Energy Policy Act of 2005

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The Energy Policy Act of 2005 (Public Law 109-58) is a statute which was passed by the United States Congress on July 29, 2005 and signed into law 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, provides tax incentives and loan guarantees for energy production of various types.

Provisions

The Act was intended to establish a comprehensive, long-range energy policy. It provides incentives for traditional energy production as well as newer, more efficient energy technologies, and conservation. More than 1,700 pages long, the Act has hundreds of provisions. Major items include:

• Provides a tax credit of up to $3,400 for owners of hybrid vehicles;
• 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 triple the current requirement (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 Department of Energy to study and report on existing natural energy resources including wind, solar, waves and tides;
• Provides tax breaks for those making energy conservation improvements to their homes;
• Provides subsidies for oil companies;
• Extends Daylight Saving Time by approximately four weeks (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: [1] [2]

• 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, 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 Department of Energy to report in one year on how to dispose of high-level nuclear waste;

It should be noted that in Congressional bills an "authorization" of a discretionary program is a permission to spend money, while an "appropriation" is the actual decision to spend money. Thus none of the authorizations above mean anything if the money is never appropriated.

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

Text of the Act

The full text of the act is available here

Tax breaks by subject area

• $4.3 Billion for nuclear power (Detailed 2005 breakdown - PDF, 29kB)
• $2.8 billion for fossil fuel production
• $2.7 billion to extend the renewable electricity production credit
• $?.? Billion for the Freedom Car initiative (1.7 billion 2003 CATO estimate)
• $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 (ethanol, methane, liquified natural gas, propane)
• $?.? Billion for hydrogen research

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.

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 starting in 2007. Clocks will be set ahead one hour on the second Sunday of March instead of the current first Sunday of April. Clocks will be set back one hour on the first Sunday in November, rather than the last Sunday of October. This will affect accuracy of electronic clocks that had pre-programmed dates for adjusting to daylight saving time. The date for the end of daylight saving time has the effect of increasing evening light on Halloween (October 31). The first Sunday in November sometimes occurs as little as two days before election day. For more detail on daylight saving time, see the related article.

Criticisms

• The Washington Post contended that the spending bill is really a broad collection of subsidies for United States energy companies; in particular, the nuclear and oil industries [3].

• Texas companies in particular benefit from the bill. This criticism is heightened by the fact that the President, the United States House Majority Leader and the House Energy & Commerce Committee Chairman are all from Texas.

• A Philadelphia Inquirer editorial on July 28th, 2005, suggested Congress had a "let's pass it and claim we did something" attitude.

• Even supporters of the bill concede that the bill will do little to lower oil prices immediately, and that any changes the bill has enacted will not happen overnight.

• John McCain denounced the 2003 bill (which was not passed) as the "No Lobbyist Left Behind" Act[4].

• The ANWR provision was not included and drilling was not increased, which will negatively affect U.S. supply resources and continue to affect high prices at the pump.

• 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. [5]

• The bill has had the unintended effect of causing shortages of E85, an ethanol and gasoline blend of fuel, in many parts of the country. Section 701 of the bill requires US Federal fleet flex-fuel vehicles (FFVs) to operate on alternative fuels 100% of the time. Formerly, such FFVs were required to be operated by the end of 2005 on alternative fuels only 51% (i.e., the majority of the time) by Executive Order 13149. (See Executive Order 13149 [6], dated April 21, 2000.) What this effectively means is that the US Government's use of E85 has effectively doubled as of August 8, 2005 with the passage of the Energy Policy Act of 2005. This has the unintended effect of limiting general public availability of formerly cheap E85 fuel coincident with shortages of gasoline due to impacts of hurricanes in the Gulf of Mexico during the 2005 hurricane season, with the follow-on effect of raising the price of E85 due to general fuel shortages. Although the price of corn has not changed greatly, the usage of E85 has jumped because of the bill, thereby creating a shortage of E85, with the end result of causing E85 prices to rise coincident with the rise in gasoline prices due to the impact of hurricanes. This has had the unintended effect of lessening the appeal of alternative fuels such as E85, through raising the cost per mile driven on E85, and hence increasing the likelihood that big oil companies can effectively maintain their fuel supply monopoly to the general public.

Legislative process

Main article: Energy Policy Act of 2005 Vote

See also

• Coal
• Energy crisis
• FutureGen zero-emissions coal-fired power plant
• Hydrogen economy
• Nuclear Power 2010 Program
• Oil depletion
• Oil industry
• Price-Anderson Nuclear Industries Indemnity Act
• Power plant
• Renewable energy

External links

Government

• Department of Energy spotlight on the bill - listing consumer savings
• Official News release and Allocution Bush / Albuquerque / 2005-08-08
• Congressional Budget Office Cost Estimate for the bill conference agreement, July 27, 2005
• Congressional Research Service summary

News

• Christian Science Monitor: How Much New Oil? Not a Lot
• Boston Herald: Editorial
• Reuters: brief summary
• MSNBC: news story
• TaxPayer.net: How the Bill Passed – a view of the reasons for the bills passage and its costs to taxpayers. See also: TaxPayer.net on Subsidies
• Yahoo! News: bill signing
• CNN: Bush: Energy bill effects will be long-term