Side-by-Side Analysis of H.R. 4

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Side-by-Side Analysis of H.R. 4

September 16, 2002 9 min read
Charli Coon
Visiting Fellow in Russian and Eurasian Studies and International Energy Policy

Select each of the following to read a comparison between the House and Senate versions, the Administration's position and The Heritage Foundation's recommendations:

Climate Title X: National Climate Change Policy
Title XI: National GHG Database
Title XIII: Climate Change Science and Technology
Title II/ Subtitle E: Renewable Portfolio Standard (RPS)
Title II: Electricity/Subtitles A, B, C, and D.
Title VIII/Subtitle A, Sec. 820: Renewable Content of Motor Vehicle Fuel (Ethanol)
Arctic National Wildlife Refuge (ANWR)

Climate Title X: National Climate Change Policy

House Position: No Provision

Senate Position: Attributes global warming to human activities. Calls for reducing GHGs, creating international projects, such as carbon sequestration & tradable credits, and U.S. participation in a binding treaty.

Replaces Byrd-Hagel Resolution on a binding climate change treaty.

Creates new climate offices & mandates organizational changes in current climate programs at a cost of about $4.8 billion (on top of existing climate programs).

Administration's Position: Sec. of Energy letter to Chairman Tauzin and House & Senate conferees states that climate titles are inconsistent with Administration plan, yet notes it would support legislation consistent with plan.

What legislative provisions do Administration officials consider consistent with its plan?

Heritage Foundation: "Disguised" carbon forcing mechanism -- would do more than stabilize GHG concentrations, would require immediate & drastic reductions in current levels of GHGs causing severe economic consequences.

Distorts current state of knowledge on climate science, or climate predictive ability.

Findings are unbalanced & misleading.

Undermines Bryd-Hagel.

Adds layers to an already fragmented federal bureaucracy on climate change costing about $4.8 billion (over 5 years) on top of billions already spent on climate change programs.

Title XI: National GHG Database

House Position: No provision.

Senate Position: Establishes new "voluntary" GHG emissions reporting measure.

Makes program mandatory within 5 years if registry is less than 60% of all U. S. GHG emissions.

Imposes reporting requirements on direct and indirect emissions to DOE & EPA, or face fines up to $25,000.

Administration Position: President has directed DOE (in consultation with other depts. & agencies) to improve the existing Voluntary Reporting of GHGs program (sec. 1605(b)) of the '92 Energy Policy Act.

Secretary of Energy letter states that climate titles are inconsistent with Administration plan yet notes it would support legislation consistent with plan.

Does the Administration consider a delayed, yet mandated, reporting requirement consistent with its plan?

Heritage Position: Represents a "domestic" form of "fatally flawed" Kyoto Treaty.

Slippery slope to mandatory reporting of carbon emissions.

Small entities (homeowners & commercial facilities) are not likely to report & thus trigger the mandatory reporting.

Provision is redundant - the President has directed that the existing voluntary program (that is working) be improved.

Creates regulatory uncertainty that carbon emissions will be regulated in future thereby impeding investments in energy sector.

Businesses will pass-on additional costs of reporting to consumers.

Title XIII: Climate Change Science and Technology

House Position: No Provision.

Senate Position: Authorizes billions for countless climate-related research and development activities: $755 million over 5 years for DOE climate change research programs; $240 million over same years to Department of Agriculture for carbon sequestration research, $900 million over 9 years for tech. deployment program; and nearly $1.4 billion over 4 years for coastal ocean observation systems, to name only a few.

Administration Position: The President's FY '03 budget requests $40 million for his newly established U.S. Climate Change Research Initiative (CCRI) and $1.7 billion for the U.S. Global Change Research Program (USGCRP) - this is on top of other climate programs already funded by the fed govt.

Sec. of Energy letter states that climate titles are inconsistent with Administration plan yet notes it would support legislation consistent with plan.

Does the Administration consider additional spending, beyond the President's request consistent with his plan?

Heritage Position: The U.S. has spent some $45 billion on climate change research over the past 10 years

The scientific facts gathered over this time do not support catastrophic human-made warming as a basis for drastic carbon dioxide (CO2) emission cuts.

