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Energized for the Future

Bingaman Discusses Way Forward on Energy Policy

Well before the current crisis over rising gas prices, Sen. Jeff Bingaman (D-N.M.) was pushing for legislation to reduce the country’s reliance on oil. Bingaman, now in his second stint as chairman of the Energy and Natural Resources Committee, sat down recently with Roll Call Executive Editor Morton M. Kondracke to discuss his efforts to enhance the development of alternative fuels and increase the use of nuclear power as pieces of an integrated strategy to fight global warming and improve energy security.

ROLL CALL EXECUTIVE EDITOR MORTON M. KONDRACKE: Renewables now account for about 6 percent of U.S. energy supplies, is that right? What do you think they could account for 10 years from now and maybe 20 years from now?

Well I don’t have the exact figures that the Energy Information Administration has come up with but I think the expectation is that in 10 years they could account for maybe 10 percent, something in that range. Depending upon how aggressively we pursue alternatives, it could get up to 20 percent a decade or so after that.

ROLL CALL: Doesn’t that mean that we’re going to be dependent on fossil fuels for a good long time?

BINGAMAN: Yeah, there’s no question that we’re going to have a dependence on fossil fuels for the next couple of decades. I hope it is a decreasing dependence on fossil fuels as we go forward, as a percentage of our overall energy needs.

ROLL CALL: But in the interim then, why doesn’t it make sense to increase domestic supply by drilling offshore or opening up [the Arctic National Wildlife Reserve] to be less dependent on foreign sources?

BINGAMAN: Well, I’m not averse to drilling offshore. I think, frankly, the president’s proposal and [Arizona Republican Sen. John] McCain’s proposal on this has been misunderstood. They’re not just suggesting that we open up the offshore for drilling. They’re suggesting that we leave it up to states to decide whether or not drilling should occur off their shore, the coastal states. That would be a major change in federal policy. The Outer Continental Shelf, which goes out for 200 miles, is federal property, always has been recognized as that. And the decision as to which parts of it to open for drilling has always been a decision made by the Congress and the president together. We now have a proposal that says we should essentially give states a veto over whichever area in the Outer Continental Shelf is determined to be off their shore, going out 200 miles. I think that would be a big mistake.

ROLL CALL: Sen. Barack Obama [D-Ill.] doesn’t want to drill there at all, though, does he?

BINGAMAN: I’m not sure what his position on it is. I just don’t know what his view, what it is.

ROLL CALL: Did we make a mistake mandating ethanol use and subsidizing it? Has it raised food prices?

BINGAMAN: Well, we asked that very question of the Department of Agriculture and the Department of Energy, the secretaries of the two departments. They’ve come back and said they believe it does account for something in the range of 3 to 4 percent of the increase in prices of food commodities. I think that moving toward more production and use of biofuels is good energy policy based on what we now know. And I think we need to continue to monitor as we go forward if there are consequences for food commodities. Obviously, that’s a concern.

ROLL CALL: Would you be in favor of eliminating the restriction on imports of Brazilian ethanol made out of sugar cane?

BINGAMAN: Yeah, I am in favor of eliminating that restriction.

ROLL CALL: Why won’t the Congress do that?

BINGAMAN: Well, there are a lot of people who represent farm states here who feel strongly the other way.

ROLL CALL: What about nuclear power? Where does nuclear power fit into the future energy equation, as far as you’re concerned? I think it accounts for 8 percent of U.S. energy supply at the moment, is that right?

BINGAMAN: I think 20 percent of the electricity that we currently produce comes from nuclear power. I think we need to increase the amount of nuclear power production that goes on in the country. We need to build some new nuclear power plants. We put various provisions in the 2005 bill to provide incentives to do just that. I think they’re having some effect. There are — I don’t know exactly how many, but 15 or 20 applications or notifications to the Nuclear Regulatory Commission by companies stating their intention of going forward. There’s some actual applications for permits to construct as well.

ROLL CALL: Are you in favor of something like the Manhattan Project to develop alternative sources?

BINGAMAN: Well, I don’t think that’s a good analogy. Everyone likes to talk about a Manhattan Project. As I see it, we need to make progress across a great many different fields of technology development in order to get this problem solved. We just had a hearing this morning with the International Energy Agency. They’ve identified 17 areas where they believe technology development needs to go forward at a rapid pace in order to give us the wherewithal to move from a high-carbon economy to a low-carbon economy. I think that’s the right way to look at it, is to identify all the different areas and to try to do all we can to stimulate additional research and development and deployment in each of those areas.

ROLL CALL: Which do you think are the most promising of the 17?

BINGAMAN: Some of them that are obviously very promising is the whole area of electric cars and plug-in hybrids. That’s an area that our own auto dealers, or auto manufacturers, have identified as holding out a lot of promise.

ROLL CALL: Let me stop you there. Does it make any sense that Sen. McCain has proposed to offer a $5,000 tax credit for everybody who buys one of those cars?

