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Monday, April 26, 2010

Civilian Nuclear Waste Disposal

Mark Holt
Specialist in Energy Policy

Management of civilian radioactive waste has posed difficult issues for Congress since the beginning of the nuclear power industry in the 1950s. Federal policy is based on the premise that nuclear waste can be disposed of safely, but proposed storage and disposal facilities have frequently been challenged on safety, health, and environmental grounds. Although civilian radioactive waste encompasses a wide range of materials, most of the current debate focuses on highly radioactive spent fuel from nuclear power plants. 

The Nuclear Waste Policy Act of 1982 (NWPA) calls for disposal of spent nuclear fuel in a deep geologic repository. NWPA established the Office of Civilian Radioactive Waste Management (OCRWM) in the Department of Energy (DOE) to develop such a repository and required the program's civilian costs to be covered by a fee on nuclear-generated electricity, paid into the Nuclear Waste Fund. Amendments to NWPA in 1987 restricted DOE's repository site studies to Yucca Mountain in Nevada. 

DOE submitted a license application for the proposed Yucca Mountain repository to the Nuclear Regulatory Commission (NRC) on June 3, 2008, and NRC docketed the application September 8, 2008. The NRC license must be based on radiation exposure standards set by the Environmental Protection Agency (EPA), which issued revised standards September 30, 2008. The State of Nevada strongly opposes the Yucca Mountain project, disputing DOE's analysis that the repository would meet EPA's standards. Risks cited by repository opponents include excessive water infiltration, earthquakes, volcanoes, and human intrusion. 

The Obama Administration "has determined that developing the Yucca Mountain repository is not a workable option and the Nation needs a different solution for nuclear waste disposal," according to the DOE FY2011 budget justification. As a result, no funding for Yucca Mountain or OCRWM is being requested for FY2011. DOE filed a motion with NRC to withdraw the Yucca Mountain license application on March 3, 2010. DOE's withdrawal motion has drawn opposition from states that have defense-related and civilian waste awaiting permanent disposal. Further consideration of the withdrawal motion was suspended by NRC's licensing board April 6, 2010, pending a ruling on related federal court cases. 

Alternatives to Yucca Mountain are to be evaluated by the Blue Ribbon Commission on America's Nuclear Future, which held its first meeting March 25-26, 2010. Congress provided $5 million for the Commission in the FY2010 Energy and Water Development Appropriations Act. The Commission is to study options for temporary storage, treatment, and permanent disposal of highly radioactive nuclear waste, along with an evaluation of nuclear waste research and development programs and the need for legislation. A draft report is to be issued within 18 months and a final report within two years. 

DOE's Office of Nuclear Energy (NE) is to take over the remaining functions of OCRWM and "lead all future waste management activities," according to the FY2011 budget justification. Substantial funding has been requested for NE to conduct research on nuclear waste disposal technologies and options and to provide support for the Blue Ribbon Commission. 

Congress provided $198.6 million to OCRWM for FY2010 to continue the Yucca Mountain licensing process but terminate all development activities related to the proposed repository. DOE plans to reprogram the FY2010 funding toward shutting down the program. 

Date of Report: April 9, 2010
Number of Pages: 25
Order Number: RL33461
Price: $29.95

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Friday, April 23, 2010

The Role of Federal Gasoline Excise Taxes in Public Policy

Robert Pirog
Specialist in Energy Economics

American drivers, compared to those in other industrialized nations in Europe, pay relatively low federal, state, and local gasoline and diesel excise taxes. The federal taxes are used specifically to fund annual highway construction, maintenance, and mass transit. Over the years, proposals have come forth to raise the federal tax as a way to address long-standing national policy concerns, including U.S. dependence on imported oil and various environmental problems related to large volumes of gasoline consumption. 

