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Thursday, November 29, 2012

Nuclear Energy: A Compendium



This Compendium focuses exclusively on nuclear energy. For in-depth information on the related issue of nuclear waste, consult Nuclear Waste: A Compendium, Order No. C-12024.

The This nuclear energy Compendium includes sections on topics including U.S. federal government nuclear energy policy, nuclear energy cooperation with foreign countries, nuclear plant design and security, and funding.

Nuclear energy is viewed by its supporters as a virtually inexhaustible and clean source of power. But the industry has been hampered by construction cost overruns, delays by regulators and interveners, concerns about nuclear weapons proliferation, and controversy over nuclear waste disposal. But as the price of conventional fossil fuels has grown more volatile, the economics of nuclear power have begun to appear more attractive. In addition, concern about carbon dioxide emissions from fossil fuels, particularly coal, has led some former critics of nuclear energy to reconsider its merits.

Federal incentives may play a key role in the future of U.S. nuclear power. Under the Energy Policy Act of 2005 (P.L. 109-58), new reactors are eligible for tax credits, loan guarantees, and payments for regulatory delays. Those incentives— combined with volatile fossil fuel prices and carbon dioxide concerns— have led to license applications for more than two dozen new power reactors. Proposals for additional federal incentives, such as increased loan guarantees, are likely to be a major subject of congressional debate.

Safety has been a fundamental issue for nuclear power since its inception. Congressional concern about nuclear power plant safety since 2001 has focused particularly on the potential consequences of terrorist attacks. The Energy Policy Act of 2005 included several significant nuclear security measures that had been debated since the attacks. Other safety issues have also unexpectedly arisen from time to time, despite the good safety record of most plants in recent years.

Date of Report: October 19, 2012
Number of Pages: 225
Order Number: C-12023
Price: $59.95

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Tuesday, November 20, 2012

Keystone XL Pipeline Project: Key Issues



Paul W. Parfomak
Specialist in Energy and Infrastructure Policy

Robert Pirog
Specialist in Energy Economics

Linda Luther
Analyst in Environmental Policy

Adam Vann
Legislative Attorney


In May 2012, Canadian pipeline company TransCanada reapplied to the U.S. Department of State for a Presidential Permit to build the Keystone XL pipeline. The pipeline would transport crude oil from the oil sands region of Alberta, Canada, to the existing Keystone Pipeline System in Nebraska. It also could accept U.S. crude from the Bakken oil fields in Montana and North Dakota. A second segment of the Keystone XL pipeline system, the Gulf Coast Project, is proceeding separately to connect existing pipeline facilities in Oklahoma to refineries in Texas. When completed, the entire Keystone XL pipeline system would ultimately have capacity to transport 830,000 barrels of crude oil per day to U.S. market hubs. TransCanada submitted the May 2012 permit application after its 2008 Keystone XL permit application was denied.

The State Department has jurisdiction over the Keystone XL pipeline’s approval because it would cross the U.S. border. Before it can approve such a permit, the department must determine that the project is in the “national interest,” accounting for potential effects on the environment, economy, energy security, and foreign policy, among other factors. Environmental impacts are considered under the National Environmental Policy Act, as documented in an Environmental Impact Statement (EIS). For the 2008 permit application, a final EIS was issued in August 2011, followed by a public review period. Largely in response to public comments and efforts by the state of Nebraska, the State Department determined that it needed to examine alternative pipeline routes that would avoid the environmentally sensitive Sand Hills region of Nebraska, a sand dune formation with highly porous soil and shallow groundwater that recharges the Ogallala aquifer.

The Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78) required the Secretary of State to approve or deny the original 2008 project application within 60 days. On January 18, 2012, citing insufficient time under this deadline to properly assess the reconfigured project, the State Department denied the Keystone XL permit. Since then, TransCanada has worked with Nebraska officials to identify a pipeline route avoiding the Sand Hills. Its May 2012 permit application reflects that effort. The State Department has begun the NEPA process anew, but will largely supplement the August 2011 final EIS to include analysis of the new route in Nebraska, as well as analysis of any significant environmental issues or information that has become available since August 2011. The department estimates that it will determine whether to approve or deny the new Presidential Permit by early 2013.

