duced. Most of America’s transmission
must be ambi vehicles to promote fuel-efficient lines, substations, and transformers were
vehicles. built when utilities were tightly regulated
tious. Transmis
• Extend the Department of Energy’s and provided service only within their as
sion grids stand “Energy Star” efficiency program to signed regions. The system is simply un
in need of repair, include schools, retail buildings, equipped for large-scale swapping of power
upgrading, and health care facilities, and homes and in the highly competitive market of the 21st
expansion. . . . If extend the “Energy Star” labeling pro century.
gram to additional products and appli The National Energy Policy will
we put these con ances. modernize and expand our energy infra
nections in place, • Fund the federal government’s Intelli structure in order to ensure that en
we’ll go a long gent Transportation Systems program, ergy supplies can be safely, reliably,
way toward the fuel cell powered transit bus pro and affordably transported to homes
gram, and the Clean Buses program. and businesses. This report includes
avoiding future
• Provide a tax incentive and streamline recommendations to:
blackouts.” permitting to accelerate the develop • Direct agencies to improve pipeline
ment of clean Combined Heat and safety and expedite pipeline permit
— Vice President Power technology. ting.
Richard B. Cheney • Direct the Secretary of Transportation • Issue an Executive Order directing
to review and provide recommenda federal agencies to expedite permits
tions on establishing Corporate Aver and coordinate federal, state, and local
age Fuel Economy (CAFE) standards actions necessary for energy-related
project approvals on a national basis
Overview • Reliable, Affordable, and Environmentally Sound Energy for America’s Future xiii
ronmentally friendly exploration. Drilling hydropower relicensing process with
pads are 80 percent smaller than a generation proper regard given to environmental
ago. High-tech drilling allows us to access factors.
supplies five to six miles away from a single • Provide for the safe expansion of
compact drilling site, leaving sensitive wet nuclear energy by establishing a national
lands and wildlife habitats undisturbed. Yet repository for nuclear waste, and by
the current regulatory structure fails to take streamlining the licensing of nuclear
sufficient account of these extraordinary ad power plants.
vances, excessively restricting the environ
mentally safe production of energy from Accelerate Protection and Improvement of the
many known sources. Environment
Our policy will increase and diver America’s commitment to environmen
sify our nation’s sources of traditional tal protection runs deep. We are all aware of
and alternative fuels in order to furnish past excesses in our use of the natural world
families and businesses with reliable and and its resources. No one wishes to see them
affordable energy, to enhance national repeated. In the 21st century, the ethic of
security, and to improve the environ good stewardship is well established in
ment. This report includes recommenda American life and law.
tions to: We do not accept the false choice be
• Issue an Executive Order directing all tween environmental protection and energy
federal agencies to include in any regula production. An integrated approach to policy
tory action that could significantly and can yield a cleaner environment, a stronger
adversely affect energy supplies a de economy, and a sufficient supply of energy
tailed statement on the energy impact for our future. The primary reason for that
of the proposed action. has been steady advances in the technology
• Open a small fraction of the Arctic Na of locating, producing, and using energy.
tional Wildlife Refuge to environmentally Since 1970, emissions of key air emissions
regulated exploration and production us are down 31 percent. Cars today emit 85 per
ing leading-edge technology. Examine cent less carbon monoxide than 30 years ago.
the potential for the regulated increase Lead emissions are down 90 percent. Lead
“We will insist in oil and natural gas development on levels in ambient air today are 98 percent
on protecting other federal lands. lower than they were in 1970. America is us
• Earmark $1.2 billion of bid bonuses from ing more, and polluting less.
and enhancing the environmentally responsible leasing One of the factors harming the environ
the environment, of ANWR to fund research into alterna ment today is the very lack of a comprehen
showing consid tive and renewable energy resources – sive, long-term national energy policy. States
eration for the including wind, solar, biomass, and geo confronting blackouts must take desperate
thermal. measures, often at the expense of environ
air and natural
• Enact legislation to expand existing al mental standards, requesting waivers of envi
lands and water ternative fuels tax incentives to include ronmental rules, and delaying the implemen
sheds of our landfills that capture methane gas emis tation of anti-pollution efforts. Shortfalls in
country.” sions for electricity generation and to electricity generating capacity and short
electricity produced from wind and bio sighted policies have blocked construction of
— Vice President mass. Extend the number of eligible bio new, cleaner plants, leaving no choice but to
Richard B. Cheney mass sources to include forest-related rely on older, inefficient plants to meet de
sources, agricultural sources, and cer mand. The increased use of emergency power
tain urban sources. sources, such as diesel generators, results in
• Provide $2 billion over 10 years to fund greater air pollution.
clean coal technology research and a New anti-pollution technologies hold
new credit for electricity produced from great promise for the environment. The same
biomass co-fired with coal. can be said of 21st century power generators
• Direct federal agencies to streamline the that must soon replace older models; signifi
Overview • Reliable, Affordable, and Environmentally Sound Energy for America’s Future xv