Policy attention on the role of the gasoline tax has also increased recently due to three major developments. First, the 2008 oil and gasoline price run-up and subsequent economic downturn have led to a decline in gasoline tax revenues available for needed highway construction and maintenance. Second, the possibility of enacting some form of binding climate change legislation in the next several years will eventually mean an increase in the relative price of fossil fuels, including oil and gasoline. Third, the volatility of gasoline prices has affected investment planning (e.g. for alternative fuels) and arguably contributed to the troubles facing domestic automobile manufacturers. In the above context, this report outlines some of the macroeconomic and microeconomic pros and cons of using the federal gasoline excise tax for policy purposes in addition to the funding of highway infrastructure. 

Whether an increase in the gasoline tax was fixed or variable, advocates argue that increasing the relative price of gasoline would promote beneficial short- and long-term changes in how we use this form of energy. A higher relative price would encourage consumers and manufacturers to move toward more fuel-efficient vehicles, or to switch to alternative fuels, thus reducing oil consumption and imports, reducing air pollution, and possibly encouraging greater use of mass transit. Advocates further argue that such taxes could be recycled back into the economy through changes in the tax structure and/or increased investment in renewable or alternative fuels, among other options. 

Opponents of gasoline tax increases point to the effects on consumer and business spending, which affect the short- and long-term performance of the overall U.S. economy, especially in a time of needed economic recovery. Additionally, opponents point out that the gasoline tax has a regressive impact and affects rural areas disproportionately. Opponents also argue that such tax revenues could be better spent if left in the private sector. 

Gasoline price increases due to market forces, or earlier tax increases, of course, have been part of the economic environment for almost four decades. Since the mid-1970s, there have been significant spikes in gasoline prices due to world oil market turmoil attributed to political conflict and war in the Middle East and to financial market speculation. Depending on the specified purpose of a new gasoline tax increase, it could be modest, or more significant. Because the demand for gasoline is quite price insensitive (inelastic), significant revenues could be generated with little change in real consumption, even with a relatively low tax increase. A more substantial tax increase would likely be needed to change consumer preferences and business investment decisions. Any debate on modifying the gasoline excise tax will likely revolve around these tensions.

Date of Report: April 15, 2010
Number of Pages: 11
Order Number: R40808
Price: $29.95

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Wednesday, April 21, 2010

Electricity Transmission Cost Allocation

Stan Mark Kaplan
Specialist in Energy and Environmental Policy

Adam Vann
Legislative Attorney

Perhaps the most contentious electricity transmission financing issue is cost allocation for new interstate transmission lines—that is, deciding which electricity customers pay how much of the cost of building and operating a new transmission line that crosses several states. This report provides background and analysis of current transmission cost allocation policy and issues. 

The report makes several observations concerning current cost allocation policy at the federal and state levels. First, there is no uniformity in cost allocation procedures, and at least to date the Federal Energy Regulatory Commission (FERC) has declined to go beyond establishing general principles. Second is the regional focus of current processes for making cost allocation decisions. This is consistent with FERC's efforts to encourage a regional perspective on transmission planning that incorporates many stakeholders in the planning process. Third, determining a method of allocating the costs of "economic" upgrades to the transmission grid (i.e., projects aimed at reducing the cost of operating the power system) has proved more complex than for reliability upgrades. 

The report also reviews several recent developments in the cost allocation area. These include: 

• The decision of the Seventh Circuit in Illinois Commerce Commission v. FERC, to reject a cost allocation plan approved by FERC which would have permitted "socialization" of the costs for some new transmission projects (i.e., allowing the costs to be spread widely among ratepayers in the PJM Interconnection, even those who do not substantially or clearly benefit from a project). 

• The addition of the "Corker Amendment" to S. 1462, the American Clean Energy Leadership Act. Supporters argue that this amendment would require FERC to ensure that the costs of new transmission projects are allocated commensurate with measurable benefits. Opponents argue that the amendment would establish an impossible-to-meet threshold for quantifying project costs and benefits. 

• FERC's decision to take an in-depth look at cost allocation and other transmission planning issues as part of a new docket. In its request for comments (Docket AD09-8, Transmission Planning Processes under Order No. 890, June 30, 2009) FERC observed that its "best remaining opportunity to eliminate barriers to new transmission construction may therefore be to provide greater certainty in its policies for allocating the cost of new transmission facilities, particularly for facilities that cross multiple transmission systems." 