Since the State Department’s denial of TransCanada’s original permit application, Congress has debated legislative options addressing the Keystone XL pipeline. The North American Energy Access Act (H.R. 3548) would transfer permitting authority for the Keystone XL pipeline project to the Federal Energy Regulatory Commission, requiring issuance of a permit within 30 days of enactment. Several other bills (H.R. 3811, H.R. 4000, H.R. 4301, S. 2041, and S. 2199) would immediately approve the 2008 permit application filed by TransCanada, allowing for later alteration of the pipeline route in Nebraska. A House bill (H.R. 6164), the Domestic Energy and Jobs Act (S. 3445), and S.Amdt. 2789 would eliminate the Presidential Permit requirement for the reconfigured Keystone XL pipeline as proposed in TransCanada’s permit application filed on May 4, 2012. S. 2100 and H.R. 4211 would suspend sales of petroleum products from the Strategic Petroleum Reserve until issuance of a Presidential Permit for the Keystone XL project. Although some in Congress have asserted congressional authority over Keystone XL, changing the State Department’s role in issuing cross-border infrastructure permits may raise questions about the President’s executive authority. H.R. 3900 would seek to ensure that crude oil transported by the Keystone XL pipeline, or resulting refined petroleum products, would be sold only into U.S. markets, but this bill could raise issues related to international trade agreements.



Date of Report: November 5, 2012
Number of Pages: 42
Order Number: R41668
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Friday, November 16, 2012

U.S. Renewable Electricity: How Does Wind Generation Impact Competitive Power Markets?



Phillip Brown
Specialist in Energy Policy

U.S. wind power generation has experienced rapid growth in the last 20 years as total installed capacity has increased from 1,500 megawatts (MW) in 1992 to more than 50,000 MW in August of 2012. According to the Energy Information Administration (EIA), wind power provided approximately 3% of total U.S. electricity generation in 2011. Two primary policies provide market and financial incentives that support the wind industry and have contributed to U.S. wind power growth: (1) production tax credit (PTC)—a federal tax incentive of 2.2 cents for each kilowatt-hour (kWh) of electricity produced by a qualified wind project (set to expire for new projects at the end of 2012), and (2) renewable portfolio standards (RPS)—state-level policies that encourage renewable power by requiring that either a certain percentage of electricity be generated by renewable energy sources or a certain amount of qualified renewable electricity capacity be installed.

The concentration of wind power projects within competitive power markets managed by regional transmission operators (RTOs), the focus of this report, has resulted in several concerns expressed by power generators and other market participants. Three specific concerns explored in this report include: (1) How might wind power affect wholesale market clearing prices? (2) Does wind power contribute to negative wholesale power price events? and (3) Does wind power impact electric system reliability? These concerns might be considered during congressional debate about the future of wind PTC incentives.

When considering the potential impacts of wind power on electric power markets, it is important to recognize that wholesale power markets are both complex and multi-dimensional. Wholesale power markets are influenced by a number of factors, including weather, electricity demand, natural gas prices, transmission constraints, and location. Therefore, determining the direct impact of a single variable, in this case wind power, on the financial economics of power generators can be difficult. In 2012, wholesale electric power prices were down from recent highs in 2008, and lower price trends can result in financial pressure for power generators in RTO markets. Arguably, however, the two primary contributors to this decline are low natural gas prices and low electricity demand.

Wind power generation can potentially reduce wholesale electricity prices, in certain locations and during certain seasons and times of day, since wind typically bids a zero ($0.00) price into wholesale power markets. Additionally, independent market monitor reports for three different RTOs each indicate that wind generators will sometimes bid a negative wholesale price in order to ensure electricity dispatch. The ability of wind generators to bid negatively priced power is generally attributed to value associated with PTC incentives and the ability to sell renewable energy credits (REC). However, wholesale power price reductions and negative electricity prices associated with wind generation need to be considered in context with other dimensions of organized power markets. For example, other revenue sources (i.e., capacity markets) may be available to generators in certain RTO market areas. Also, generators oftentimes enter into bilateral power purchase agreements that can provide a hedge against power price volatility. Therefore, the absolute impact of wind electricity on the economics of power generators is difficult to determine due to the many variables and dimensions that influence wholesale power markets.