Evidence shows that under Kyoto, average temperature will rise about 1degree Centigrade by 2053. Without Kyoto that rise will occur in 2050. The difference between these trends is a statistically insignificant six-hundredths of a degree.

Given that the best scientific evidence says the warming likely to occur over the next several decades is small, and given the weak economy, excessive spending on climate change programs is irresponsible -- plays into the hands of extremists and alarmists.

Title II/Subtitle E: Renewable Portfolio Standard (RPS)

House Position: No federal mandate.

Senate Position: Mandates that retail electric suppliers obtain 10% of their power production in 2020 from "select" renewable energy resources. (Minimum % is 1% in 2005 increasing 1.2% every 2 years to 10%).

Defines "eligible" renewables as only solar, wind, biomass, geothermal, and "incremental" hydro.

Allows electric suppliers to meet RPS in one of three ways: 1) producing mandated % with eligible renewables; 2) purchasing "tradable credits" from entities that produced elec. from eligible renewables that are willing to sell; 3) buy credits from DOE (which doesn't produce energy) at 1.5 cents per credit kilowatt hour/kWh.

Excludes municipal and rural electric cooperatives from federal mandate.

Includes a provision sponsored by Senator Kennedy that requires that a two-year study by the National Academy of Sciences be done before the Nantucket Sound windmill project can go forward.

Administration Position: Supports increased use of renewables.

Opposes federal RPS mandate.

Supports leaving RPSs to the states.

Supports 3-year extension of renewable energy production tax credit.

Supports 2-year. extension of credit enacted under the Job Creation and Worker Assistance Act of 2002.

Heritage Position: Federal RPS mandate is costly and irresponsible.

Renewable energy accounted for just 9% of U.S. electricity generation in 2000 & only 2% if "favored" renewables (solar, wind, geothermal, & biomass) are counted -- these non-hydro renewables are projected to increase to a mere 3% of total generation & electricity sales in 2020.

Since 1978, DOE has spent over $11 billion of taxpayer money on research and development on renewable energy.

Renewables also benefit from taxpayer subsidies through tax credits - these subsidies represented over $1 billion in federal government outlays in FY 99 alone.

Despite these liberal taxpayer subsidies, renewable energy sources have failed to gain a significant market share - they have failed to do so b/c they are uneconomic.

Not only are wind and solar more costly on a per unit basis, they have low capacity, are site constrained (make a large "footprint,"), and are intermittent.

Back-up capacity is need to compensate for this unreliability adding costs to production that will be passed on to consumers.

The cost of transmitting electricity produced by renewables is often higher than fossil fuels b/c the best renewables are far from urban areas.

While consumers are paying higher utility bills, developers are enriching themselves with lucrative tax shelter schemes. Such taxpayer subsidies don't benefit consumers and don't enhance energy security.

It is clearly a double standard to impose a federal RPS mandate on the states, yet slip a provision in the bill to "delay" a wind farm project off of Nantucket Sound. If renewable energy is being forced on everyone else, Nantucket Sound should not be given pref. treatment with a statutory "exclusion."

Title II: Electricity/Subtitles A, B, C, and D.

House Position: No provision, however, Chairman Barton supports de-regulation of the wholesale electricity market and has been and is engaged in crafting an electricity title. In fact, he is the "lead" on this issue in the House.

Senate Position: Repeals the Public Utility Holding Company Act (PUHCA) and gives the Fed. Energy Regulatory Commission (FERC) and state utility commissions access to holding co. books and records.

Makes repeal of important PURPA (Public Utility Holding Company Holding Act) provisions conditional on FERC finding that competition in electricity market exists.

Requires state regulatory authorities to consider requiring electric utilities to offer real-time pricing and time-of-use metering to customers at their request.

Requires electric utilities to provide distributed generation and other sources access to the local distribution grid.

Expands FERC's merger review authority.

Gives FERC new authority to regulate in connection with its review of mergers and other asset transfers, to oversee an electric reliability organization, and to issue mandatory reliability standards.

Creates an Office of Consumer Advocacy at DOJ.

Increases consumer protection role of the Fed. Trade Comm. (FTC).