Recent public comments by FERC commissioners also suggest that the Commission may release a proposed transmission cost allocation policy, perhaps before the end of 2010. 

Date of Report: April 19, 2010
Number of Pages: 19
Order Number: R41193
Price: $29.95

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Tuesday, April 20, 2010

Capturing CO2 from Coal-Fired Power Plants: Challenges for a Comprehensive Strategy

Larry Parker
Specialist in Energy and Environmental Policy

Peter Folger
Specialist in Energy and Natural Resources Policy

Any comprehensive approach to substantially reduce greenhouse gases must address the world's dependency on coal for one-quarter of its energy demand, including almost half of its electricity demand. To maintain coal in the world's energy mix in a carbon-constrained future would require development of a technology to capture and store its carbon dioxide emissions. This situation suggests to some that any greenhouse gas reduction program be delayed until such carbon capture technology has been demonstrated. However, technological innovation and the demands of a carbon control regime are interlinked; a technology policy is no substitute for environmental policy and should be developed in concert with it. 

Much of the debate about developing and commercializing carbon capture technology has focused on the role of research, development, and deployment (technology-push mechanisms). However, for technology to be fully commercialized, it must also meet a market demand—a demand created either through a price mechanism or a regulatory requirement (demand-pull mechanisms). Any conceivable carbon capture technology for coal-fired power plants will increase the cost of electricity generation from affected plants because of efficiency losses. Therefore, few companies are likely to install such technology until they are required to, either by regulation or by a carbon price. Regulated industries may find their regulators reluctant to accept the risks and cost of installing technology that is not required. 

The Department of Energy (DOE) has invested millions of dollars since 1997 in carbon capture technology research and development (R&D), and the question remains whether it has been too much, too little, or about the right amount. In addition to appropriating funds each year for the DOE program, Congress supported R&D investment through provisions for loan guarantees and tax credits. Congress also authorized a significant expansion of carbon capture and sequestration (CCS) spending at DOE in the Energy Independence and Security Act of 2007. Funding for carbon capture technology has increased substantially as a result of enactment of the American Recovery and Reinvestment Act of 2009. 

Legislation introduced in the 111th and 110th Congresses invokes the symbolism of the Manhattan project of the 1940s and the Apollo program of the 1960s to frame proposals for large-scale energy policy initiatives that include developing CCS technology. However, commercialization of technology and integration of technology into the private market were not goals of either the Manhattan project or Apollo program. 

Finally, it should be noted that the status quo for coal with respect to climate change legislation isn't necessarily the same as "business as usual." The financial markets and regulatory authorities appear to be hedging their bets on the outcomes of any federal legislation with respect to greenhouse gas reductions, and becoming increasingly unwilling to accept the risk of a coal-fired power plant with or without carbon capture capacity. The lack of a regulatory scheme presents numerous risks to any research and development effort designed to develop carbon capture technology. Ultimately, it also presents a risk to the future of coal.

Date of Report: April 15, 2010
Number of Pages: 37
Order Number: RL34621
Price: $29.95

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Offshore Oil and Gas Development: Legal Framework

Adam Vann
Legislative Attorney

The development of offshore oil, gas, and other mineral resources in the United States is impacted by a number of interrelated legal regimes, including international, federal, and state laws. International law provides a framework for establishing national ownership or control of offshore areas, and domestic federal law mirrors and supplements these standards. 

Governance of offshore minerals and regulation of development activities are bifurcated between state and federal law. Generally, states have primary authority in the three-geographical-mile area extending from their coasts. The federal government and its comprehensive regulatory regime govern those minerals located under federal waters, which extend from the states' offshore boundaries out to at least 200 nautical miles from the shore. The basis for most federal regulation is the Outer Continental Shelf Lands Act (OCSLA), which provides a system for offshore oil and gas exploration, leasing, and ultimate development. Regulations run the gamut from health, safety, resource conservation, and environmental standards to requirements for production based royalties and, in some cases, royalty relief and other development incentives. 

