BPC lists objectives for maintaining the US energy resurgence

The US should pursue a diverse energy portfolio, improve the economy’s economic productivity, accelerate innovation and technology improvements across the energy sector, and improve energy policy governance and accountability, the Bipartisan Policy Center said in a new report.

“This report is proof that people with strong differences can develop a consensus plan to advance national energy policy,” said BPC Pres. Jason S. Grumet. “While Congress is not in a particularly collaborative mood, energy policy has often been a source of bipartisan agreement.”

Grumet said, “Recent achievements in production, efficiency, and advanced technologies create an opportunity for Congress to legislate from a position of national strength.” The detailed recommendations “are designed to provide impetus for a serious legislative effort,” he said.

“We should take advantage of the unbelievable resurgence of the oil and gas industry in this country,” suggested former US Sen. Byron L. Dorgan (D-ND), co-chairman with former US Senate Majority Leader Trent Lott (R-Miss.) of BPC’s Strategic Energy Policy Initiative.

Dorgan noted that 5 years ago, while serving on the Energy and Natural Resources Committee, he asked the US Geological Survey to complete its research on the crude oil potential of the Bakken shale in North Dakota and Montana, and held a press conference about it with the US Department of the Interior agency.

‘Only the beginning’

“Everyone knows what has happened since, and it was only the beginning of a broader domestic oil and gas revival,” Dorgan said. “But we also need to pursue alternatives and continue making impressive gains in efficiency.”

Lorr added, “I think we’ve produced a product that will be useful to everyone who’s interested in energy, but we’re not going to stop here. We plan to discuss this with the media and meet with members of Congress.”

He also urged the Senate’s current leadership—Majority Leader Harry M. Reid (D-Nev.) and Ranking Minority Member Mitch McConnell (R-Ky.)—to concentrate more on energy bills that could significantly improve the national economic recovery “and quit picking fights over issues where there’s no chance for agreement.” He said, “The idea is to produce something that would be good for the country. It starts by taking one good step, and then moving on to the next one.”

Some of the more than 50 recommendations under the four broad objectives involve oil and gas more directly than others. Under pursuit of a diverse energy portfolio, for example, the first recommendation is to expand production of domestic oil and gas resources while improving the environmental performance of shale oil and gas development.

Others call for more research, development, and deployment of power generation and transportation fuel alternatives, carbon capture and storage technologies, and an improved nuclear power structure.

Two more already have strong oil and gas industry support: evaluating training needs for a skilled energy workforce, and avoiding international energy trade restrictions such as calls to limit liquefied natural gas exports.

Tax provision review

The final recommendation under this objective—“reviewing the full range of energy tax expenditures and developing a reasonable phase-out plan for those…that constitute subsides for mature fuels and technologies”—is already controversial. The Obama administration has said that several federal tax provisions, which the oil and gas industry considers essential to recover ongoing necessary business expenses, are actually subsidies which have outlived their purpose.

Possibly the report’s harshest critique is its assessment of federal energy policymaking. “The executive branch is not well-equipped to develop, coordinate, and implement national energy policy,” its summary said. “Energy-related responsibilities fall under at least 20 distinct federal agencies and departments. This has increased the potential for failure in coordination, incompatible agendas, duplication, and inconsistency across the federal complex.”

Retired US Marine Corps Gen. James M. Jones, who chairs BPC’s Energy Policy group, said, “We have not produced a coherent US energy policy in 50 years. This report offers suggestions for one. Implementing them will require strong leadership to reconcile more oil and gas production, better environmental management, pursuit of alternative and renewable energy technologies, and implementation of a good trade policy.”

The report recommends establishing a National Energy Security Council to develop a high-level national energy strategy and review it every four years. It would be paired with a well-coordinated implementation plan which could respond to often unpredictable economic, political, and technological conditions, and regularly track and report progress.

Energy secretary’s role

“I think if we’re going to reach our potential, we need to be better organized,” said Jones. “For example, the US energy secretary needs to be designated the single point of contact, as our report suggests.”

Lott said, “Our governance recommendations could be accomplished to a great extent by the president. Congress might also need to be involved on some aspects of it.” He noted that Senate Energy and Natural Resources Committee Ranking Minority Member Lisa Murkowski’s (R-Alas.) 20/20 plan includes an advanced energy trust fund. “My immediate question is where we’d get the revenue to fund that,” he said.

Former US Environmental Protection Agency Administrator William K. Reilly, who chairs BPC’s Energy and Environment committee, said the Chinese probably better recognize the significance of the US oil and gas renaissance than most Americans.

“But there’s one other aspect that’s more of a sleeper,” he continued. “Efficiency has contributed more at the energy source than coal, oil, gas, nuclear and renewables combined. The number of coal-fired power plants which have been avoided as a result of these energy productivity gains numbers in the hundreds.

Further energy efficiency improvements represent a very large opportunity, he maintained. “The National Academy of Sciences estimates that in the next 100 years, it will be possible to undertake all the building this country needs without materially increasing its energy consumption,” Reilly said. “That is a profoundly tantalizing and inviting possibility, and it does not involve dramatic technology breakthroughs.”

Contact Nick Snow at nicks@pennwell.com.

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