Energy_Policy_Act_of_2005

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Energy Policy Act of 2005

The Energy Policy Act of 2005 is a statute that was passed by the United States Congress on July 29, 2005 and signed into law by President George W. Bush on August 8 2005 at Sandia National Laboratories in Albuquerque, New Mexico. The Act, described by proponents as an attempt to combat growing energy problems, changed the energy policy of the United States by providing tax incentives and loan guarantees for energy production of various types.

Provisions

General provisions

Authorizes loan guarantees for "innovative technologies" that avoid greenhouse gases, which might include advanced nuclear reactor designs (such as PBMR) as well as clean coal and renewable energy;
Increases the amount of biofuel (usually ethanol) that must be mixed with gasoline sold in the United States to 4 billion gallons by 2006, 6.1 billion gallons by 2009 and 7.5 billion gallons by 2012;
Seeks to increase coal as an energy source while also reducing air pollution, through authorizing $200 million annually for clean coal initiatives, repealing the current 160-acre cap on coal leases, allowing the advanced payment of royalties from coal mines and requiring an assessment of coal resources on federal lands that are not national parks;
Authorizes subsidies for wind energy, and other alternative energy producers;
Adds ocean energy sources including wave power and tidal power for the first time as separately identified renewable technologies;
Authorizes $50 million annually over the life of the bill for a biomass grant program;
Contains several provisions aimed at making geothermal energy more competitive with fossil fuels in generating electricity;
Requires the U.S. Department of Energy to study and report on existing natural energy resources including wind, solar, waves and tides;
Authorizes the Department of the Interior to grant leases for activities that involve the production, transportation, or transmission of energy on the Outer Continental Shelf lands from sources other than gas and oil (Section 388);
Requires the U.S. Department of Energy to study and report on national benefits of demand response and make a recommendation on achieving specific levels of benefits and encourages time-based pricing and other forms of demand response as a policy decision;
Requires all public electric utilities to offer net metering on request to their customers;
Provides tax breaks for those making energy conservation improvements to their homes;
Provides incentives to companies drilling for oil in the Gulf of Mexico;
Exempts oil and gas producers from certain requirements of the Safe Drinking Water Act;
Extends daylight saving time by four-five weeks, depending upon the year (see below);
Requires that no drilling for gas or oil may be done in or underneath the Great Lakes;
Requires that Federal Fleet vehicles capable of operating on alternative fuels be operated on these fuels exclusively (Section 701.)
Sets federal reliability standards regulating the electrical grid (done in response to the Blackout of 2003);
Nuclear-specific provisions:

*Extends the Price-Anderson Nuclear Industries Indemnity Act through 2025;

*Authorizes cost-overrun support of up to $2 billion total for up to six new nuclear power plants;

*Authorizes a production tax credit of up to $125 million total per year, estimated at 1.8 US¢/kWh during the first eight years of operation for the first 6.000 MW of capacity ; consistent with renewables;

*Authorizes $1.25 billion for the Department of Energy to build a nuclear reactor to generate both electricity and hydrogen;

*Allows nuclear plant employees and certain contractors to carry firearms;

*Prohibits the sale, export or transfer of nuclear materials and "sensitive nuclear technology" to any state sponsor of terrorist activities;

*Updates tax treatment of decommissioning funds;

*A provision for the U.S. Department of Energy to report in one year on how to dispose of high-level nuclear waste;

Directs the Secretary of the Interior to complete a programmatic environmental impact statement for a commercial leasing program for oil shale and tar sands resources on public lands with an emphasis on the most geologically prospective lands within each of the states of Colorado, Utah, and Wyoming.

In Congressional bills an "authorization" of a discretionary program is a permission to spend money, while an "appropriation" is the actual decision to spend it; none of the authorizations above will mean anything if the money is never appropriated.

Tax reductions by subject area

$4.3 billion for nuclear power
$2.8 billion for fossil fuel production
$2.7 billion to extend the renewable electricity production credit
$1.6 billion in tax incentives for investments in clean coal facilities
$1.3 billion for conservation and energy efficiency
$1.3 billion for alternative motor vehicles and fuels (bioethanol, biomethane, liquified natural gas, propane)
$500 million Clean Renewable Energy Bonds (CREBS) for government agencies for renewable energy projects.

Change to daylight saving time

The bill amends the Uniform Time Act of 1966 by changing the start and end dates of daylight saving time, beginning in 2007. Clocks were set ahead one hour on the second Sunday of March (March 11, 2007) instead of on the first Sunday of April (April 1, 2007). Clocks were set back one hour on the first Sunday in November (November 4, 2007), rather than on the last Sunday of October (October 28, 2007). Lobbyists for this provision included the Sporting Goods Manufacturers Association, the National Association of Convenience Stores, and the National Retinitis Pigmentosa Foundation Fighting Blindness; lobbyists against included the U.S. Conference of Catholic Bishops, the United Synagogue of Conservative Judaism, the National Parent-Teacher Association, the Calendaring and Scheduling Consortium, the Edison Electric Institute, and the Air Transport Association. This section of the act is controversial; some have questioned whether daylight saving results in a net energy savings.

Commercial building deduction

The Act contains provisions for commercial buildings that make improvements to their energy systems. Energy improvements completed in 2006 and 2007 are eligible for tax deductions of as much as $1.80 per square foot. The incentives focus on improvements to lighting, HVAC and building envelope. Improvements are compared to a baseline of ASHRAE 2001 standards.