Administration Position: Supports open access for all generators to wholesale electricity grid, mandatory and enforceable reliability rules, repeal of PUHCA, and reform of PURPA.

"Pleased" with provisions that would strengthen FERC's authority to review mergers and prohibit abuses of market power.

Supports provisions to protect consumers and strengthen FERC's ability to ensure "just and reasonable" rates.

Proposes tougher criminal penalties for violating the Fed. Power Act.

Supports "last-resort" federal site authority for high-priority transmission lines.

Supports Senate's provision to clarify tax implications from sale or transfer of transmission assets to companies that will operate under a RTO (Regional Transmission Org.).

Supports efforts to eliminate provision that jeopardize tax-exempt status of electricity coops when they offer nondiscrimination access to their transmission system.

Heritage Position: Senate version simply "re-regulates" - not "de-regulates" electricity.

Title II expands FERC's authority and authorizes new reg. programs for DOE, and FTC, and other agencies.

It fails to provide the incentive structure needed to maintain and expand the nation's electricity infrastructure.

The bill makes repeal of PURPA conditional when repeal (prospectively) of the mandatory provision would de-regulate the market rather than simply re-direct this anti-competitive requirement.

The bill also fails to limit taxpayer subsidies and preferential treatment of municipal utilities and rural coops - nor does it eliminate the unfair competitive advantages given to federally owned utilities that are long over-due for privatization.

De-regulating any sector, including the electricity market, doesn't happen frequently on the Hill. Conferees can use this opportunity to do it right by de-regulating, not simply re-regulating the electricity market. The Senate bill fails to satisfy this test.

Title VIII /Subtitle A, Sec. 820: Renewable Content of Motor Vehicle Fuel (Ethanol)

House Position: No Provision.

Senate Position: Increases federal subsidies for fuel ethanol.

Nearly triples ethanol consumption by 2012.

Includes "safe harbor" provision that protects manufactures of ethanol from liability from adverse effects on the public.

Administration Position: Supports Senate ethanol mandate.

Heritage Position: Amounts to a "corporate welfare" scheme that benefits a small number of companies that control the ethanol market.

Imposes a new "tax" on consumers that would increase the price of gasoline.

Reduces highway trust fund revenues by $7 billion over the next 9 years depriving states of funds for new roads and other critical infrastructure projects.

Given that the proper infrastructure currently does not exist to produce, store, and blend more ethanol, the use of ethanol-blended fuel is not cost-effective for the entire nation.

Despite claims that ethanol is environmentally "friendly", it is not - it could cause an increase in NOX (a main contributor to smog) and increase the likelihood of toxins in gasoline, such as benzene, to seep into groundwater.

Clearly defines winners (corn growers) and losers (American consumers).

Mandating the use of more fuel ethanol is costly, irresponsible, and inconsistent with a national energy plan whose goal is to enhance the nation's energy security.

Arctic National Wildlife Refuge (ANWR)

House Position: Authorizes exploration in a small sliver of ANWR to reduce U.S. dependence on foreign oil and enhance the nation's energy security.

Senate Position: No provision. Senate majority leadership denied an "up or down" vote on ANWR by manipulating the Senate rules.

Administration Position: Supports authorizing a small portion of ANWR to responsible oil and natural gas exploration to enhance the nation's energy security.

Heritage Position: Irresponsible federal policies and indifference by policymakers to the growing domestic shortages of oil, not the actions of oil companies, have made the U.S. more than 50% dependent on foreign oil sources and subject to price volatility.

The U.S. Geological Survey (USGS) estimates that the Section 1002 area in ANWR could yield up to 16 billion barrels of oil-roughly equivalent to what the U.S. imports from Saudi Arabia over 30 years

Opening a mere 2000 acres in ANWR for oil and gas exploration would leave 99.99% of ANWR's 19 million acres untouched.

Despite claims to the contrary, the 1002 Area is not pristine habitat - it is a flat, treeless plain that reaches minus 110 degrees with wind-chill in the winter and is infested with mosquitoes during the summer months.

Opening a mere 2000 acres in ANWR is long overdue and vital to the nation's energy and national security. It belongs in any responsible national energy plan.


Charli Coon

Visiting Fellow in Russian and Eurasian Studies and International Energy Policy

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