In 2008, both the President and the 110th Congress removed previously existing moratoria on offshore leasing on most areas of the outer continental shelf. As of the date of this report, the 111th Congress has not reinstated the appropriations-based moratoria that were not renewed by the 110th Congress, and the President has advocated moving forward with oil and natural gas exploration and production in some areas previously under moratoria. 

Other recent legislative and regulatory activity also suggests an increased willingness to allow offshore drilling in the U.S. Outer Continental Shelf. In 2006, Congress passed a measure that would allow new offshore drilling in the Gulf of Mexico. Areas of the North Aleutian Basin off the coast of Alaska have also been recently made available for leasing by executive order. The five-year plan for offshore leasing for 2007-2012 adopted by the Minerals Management Service (MMS) in December of 2007 proposed further expansion of offshore leasing. At the same time, the role of the coastal states in deciding whether to lease in areas adjacent to their shores has also received recent attention. 

In addition to these legislative and regulatory efforts, there has also been significant litigation related to offshore oil and gas development. Cases handed down over a number of years have clarified the extent of the Secretary of the Interior's discretion in deciding how leasing and development are to be conducted.

Date of Report: April 6, 2010
Number of Pages: 23
Order Number: RL33404
Price: $29.95

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Monday, April 19, 2010

Outer Continental Shelf Moratoria on Oil and Gas Development

Curry L. Hagerty
Specialist in Energy and Natural Resources Policy

Moratoria provisions for the outer continental shelf (OCS), enacted as part of the Department of the Interior appropriations over 26 years, prohibited federal spending on oil and gas development in certain locations and for certain activities. These annual congressional moratoria expired on September 30, 2008. While the expiration of the restrictions does not make leasing and drilling permissible in all offshore areas, it is a significant development in conjunction with other changes in offshore leasing activity. The ending of the moratoria signals a shift in policy that may affect other OCS policies as well. 

The chief policy goal in not continuing annual moratoria beyond FY2008 was to increase domestic OCS energy production. Also influential were policies to diversify domestic energy production, including by launching renewable energy programs in the OCS, and the availability of new technology that would allow OCS activity in deeper waters beyond clear jurisdictional boundaries. These developments, taken together, reflect a transformative change in OCS policy alternatives. Their impact during periods of volatility in oil markets and in an exceptionally weak economy focuses congressional attention on federal priorities for OCS development. 

In the past, Congress has addressed OCS oil and gas development by balancing numerous factors, including economic feasibility, environmental risk, technology, and ocean sovereignty. Disagreements tend to arise in each of these four issue areas between those in favor of offshore oil and gas development and those opposed. Positions are sharply divided on national and coastal state goals for OCS activities in former moratorium areas, and in areas in the Gulf of Mexico and the Arctic where prospective drilling activities or renewable energy projects are permissible. 

Around the world, offshore activities are changing, as is reflected in international offshore policy disagreements that are similar to domestic policy disagreements. Economic opportunity and technological advances are driving the global search for energy sources in deeper ocean waters. These activities may clash with national or international environmental policies. Within the framework of the United Nations Convention on the Law of the Sea (UNCLOS), a number of countries are establishing parameters for offshore activities, including preparing claims for extended continental shelf areas. Although the United States has not ratified UNCLOS, U.S. efforts are underway to address extended continental shelf areas in a manner not inconsistent with the UNCLOS process. 

The expiration of congressional moratoria is part of a series of changes in domestic and international OCS energy development policy. Moratorium policies have impacted federal-state coordination on economic and environmental concerns. As a result of changes in these policies, federal-state coordination and nation-to-nation coordination may emerge as issues for Congress as it addresses economic and environmental challenges in the OCS.

Date of Report: April 7, 2010
Number of Pages: 22
Order Number: R41132
Price: $29.95

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Friday, April 2, 2010

Renewable Energy Programs in the 2008 Farm Bill

Megan Stubbs
Analyst in Agricultural Conservation and Natural Resources Policy

The Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the 2008 farm bill) extends and expands many of the renewable energy programs originally authorized in the Farm Security and Rural Investment Act of 2002 (P.L. 107-171, 2002 farm bill). The bill also continues the emphasis on the research and development of advanced and cellulosic bioenergy authorized in the 2007 Energy Independence and Security Act (P.L. 110-140). 