Many buildings are eligible for tax deductions for improvements completed or planned within the normal course of business, and can thus "free ride" for the new incentives. Achievement of these benefits requires cooperation between the facilities/energy division of a business and its tax department. A tax advisor with engineers on staff may serve as a bridge between these two historically separate business divisions. For municipal buildings, benefits are passed through to the primary designers/architects in an attempt to encourage innovative municipal design.

These benefits emanate from the Department of Energy's desire to make all buildings "zero energy" within 20 years.

Energy management

The commercial building tax deductions can be used to improve the payback period of a prospective energy improvement investment.

Often the deductions are combined with participation in demand response programs where buildings agree to curtail usage at peak times for a premium.

The most common qualifying projects are in the lighting area. Industrial spaces such as Manufacturing, Warehouse and Distribution Centers are typically lit with 400W Metal Halide fixtures. These fixtures are commonly being upgraded with Hi-Bay Fluorescent fixtures that can cut energy use in half as well as qualify the building for tax deductions. In the Northeast paybacks for this project can get below one year.

Congressional Budget Office (CBO) cost estimate

The Congressional Budget Office review of the conference version of the bill estimated the Act will increase direct spending by $1.6 billion, and reduce revenue by $12.3 billion between 2006 and 2015. The CBO noted that the bill could have additional effects on discretionary spending, but did not attempt to estimate those effects.

Support

The collective reduction in national consumption of energy (gas and electricity) is significant for home heating. The Act provided tangible financial incentives (tax credits) for average homeowners to make environmentally positive changes to their homes. It made improvements to home energy use more affordable for walls, doors, windows, roofs, water heaters, etc. Consumer spending, and hence the national economy, was abetted. Industry grew for manufacture of these environmentally positive improvements. These positive improvements have been near and long-term in effect.

The collective reduction in national consumption of oil is significant for automotive vehicles. The Act provided tangible financial incentives (tax credits) for operators of hybrid vehicles. It helped fuel competition among auto makers to meet rising demands for fuel-efficient vehicles. Consumer spending, and hence the national economy, was abetted. Dependence on imported oil was reduced. The national trade deficit was improved. Industry grew for manufacture of these environmentally positive improvements. These positive improvements have been near and long-term in effect.

Criticisms

The Washington Post contended that the spending bill is a broad collection of subsidies for United States energy companies; in particular, the nuclear and oil industries.
Texas companies in particular benefit from the bill. This criticism is heightened by the fact that President George W. Bush, the House Majority Leader (Tom DeLay), and the Chairman of the House Energy & Commerce Committee (Joe Barton) were all from Texas. The fact that the bill passed 66-29 with wide support from Democrats for the bill has not calmed this criticism (a Philadelphia Inquirer editorial on July 28, 2005, suggested Congress had a "let's pass it and claim we did something" attitude).
Speaking for the National Republicans for Environmental Protection Association, President Martha Marks said that the organization was disappointed in the bill: it did not give enough of a short to conservation, and continued to subsidize the well-established oil and gas industries that don't require subsidizing.
The bill did not include provisions for drilling in the Arctic National Wildlife Refuge (ANWR) even though some Republicans claim "access to the abundant oil reserves in ANWR would strengthen America's energy independence without harming the environment.
Senator Hillary Rodham Clinton made the bill an issue in the 2008 Democratic Primary by criticizing Senator Barack Obama’s two votes supporting the bill, calling it the “Dick Cheney lobbyist energy bill.”

Legislative history

The Act was voted on and passed twice by the United States Senate, once prior to conference committee, and once after. In both cases, there were numerous senators who voted against the bill. John McCain, the Republican Party nominee for President of the United States in the 2008 election voted against the bill. Barack Obama, the Democratic Party nominee for President of the United States in the 2008 election voted in favor of the bill.

Provisions in the original bill that were not in the act

Limited liability for producers of MTBE.
Drilling for oil in the Arctic National Wildlife Refuge (ANWR).
Increasing vehicle efficiency standards (CAFE).
Requiring increased reliance on non-greenhouse gas-emitting energy sources similar to the Kyoto Protocol.

Preliminary Senate vote

June 28, 2005, 10:00 a.m. Yeas - 85, Nays - 12

Conference committee

The bill's conference committee included 14 Senators and 51 House members. The senators on the committee were: Republicans Domenici, Craig, Thomas, Alexander, Murkowski, Burr, Grassley and Democrats Bingaman, Akaka, Dorgan, Wyden, Johnson, and Baucus.

Final Senate vote

July 29, 2005, 12:50 p.m. Yeas - 74, Nays - 26

Legislative history

Stage	House of Representatives	Senate
Initial Debate
Introduction	April 18, 2005	June 11
Committed	April 18	June 14
Committee Name(s)	Energy and Commerce Education and the Workforce Financial Services Agriculture Resources Science Ways and Means Transportation and Infrastructure
Committee Stage	April 18 to 19
Committee Report	April 19
Floor Debate	April 19 to 21	June 14 to 23 Cloture invoked June 23,
Passage	April 21,	June 28,
Conference Stage
Conference Demanded/Accepted	July 13	July 1
Conference Meetings	July 14 to 24
Report Filed	July 27
Final Passage
Final Debate	July 28	July 28 to 29 Budget Act waived, July 29,
Concurrence and Passage	July 28,	July 29,
Presented to President	August 4
Signed	August 8