June 10, 1992 PRESIDENT BUSH'S NATIONAL ENERGY STRATEGY +quot;The driving force behind [ou

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June 10, 1992 PRESIDENT BUSH'S NATIONAL ENERGY STRATEGY "The driving force behind [our National Energy Strategy] is straightforward. It relies on the power of the marketplace, the common sense of the American people and the responsible leadership of industry and government." President George Bush February 20, 1991 "When our administration developed our national energy strategy, three principles guided our policy: reducing our dependence on foreign oil, protecting our environment, and promoting economic growth." President George Bush October 25, 1991 Summary o On February 20, 1991, President Bush released to the American people his National Energy Strategy (NES), a comprehensive strategy designed to increase America's energy security, enhance environmental quality, and fuel future economic growth. o In early March 1991, the President sent to Congress legislation to implement key aspects of his NES. The Congress is currently considering energy legislation that is substantially modeled upon the President's National Energy Strategy. Recently, energy bills have passed the Senate 94 to 4 votes and the House 381 to 37 votes. o The President is pleased that the Senate and House of Representatives have made progress toward adopting a sound national energy policy. The Senate and House energy bills would implement several key elements of the President's NES. By following the President's NES, they would make the United States less vulnerable to the economic damage resulting from excessive dependence on insecure foreign suppliers, through initiatives designed to promote energy efficiency and increase domestic production. While there is much work to be done, the President believes the Senate and House bills form a welcome bipartisan basis for moving to final action in conference. o The President's National Energy Strategy builds upon a number of Bush Administration initiatives including the 1990 revisions to the Clean Air Act, 1989 Natural Gas Wellhead Decontrol Legislation and incentives provided in the 1990 budget agreement for domestic producers of renewable and fossil energy. The President's National Energy Strategy o President Bush released his NES on February 20, 1991. The NES is a comprehensive and balanced strategy for an energy future that is secure, efficient, and environmentally sound. The NES is designed to: -- Diversify U.S. sources of energy supplies; -- Increase efficiency and flexibility in energy consumption; -- Reduce the dependence of the U.S. economy on oil while increasing domestic oil production; -- Increase the use of natural gas, a domestically abundant source of clean energy; -- Increase the production and use of renewable energy resources; -- Increase the use of alternative transportation fuels; -- Encourage efficiency and competition in electricity generation and efficient use of electric power; -- Reduce U.S. emissions of greenhouse gases from projected levels; -- Improve air, land, and water quality by developing and using environmentally superior technology; -- Create jobs and promote economic growth; and -- Maintain U.S. preeminence in fundamental science and engineering research and accelerate commercialization of technologies developed through Federally funded research. Increasing Energy Conservation and Efficiency o President Bush is committed to achieving greater efficiency in every element of energy production and use. Greater energy efficiency can reduce energy costs to consumers, enhance environmental quality, maintain and enhance our standard of living, increase our freedom and energy security, and promote a strong economy. o The President has proposed over $330 million in the FY 93 budget for energy conservation research and development, double the amount when he took office. The following are examples of specific proposals in the President's NES to increase our energy efficiency. Transportation: o Transportation efficiency is targeted by expanding efforts to develop advanced transportation technologies, such as more fuel efficient engines, electric vehicles, more intelligent-vehicle highway systems, and magnetic-levitation and other high speed transportation. These advanced technologies hold the promise of significant energy savings in the transportation sector. o The NES also promotes efforts to accelerate scrappage of older, gas guzzling cars and increase use of public transportation and ridesharing by raising the limit on tax- free commuter subsidies that employers can give employees. o These and other measures directed at transportation are projected to save the equivalent of 3.0 million barrels of oil per day by the year 2010 without the harmful effects of higher taxes, increased regulations or oil import fees. Even though the number of passenger miles driven is estimated to increase 60% by 2010, the volume of gasoline purchased by consumers is projected to fall by 10%. Electricity: o Analysts forecast that over 90 gigawatts (about 90 large power plants) will be needed over the next 10 years to meet increased electricity demand. The President's NES will meet this increased