BINGAMAN: Well, we’ve got in this bill, that we’ve been trying to pass now three or four times, a provision to provide a tax credit of $3,000. But we’ve got a provision in there to encourage people to buy plug-in hybrids when they become available, and also to buy hybrids until plug-in hybrids are available. So I think yes, it does make sense. It’s one of many things we need to be doing. Multi-tasking is the way to think of this and I think we have to get very good at it.

ROLL CALL: Do you buy the conspiracy theory that Detroit could have gone electric a long time ago but chose not to because of the influence of the oil companies?

BINGAMAN: No, I don’t buy that. I think they took the path of least resistance. I think it is difficult to see with the technology that we have, how you have an electric vehicle or electric vehicles, both cars and trucks. They basically have not concerned themselves with the fuel efficiency issue at all, until very recently. And they’ve chosen to build bigger and faster and more powerful vehicles, and Americans love those because you can roar all around and feel great.

ROLL CALL: What about wind and solar? Wind, I think, is about 1 percent of electricity production now. What is the potential there? People who like wind say that it’s huge in the future. Do you agree with that?

BINGAMAN: I think it’s a substantial potential. I think we can produce a significant amount of power with wind turbines. We just now in the last few years have gotten started with the installation of a significant number of wind farms in our country. And we can do a lot more.

ROLL CALL: As I understand it from the wind industry people, they need a tax credit in order to get the investment that they need, in order to develop that. Now what are the prospects of that happening?

BINGAMAN: Well, that’s part of this package of tax extensions: energy tax provisions we’ve been trying to extend, that we’ve now voted on three times so far in this Congress. It’s a production tax credit. Wind is the main beneficiary of that production tax credit. I agree with them, we need to extend that.

ROLL CALL: Then what’s the holdup?

BINGAMAN: The holdup is that most of the Republicans in the Senate do not want to see it offset. They don’t want to pay for it. The House, of course, has taken the position, particularly the Blue Dogs in the House, have taken the position that they will not agree to support it unless it’s paid for. They think we should have offsets.

ROLL CALL: Would the offsets be an elimination of oil subsidies?

BINGAMAN: The first proposal that came out of the Finance Committee was that. It was to reduce the subsidy, particularly the Section 199 subsidy, which was put in law back in 2004 as it applied to the top five integrated oil- and gas-producing companies.

ROLL CALL: What subsidies were those?

BINGAMAN: It’s a manufacturer subsidy that was written in such a way that they benefited from it. So the suggestion was: “Let’s take that away. Let’s make a few other changes. That way, we’ll have enough revenue generated to offset the cost of these renewable-energy tax credits.” That was objectionable. We thought the problem there was that they didn’t like that particular offset.

ROLL CALL: “They” being?

BINGAMAN: The Republicans. I think their position now, as I understand it, they’ve done a letter to [Montana Democratic Sen. Max] Baucus saying that they object to any offsets. They’re certainly willing to support extending these tax credits, but they do not believe it’s appropriate to offset that.

ROLL CALL: What’s your position on offsets?

BINGAMAN: My position is we should offset the extension of the tax credits. That’s the fiscally responsible thing to do. If we’re not able to — I mean if we try every which way and cannot do it — it is very important that we keep these tax credits in place. And I will vote for them and I have voted for them without being offset, but that’s not my first choice.

ROLL CALL: On the area of solar, what do you see as its future as compared to, say, wind? Is wind more promising than solar?

BINGAMAN: Well, I think most people will tell you wind is currently cheaper today — it’s cheaper to produce power from wind than it is from solar — but that the cost of producing power from solar energy, either photovoltaic cells or solar thermal, concentrated solar …

ROLL CALL: Solar thermal is using mirrors to basically boil water and produce steam?

BINGAMAN: Right, right. There’s a couple different ways that they do that but I think the cost of energy production from solar either way, either in photovoltaics or more concentrated solar, is coming down pretty rapidly. I think there are many experts who believe there’s a substantial opportunity there, particularly in the Southwest, to produce substantial amounts of power from solar thermal or photovoltaic. We had the head of Southern California Edison in to see me the other day and he says that they’ve got a new plan, a new effort that they’ve launched to put photovoltaic panels on the roofs of large warehouses in the Los Angeles area. Through that device they’re putting a lot of solar power on the grid, or, not on the grid but into the distribution system.

ROLL CALL: Do you believe that we will ever see economical clean coal or recapturing carbon from coal? Do you think that the science is there and is it feasible?

BINGAMAN: I think the science is there. They’ve demonstrated that they can do this. The question is can they do it on the scale that we really need to have it done, in order to allow power production from coal the way we’ve always known it. I don’t know if we know the answer yet. The Department of Energy is now underwriting the cost. I think they now estimate there are 10 projects that they are underwriting the cost of, each of which will demonstrate the feasibility of this. And they’re optimistic that they can demonstrate that this is feasible. But it’s not been done yet so the jury is still out on whether this is going to be the solution to the problem of greenhouse gases from coal.

ROLL CALL: There are varied other kind of potentials, like [Utah Republican Sen. Bob] Bennett talked about for example, using tidal energy. Is that a reasonable possibility? It does seem that there is a lot of movement of tidal water and you’d think that it could generate electricity or something. Is it feasible?