Farm bill debate over U.S. biomass-based renewable energy production policy focused mainly on the continuation of subsidies for ethanol blenders, continuation of the import tariff for ethanol, and the impact of corn-based ethanol on agriculture. The enacted bill requires reports on the economic impacts of ethanol production, reflecting concerns that the increasing share of corn production being used for ethanol had contributed to high commodity prices and food price inflation. 

Title VII, the research title of the 2008 farm bill, contains numerous renewable energy related provisions that promote research, development, and demonstration of biomass-based renewable energy and biofuels. The Sun Grant Initiative coordinates and funds research at land grant institutions on biobased energy technologies. The Agricultural Bioenergy Feedstock and Energy Efficiency Research and Extension Initiative provides support for on-farm biomass energy crop production research and demonstration. 

Title IX, the energy title of the farm bill, authorizes mandatory funds (not subject to appropriations) of $1.1 billion, and discretionary funds (subject to appropriations) totaling $1.0 billion, for the FY2008-FY2012 period. Energy grants and loans provided through initiatives such as the Bioenergy Program for Advanced Biofuels promote the development of cellulosic biorefinery capacity. The Repowering Assistance Program supports increasing efficiencies in existing refineries. Programs such as the Rural Energy for America Program (REAP) assist rural communities and businesses in becoming more energy-efficient and self-sufficient, with an emphasis on small operations. The Biomass Crop Assistance Program, the Biorefinery Assistance Program, and the Forest Biomass for Energy Program provide support to develop alternative feedstock resources and the infrastructure to support the production, harvest, storage, and processing of cellulosic biomass feedstocks. Cellulosic feedstocks—for example, switchgrass and woody biomass—are given high priority both in research and funding. 

Title XV of the 2008 farm bill contains tax and trade provisions. It continues current biofuels tax incentives, reducing those for corn-based ethanol but expanding tax credits for cellulosic ethanol. The tariff on ethanol imports is extended. 

Implementation of the farm bill's energy provisions is underway. President Obama, in May 2009, directed the U.S. Department of Agriculture (USDA) and the Department of Energy (DOE) to accelerate implementation of renewable energy programs. Notices and proposed rules have appeared in the Federal Register soliciting applications for the Biorefinery Program, the Rural Energy for America Program, and the Biomass Crop Assistance Program.

Date of Report: March 22, 2010
Number of Pages: 20
Order Number: RL34130
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Thursday, April 1, 2010

Energy and Water Development: FY2011 Appropriations

Carl E. Behrens, Coordinator
Specialist in Energy Policy

The Energy and Water Development appropriations bill provides funding for civil works projects of the Army Corps of Engineers (Corps), the Department of the Interior's Bureau of Reclamation, the Department of Energy (DOE), and a number of independent agencies. Key budgetary issues for FY2011 involving these programs may include the following: 

• the distribution of Corps appropriations across the agency's authorized planning, construction, and maintenance activities (Title I); 

• support of major ecosystem restoration initiatives, such as Florida Everglades (Title I) and California "Bay-Delta" (CALFED) and San Joaquin River (Title II); 

• alternatives to the proposed national nuclear waste repository at Yucca Mountain, Nevada, which the Administration has abandoned (Title III: Nuclear Waste Disposal); 

• several new initiatives proposed for Energy Efficiency and Renewable Energy (EERE) programs (Title III); and 

• funding decisions in DOE's Office of Environmental Management. 

Funding for FY2010 Energy and Water Development programs is contained in H.R. 3183, which the House passed July 17, 2009. The Senate passed its version of H.R. 3183 July 29. The Conference Committee issued its report (H.Rept. 111-278) September 30, and the House passed the conference bill October 1, and the Senate October 15. The President signed the bill October 28 (P.L. 111-85). 

President Obama's proposed FY2011 budget for Energy and Water Development programs was released in February 2010. 

Date of Report: March 23, 2010
Number of Pages: 50
Order Number:R41150
Price: $29.95

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