demand by both increasing efficiency and expanding the range of fuels and technologies for electricity generation. o The President's NES will increase electricity efficiency and competition among suppliers by amending the Public Utility Holding Company Act to remove restrictions on electric generators who wish to build, own, and operate power facilities in more than one area, and by reforming the Public Utility Regulatory Policies Act to modify size and fuel use restrictions for small power producers. o The NES also supports State and utility efforts to invest in energy efficiency as an alternative to power plant additions and provides tax-free treatment of utility discounts on consumers' electricity bills for efficiency investments. It will reduce Federal subsidies for the debt of Federal Power Marketing Administrations and expand access to electricity transmission for utility and non-utility wholesale buyers and sellers. o The electricity efficiency measures in the President's NES are projected to reduce electricity growth by over 10% in 2010 and save consumers over $30 billion in electricity costs. Residential and Commercial Building Conservation: o The NES targets residential and commercial buildings' efficiency by increasing Federal funding for R&D in building technologies. This is to develop and encourage the use of cost-effective building efficiency standards. o The NES also encourages providers of home mortgages to consider energy efficiency ratings in their pending decisions with prospective home buyers and expands energy efficiency labeling programs to include certain other equipment, such as light bulbs. Industry: o The NES will increase industrial energy efficiency by increasing research and development for industrial waste reduction and recycling, supporting the use of industrial energy audits at the state and local level, and modifying regulations that inhibit the use of waste minimization technologies. o Industrial output is expected to grow almost 80% by the year 2010, but the United States is projected to use only 25% more energy to power its industrial facilities. Federal Government: o President Bush has issued an Executive Order directing all Federal agencies to reduce overall energy consumption in Federal buildings 20% by the year 2000, and to reduce fuel consumption in Federal vehicles 10% by 1995. o President Bush has directed Federal agencies to maximize their purchases of alternative fuels vehicles. Over 3,000 such vehicles have already been purchased and are in use. Securing Future Energy Supplies o The U.S. is part of an energy interdependent world, but U.S. vulnerability to supply disruptions must be reduced. One of the objectives of the NES is to increase the environmentally sound production of domestic energy resources. Initiatives in the NES will increase domestic oil production by up to 3.8 million barrels per day in 2010, and increase economically recoverable resources by 25 to 70 billion barrels. The NES also includes a major commitment to advanced energy technology through research and development initiatives for energy security. Oil: o President Bush has led efforts to reform alternative minimum tax (AMT) as it applies to independent energy producers. President Bush has actively supported measures to remove serious disincentives to domestic production of oil and gas that exist in current tax law. The President believes that reform of AMT is absolutely necessary to help revitalize the domestic oil and gas industry. o The NES establishes a new program of joint Federal/private investment in advanced oil recovery technology. By 2010, advanced oil recovery technologies are projected to increase U.S. production by over 3 million barrels per day. o The President supports the expansion of worldwide strategic petroleum stocks available to offset future oil supply disruptions. o The President's NES encourages oil production in America by calling for the approval of access to the coastal plain of the Alaskan National Wildlife Refuge (ANWR) and some Outer Continental Shelf areas under strict environmental safeguards. The President will continue to press Congress to allow access to ANWR. The NES also supports an increase in the production of California heavy oil and access to export markets. o The NES supports the expansion of production capacity throughout the world and the Administration has initiated programs to achieve this end in the Western Hemisphere and in the former Soviet Union. o The President supports Federal royalty reductions for on- shore oil and gas producers. The Administration is examining royalty reductions on off-shore production. Natural Gas: o On March 6, 1992, President Bush announced steps to bring relief to the natural gas industry. The Administration will remove regulatory barriers that impede the use of natural gas by electric utilities. It will also encourage greater usage of natural gas vehicles by removing regulatory barriers to the sale of compressed natural gas for use in motor vehicles, and will issue proposed emission standards for natural gas vehicles that will allow them to compete on an equal basis with other vehicles. o To promote domestic gas production, the President's NES