November 18, 2003 | WebMemo on Energy and Environment
House and Senate conferees have reconciled their differences and approved the long-awaited energy bill, the Energy Policy Act of 2003 (H.R. 6).
Though the bill has some good provisions it fails to adequately enhance domestic energy supplies, a major missed opportunity to ensure reliable and affordable energy for American families and businesses.
The good news: the bill includes provisions that strengthen the nation's electricity system and, at the margins, narrows the gap between supply and demand. The bad news: it is also loaded with costly and unnecessary new program authorizations, costly pork-barrel projects, and over $23 billion in special interest tax subsidies.
Despite numerous policy flaws, Congress will likely pass this bill and get President Bush's signature.
What is Good About the Bill
Of particular significance are energy-suppressing measures not contained in the bill which would pick energy winners and losers, add costs to consumers and increase regulation.
There are no:
The bill does contain provisions which will strengthen our energy infrastructure:
What is Bad About the Bill
Lawmakers could have advanced policies to enhance the nation's energy security in the long-term, but instead took the easy way out and give generous tax breaks to special interest groups for only marginal increases in supply for the short-run.
Long-term thinking would have prompted:
The tax breaks -- so-called "incentives" -- total over $23 billion and include:
Congress also creates an artificial market for ethanol with a mandate that more than doubles the use of renewable fuels in gasoline, primarily corn-based ethanol, to 5 billion gallons a year by 2012 increasing costs to families and businesses. Congress should not be choosing the nation's fuel winners and losers, and instead let the free market and consumers make those determinations.
Congress is also generous with taxpayers' money for pork-barrel projects in the name of energy. For example, members provide $350 million in tax-exempt bonds for four so-called "green" development projects, in:
Likewise, the bill provides $18 billion in loan guarantees for construction of a 3,500-mile pipeline pumping natural gas from Alaska's North Slope to Chicago, Illinois. While providing additional supplies of natural gas to the lower 48-states is needed, funding for this project should stand on its own and be borne by the companies interested in building the structure-not guaranteed with taxpayers hard-earned money.
Another taxpayer giveaway hidden in the bill involves an $800 million loan guarantee to build a coal gasification power plant in Minnesota which benefits one single company. Taxpayer money should be used only for programs that benefit the general public interest-not to advance the bottom-line of one specific company.
Not only is the bill loaded with multi-billion tax breaks, it also includes hundreds of millions of dollars in new authorizations for federal spending including $2.1 billion from fiscal year 2004 through 2008 for hydrogen fuel cell research, $300 million in research and development for photovoltaic and renewable resources, and $50 million for each fiscal year from 2004-2014 for a grant program to improve biomass use. While these may represent laudable projects, the private sector-not taxpayers-should bear these costs.
Certainly, the conference report includes some needed energy enhancing provisions. Nevertheless, the report fails to provide long-term solutions to the nation's growing demand for energy. Given the plethora of policy shortcomings in this bill and its failure to sufficiently enhance domestic energy supplies, Congress has regrettably missed an opportunity to truly ensure reliable, affordable, and abundant supplies of energy for families and businesses now and into the future.