BINGAMAN: I think, again, we don’t know yet. But I think it’s certainly worth putting research and development dollars into. There are quite a few like that, where we may find that we can meet a substantial portion of our energy needs through some of these technologies. But we don’t know enough yet, and frankly, our record of sustained focus in this area is not very good. Geothermal is a classic example, where we used to provide funding for research into geothermal power production and then we quit for a couple of years. And then the folks up at [the Massachusetts Institute of Technology] wrote a report saying this was a good opportunity and then we started again.

ROLL CALL: This is basically the heat of the earth, water recaptured.

BINGAMAN: Right. There are some countries, particularly Iceland, that have demonstrated tremendous results from use of geothermal.

ROLL CALL: Now, research and development funding is one thing but it seems as though every single one of these industries wants a subsidy. Do we have to subsidize forever? We’ve been subsidizing oil and natural gas. Will the market ever be able to bring any of these alternatives down the line, especially given the price of oil?

BINGAMAN: I think definitely. I think that a good case can be made that any tax provisions we’ve put into law as a subsidy, we should have a phase-down, reduce as they go forward so that the technology has to stand on its own. But you’re correct in pointing out that there are many subsidies in the law today for oil and gas, most of which could not be justified, given the price of oil and gas that it’s selling for in the market today. We have a problem obviously in our political system. You have a lot of pulling and shoving when you get to either putting subsidies in place or removing subsidies.

ROLL CALL: When you try to eliminate a subsidy, the people who are in favor of oil say that you’re raising taxes on the oil industry and you’re going to get less production. So when the price is low you can’t do it because the price is low and they need the subsidy, so it seems to just live on forever.

BINGAMAN: You’re exactly right. I agree.

ROLL CALL: There’s a debate going on between cap-and-trade and carbon tax as the way to discourage the use of fossil fuels. What’s your preference?

BINGAMAN: Well, I think the reality here in Washington, at this stage at least, [is] we couldn’t get the votes to do a tax on carbon. We have too many people running for Congress after they’ve signed a pledge that they will not raise taxes on anything during the time that they’re in public service. Some of the same ones that are advocating for a tax in this area have already signed a pledge that they would not vote for it in case someone actually proposed it. With that in mind, I think most people have concluded that cap-and-trade is a more realistic way to proceed. That’s what the Europeans have done and I think that’s what both Sen. McCain and Sen. Obama have indicated they would want to do.

ROLL CALL: How do you avoid, under the cap-and-trade system, using these trillions of dollars that the emission credits would sell for, from developing into industrial policy where some agency is picking winners and losers like the synfuels experience of the 1970s?

BINGAMAN: Obviously you need to make a judgment if you put in place a cap-and-trade system and you do wind up auctioning allowances, which then generates a lot of revenue. You have to decide how much of that revenue you’re going to return to the people whose utility rates are going up since most of that will be loaded on to utilities, how much of it you put in research and development funding and then the extent to which you — you know, in research and development, at least it’s my view, that in research and development some picking of winners and losers is not a bad thing. I know Sen. McCain just announced he thought we ought to put money into creating a new battery, or a more capable battery. I think he’s right that we ought to focus on that. I don’t know that his particular proposal is the right one.

ROLL CALL: You’re talking about his $300 million prize?

BINGAMAN: Yeah, that’s way more than any of the other prizes that we currently have out there. And there is a lot of research and development going on in this area, and the federal government needs to support that research and development. If we want to spend $300 million more on this area, we might spend it more usefully than just holding it out as a prize. But that’s getting into the weeds. I do think that some portion of what is raised through a cap-and-trade system could usefully be put to the pursuit and the advancement of these technologies that will be needed.

ROLL CALL: This is such a big deal, the transfer from a fossil economy to a renewable economy. Doesn’t it take something inspirational like the Manhattan Project in order to give it political oomph? Would piecemeal do it, or do you think that the public understands the need to do it well enough that we could do it piecemeal?

BINGAMAN: Well, I think obviously it will be better if we can develop a coherent plan for moving ahead that has some flexibility in it, that we can adjust it as we learn more about these different technologies. There’s a lot of reasons why I don’t think the Manhattan Project is the right analogy. This was a two-year program, the Manhattan Project was. This has got to be a multi-decade program. We’re going to have to organize ourselves to pursue it over the next couple of decades and really make the transition from the high-carbon to the low-carbon economy.

ROLL CALL: Do you think that we are on the verge of developing a coherent energy strategy in the United States?

BINGAMAN: Well, I think that we’ve got a lot of the elements of a coherent energy strategy out there. You know, being able to write one down and being able to implement it are two very different things. Like I say, I think some of our problem in the past has not been our inability to write it down, it’s been our inability to pursue it with any persistence. And time will tell whether or not we’ve actually solved that problem.

ROLL CALL: Everybody’s paying attention to it while gasoline is at $4. Do you expect that the price will drop?

BINGAMAN: I think it will drop, but I don’t know how much. I doubt seriously we’re going to go back to — you know, we’re not going to be buying gasoline for $1.50 a gallon again. But I think they will drop back from the level it’s at now.

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