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Wednesday, December 26, 2012

Biofuels: A Compendium

Since the late 1970s, U.S. policymakers at both the federal and state levels have enacted a variety of incentives, regulations, and programs to encourage the production and use of agriculture-based biofuels. Initially, federal biofuels policies were developed to help kick-start the biofuels industry during its early development, when neither production capacity nor a market for the finished product was widely available. Federal policy has played a key role in helping to close the price gap between biofuels and cheaper petroleum fuels. Now, as the industry has evolved, other policy goals (e.g., national energy security, climate change concerns, support for rural economies) are cited by proponents as justification for continuing policy support.

The U.S. biofuels sector has responded to these government incentives by expanding output every year since 1980 (with the exception of 1996), with important implications for the domestic and international food and fuel sectors. The production of ethanol (the primary biofuel produced in the United States) has risen from about 175 million gallons in 1980 to nearly 14 billion gallons in 2011. U.S. biodiesel production, albeit much smaller, has also shown strong growth, rising from 0.5 million gallons in 1999 to a projected 800 million gallons in 2011.

Despite this rapid growth, total agriculture-based biofuels production accounted for only about 8% of U.S. transportation fuel consumption (gasoline and diesel combined) on a volume basis and 6% on a gasoline-equivalent basis in 2011. Federal biofuels policies have had costs, including unintended market and environmental consequences and large federal outlays (estimated at over $6 billion in 2011). Despite the direct and indirect costs of federal biofuels policy and the relatively small role of biofuels as an energy source, the U.S. biofuels sector continues to push for federal involvement. But critics of federal policy intervention in the biofuels sector have also emerged.

Date of Report: November 8, 2012
Number of Pages: 206
Order Number: C-12006
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Wednesday, December 19, 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: December 19, 2012
Number of Pages: 237
Order Number: C-12023
Price: $59.95

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Tuesday, December 18, 2012

Nuclear Energy: Overview of Congressional Issues

Mark Holt
Specialist in Energy Policy

The policy debate over the role of nuclear power in the nation’s energy mix is rooted in the technology’s fundamental characteristics. Nuclear reactors can produce potentially vast amounts of energy with relatively low consumption of natural resources and emissions of greenhouse gases and other pollutants. However, facilities that produce nuclear fuel for civilian power reactors can also produce materials for nuclear weapons. The process of nuclear fission (splitting of atomic nuclei) to generate power also results in the production of radioactive material that must be contained in the reactor and can remain hazardous for thousands of years. How to manage the weapons proliferation and safety risks of nuclear power, or whether nuclear power is worth those risks, are issues that have long been debated in Congress.

The 104 licensed nuclear power reactors at 65 sites in the United States generate about 20% of the nation’s electricity. Five new reactors are currently licensed for construction. About a dozen more are planned, but whether they move forward will depend largely on their economic competitiveness with natural gas and coal plants. Throughout the world, 436 reactors are currently in service, and 62 more are under construction.

The March 2011 disaster at the Fukushima Dai-ichi nuclear power plant in Japan increased attention to nuclear safety throughout the world. The U.S. Nuclear Regulatory Commission (NRC), which issues and enforces nuclear safety requirements, established a task force to identify lessons from Fukushima applicable to U.S. reactors. The task force’s report led to NRC’s first Fukushima-related regulatory requirements on March 12, 2012. Several other countries, such as Germany and Japan, eliminated or reduced their planned future reliance on nuclear power after the accident.

Highly radioactive spent nuclear fuel that is regularly removed from nuclear power plants is currently stored at plant sites in the United States. Plans for a permanent underground repository at Yucca Mountain, NV, were abandoned by the Obama Administration, although that decision is being challenged in court. The Obama Administration appointed the Blue Ribbon Commission on America’s Nuclear Future to recommend an alternative nuclear waste policy. The Commission recommended in January 2012 that new candidate sites for nuclear waste storage and disposal facilities be selected through a “consent based” process.