proposes legislation which will streamline gas pipeline construction regulations and develop more efficient environmental review procedures. And, pursuant to the NES, the Federal Energy Regulatory Commission recently proposed regulatory reforms which will deregulate pipeline sales rates in competitive markets and reform gas pipeline rate designs. o The Administration has proposed increased funding for natural gas research and development, particularly for technologies to increase utilization of natural gas for environmental compliance. The Department of Energy has also restructured its natural gas program to shift research and development activities to meet nearer-term objectives and cost-sharing investment with industry. o NES recommendations relating to alternative fuels and electricity regulatory reform (PUHCA) will also substantially increase utilization of natural gas. o Initiatives in the NES are expected to increase natural gas consumption by almost 1 trillion cubic feet by the year 2000. Coal: o The President's NES promotes the use and exportation of clean coal by promoting clean coal technology and by creating favorable export markets for U.S. coal and coal- burning technologies. The NES will clarify the applicability of the Clean Air Act to refurbished power plants, and pursue research and development on environmental protection during mining. o Initiatives in the NES will help the U.S. coal industry capture a major share of the growing international coal and coal technology markets, while at the same time improving our ability to more cleanly and efficiently utilize the large U.S. supplies of low cost coal. o The President supports full funding of the Five-Round Clean Coal Technology R&D program. This Federal-industry $5 billion cost-shared program is developing high efficiency, low-emission technology to meet the stringent air quality standards of the next decade. Nuclear Power: o The NES proposes legislation which will preserve the nuclear power option to meet electricity needs by reforming and streamlining the nuclear plant licensing process. o The NES supports the renewal of licenses for existing nuclear plants, where this can be done safely and economically. It also supports standardized designs for "next generation" power plants and accelerates research and development of "next generation" passively safe design nuclear reactors. o The NES contains initiatives to ensure progress on the management and disposal of nuclear waste. Renewable and Alternative Energy: o The President's renewable energy research and development budget for FY 93 was increased to nearly $250 million, a more than 65% increase over the amount when he took office. o The NES encourages the development and use of alternative fuels and technologies through research and development and by requiring centrally-fueled fleets to purchase vehicles capable of using alternative fuels. The Department of Energy has teamed with industry to establish a joint research venture to make possible a new generation of batteries for electric vehicles. o The President's NES encourages hydropower projects by proposing legislation which would eliminate unwarranted Federal regulation and streamlining hydropower licensing projects. o The Department of Energy has begun to test new ways to produce ethanol at cost-competitive prices. Increasing the use of ethanol in the transportation sector will make the United States less dependent on oil imports. o The Department of Energy completed construction of the Wind Energy Test Center in September 1991. Advances in technology of wind as an energy source will enhance its chances of becoming a competitive resource for electricity in many areas of the country. The President requested $22 million for wind energy research and development in the FY 93 Budget. o The Department of Energy has entered into a joint venture with private companies to develop a system that uses solar power to operate generators. President Bush has requested $27 million in his FY 93 Budget for the research and development of solar energy. o The NES supports converting municipal solid waste to energy as part of a comprehensive waste management strategy. o The NES proposes to intensify international collaboration in fusion research to develop a demonstration plant by 2025 and a commercial plant that could cost-effectively supply power by 2040. o Electricity generation from renewable energy sources is projected to increase 16% by 2010 under the NES. Energy and the Quality of Air, Land and Water o Coupled with the Clean Air Act Amendments that the President signed into law in 1990, the NES strives to enhance environmental quality by reducing sulphur dioxide emissions by 40%, nitrogen oxides by 30%, and volatile organic compounds emissions by 25% from projected levels in 2030. The NES will reduce the cost of achieving greater environmental benefits. o The NES, will reduce greenhouse gas emissions and demonstrate U.S. international leadership on this issue. At the same time, ongoing Federal research aimed at reducing scientific uncertainty on the potential for global climate change, will provide an improved basis for future policy.

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