With regard to how wind power might impact electricity system reliability, two aspects of reliab system to manage the variable and sometimes unpredictable nature of wind power production, and (2) resource adequacy and capacity margins—the potential for wind power generation to either influence power plant retirements or contribute to market conditions that do not support investment in new capacity resources. RTOs are currently implementing various initiatives (i.e., dispatchable resource programs, renewable energy transmission projects) to address the variable generation characteristics of wind power. Furthermore, each RTO market is designed to provide the economic signals necessary to stimulate capacity additions in order to ensure resource adequacy and maintain capacity margins. However, should wind power generation continue to grow, it is uncertain if current RTO market designs will provide the signals needed to encourage specific types of generation capacity (e.g., operating and spinning reserves) necessary to manage the variable nature of wind power.ility are typically discussed: (1) impacts to system operations—the ability of the power 



Date of Report: November 7, 2012
Number of Pages: 27
Order Number: R42818
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Energy Policy: 112th Congress Issues and Legislative Proposals



Carl E. Behrens
Specialist in Energy Policy

Energy policy in the United States has focused on three major goals: assuring a secure supply of energy, keeping energy costs low, and protecting the environment. In pursuit of those goals, government programs have been developed to improve the efficiency with which energy is utilized, to promote the domestic production of conventional energy sources, and to develop new energy sources, particularly renewable sources.

Implementing these programs has been controversial because of varying importance given to different aspects of energy policy. For some, dependence on imports of foreign oil, particularly from the Persian Gulf, is the primary concern; for others, the indiscriminate use of fossil fuels, whatever their origin, is most important. The contribution of burning fossil fuels to global climate change is particularly controversial. Another dichotomy is between those who see government intervention as a positive force and those who view it as a necessary evil at best.

Energy policy is an important issue in the presidential campaign, and there are sharp differences between the positions of President Obama and Republican candidate Mitt Romney, and between most Republicans and Democrats in Congress. The Obama Administration has vigorously pushed energy efficiency and renewable energy initiatives, at the same time claiming to encourage development of oil and natural gas resources. President Obama has declared global climate change a major issue. The Romney campaign argues that the Obama Administration has blocked oil and gas development, and declares that so-called green technologies are too expensive to compete in the market. Alternative energy funding, according to Romney, should be concentrated on basic research. On global climate change, Romney acknowledges that human activity contributes to global warming, but claims there is no consensus on its extent or severity. He opposes unilateral measures that do not include actions by developing countries.

The 112th Congress has not taken up comprehensive energy legislation, but numerous bills have been taken up on specific energy issues. Several notable bills that have passed the House but have not been taken up by the Senate are H.R. 4480, aimed at increasing leasing of federal land for oil and gas production; H.R. 2401 and H.R. 3409, which would limit EPA’s issuance of new emissions restrictions for coal-fired power plants; and H.R. 6213, which would prohibit the Department of Energy from granting loan guarantees for innovative and renewable energy projects.



Date of Report: November 8, 2012
Number of Pages: 12
Order Number: R42756
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Thursday, November 15, 2012

Wind Energy: Offshore Permitting



Adam Vann
Legislative Attorney

Technological advancement, financial incentives, and policy concerns have driven a global expansion in the development of renewable energy resources. Wind energy, in particular, is often cited as one of the fastest-growing commercial energy sources in the world. Currently, all U.S. wind energy facilities are based on land. However, multiple offshore projects have been proposed and are at various stages of the federal permitting process.

The United States has the authority to permit and regulate offshore wind energy development within the zones of the oceans under its jurisdiction. The federal government and coastal states each have roles in the permitting process, the extents of which depend on whether the project is located in state or federal waters. Currently, no single federal agency has exclusive responsibility for permitting related to activities on submerged lands in federal waters; authority is allocated among various agencies based on the nature of the resource to be exploited and the potential impacts incidental to such exploitation. The same is true for the offshore wind energy context, where several federal agencies have a role to play in permitting development and operation activities.

Section 388 of the Energy Policy Act of 2005 (EPAct; P.L. 109-58) amended the Outer Continental Shelf Lands Act (OCSLA) to address previous uncertainties regarding offshore wind projects. This provision retained a role for the Army Corps of Engineers in permitting under the Rivers and Harbors Act but grants ultimate authority over offshore wind energy development to the Secretary of the Interior. The statutory authority granted by Section 388 is administered by the Bureau of Ocean Energy Management (BOEM), an agency within the Department of the Interior (DOI). Since the passage of EPAct, BOEM has promulgated rules and guidelines governing the permitting and operation of offshore wind facilities.



Date of Report: October 17, 2012
Number of Pages: 15
Order Number: R40175
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