The level of security that must be provided at nuclear power plants has been a high-profile issue since the 9/11 terrorist attacks on the United States in 2001. Since those attacks, NRC issued a series of orders and regulations that substantially increased nuclear plant security requirements, although industry critics contend that those measures are still insufficient.

Encouraging exports of U.S. civilian nuclear products, services, and technology while making sure they are not used for foreign nuclear weapons programs has long been a fundamental goal of U.S. nuclear energy policy. Recent proposals to build nuclear power plants in several countries in the less developed world, including the Middle East, have prompted concerns that international controls may prove inadequate.

Date of Report: December 11, 2012
Number of Pages: 13
Order Number: R42853
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Monday, December 3, 2012

Analysis of Renewable Identification Numbers (RINs) in the Renewable Fuel Standard (RFS)

Brent D. Yacobucci
Section Research Manager

The federal Renewable Fuel Standard (RFS) was established in the Energy Policy Act of 2005 (EPAct) and significantly expanded in the Energy Independence and Security Act of 2007 (EISA). The RFS requires the use of renewable biofuels in transportation fuel. For 2012, the RFS requires the use of 15.2 billion gallons of renewable fuel. Within the larger mandate, there are submandates (“carve-outs”) for advanced biofuels, including at least 1 billion gallons of biomassbased diesel fuel (BBD) in 2012. By 2022, the RFS requires the use of 36 billion gallons of renewable fuels, including 21 billion gallons of advanced biofuels.

The RFS is a market-based compliance system in which obligated parties (generally refiners and/or terminal operators) must submit credits to cover their obligations. These credits – Renewable Identification Numbers, or RINs – are effectively commodities that can be bought or sold like other commodities. For each gallon of renewable fuel in the RFS program, one RIN is generated. Each RIN is a 38-digit number, with blocks of digits corresponding to various data, including the year the RIN was generated, the producer of the fuel, and the type of fuel. RINs are valid for use in the year they are generated and the following year.

From the beginning of the RFS program, there have been concerns with RIN generation and the RIN market. As the RINs are essentially numbers in a computerized account, there have been errors and opportunities for fraud. Because of concerns over transposed digits, invalid characters, allegations of double-counting (intentional or unintentional) and other errors and inaccuracies, when EPA finalized rules for the RFS as expanded by EISA (the “RFS2”), EPA also established a new in-house trading system in an effort to address these concerns. All RIN transactions must be cleared through this in-house system, called the EPA Moderated Transaction System (EMTS). From the beginning of the RFS2 EPA has maintained that all due diligence remains the duty of obligated parties. Under this “buyer beware” system those purchasing or receiving RINs must certify their validity on their own, and they are responsible for any fraudulent RINs they pass on to other buyers or submit to EPA for compliance.

In late 2011 and early 2012, EPA issued Notices of Violations (NOVs) to three companies that the agency alleges fraudulently generated a combined 140 million biodiesel RINs in 2010 and 2011. Because of these RIN fraud cases, EPA is looking at establishing a system whereby RINs can be certified by third parties registered with EPA. (EPA may be considering other options but this is the only one the agency has publicly discussed.) EPA is considering whether such certification would provide obligated parties with an “affirmative defense” if RINs are later found to fraudulent – i.e., obligated parties would not be liable for penalties under the Clean Air Act for the use of such RINs. Key questions include whether such an affirmative defense would also eliminate the requirement to purchase make-up RINs. EPA expects to issue a proposed rule in late 2012 or early 2013, with a final rule some time in mid-2013.

In addition to agency action, at least one bill has been introduced that would amend the compliance system. H.R. 6444 would require EPA to establish a RIN certification system and would preclude the agency from later invalidating any certified RINs. Thus, under the bill, any RIN found subsequently to be fraudulent would still count toward an obligated party’s compliance, without penalties.

Date of Report: November 16, 2012
Number of Pages: 19
Order Number: R42824
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