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Alexander Says Senate Energy Bill Is 'Shaping Up'

Comparing the surprise Americans felt from the terrorist attacks of 9/11 to the surprise Americans will feel from soaring energy prices, Sen. Lamar Alexander (R-TN) said last week that his stand-alone natural gas legislation is aimed at bringing energy prices down and alleviating foreign energy reliance.

Speaking at an energy media breakfast sponsored by The Energy Daily and BP America, Alexander said, "In talking with General Carl Steiner this last week, who is head of our Special Forces, he pointed out that 9/11 was a big surprise for America, but it shouldn't have been because there were terrorist acts affecting our country going back into the late '70s, the '80s and the '90s...we just weren't ready for it. I think the next big surprise as a country is to our pocketbooks and that the energy prices are an important part of our being able to avoid that big surprise."

Alexander said as he looks at the work that is being done on the energy bill in the Senate, he "sees legislation shaping up that I would like to think of as a Clean Energy Act of 2005 that has a goal of lower prices from reliable low-cost supply of American-produced energy." Besides supporting expansion of supply options for natural gas, the senator is pushing for incentives for nuclear and clean coal development, labeling wind power a "puny supply" option and a cop-out.

Last month, Alexander offered a piece of stand-alone natural gas legislation in the Senate that seeks to tame gas prices by giving coastal states the opportunity to opt out of the federal moratorium on offshore oil and gas leasing and potentially freeing up gas-rich Lease 181 in the eastern Gulf of Mexico. The senator's bill also includes a number of other initiatives to slice gas demand and bolster supply (see NGI, April 11).

As for giving individual states more power when it comes to offshore leasing, Alexander said Tuesday that several senators and governors have told him that they want to learn more.

"If Tennessee had a coastline, which it doesn't, what I would do is put a gas rig far enough out to sea so that no one from Tennessee or any other state could see it," Alexander said. "I would use the conservation royalty that the state would get from that under my legislation and I up a trust fund and have the best colleges and universities in the United States and I would lower taxes."

As for the opposition in the past from several states to drilling offshore from their state line, Alexander said they might just come around. "My guess is that over time, when Florida thinks about whether to put gas rigs so far out to sea that it can't see them...and the choice is that, or state income tax, the issue may shift a little bit. Or if the governor of Virginia were to propose lowering property taxes in Virginia and increasing support for higher education in exchange for putting gas rigs so far out to sea that no one in Virginia could ever see them...there might be real support for that. I just think this is one of those issues that nobody has been willing to talk about. When someone actually did talk about it, everybody says, 'oh, that might make sense.'"

Having noted that there is interest, Alexander said he wasn't sure whether there would be enough interest to make the offshore proposal part of the energy bill. "There is a good deal of interest among southern governors and among senators," he reiterated.

Citing a recent conversation with Sen. Richard Burr (R-NC), Alexander said Burr was only concerned with having the choice. "Sen. Burr long as North Carolinians had the option of whether or not to do it was the main thing that he was interested in," Alexander said. "My legislation would say for Sen. Burr and North Carolinians that if [Virginia] Sen. [George] Allen and Gov. [Mark] Warner want to do it in Virginia that they are free to do it as long as North Carolinians can't see it. The idea of if you can see it and you don't like it, then you can veto it, is a big help because I think a great many Americans simply don't know that many of these rigs are so far out to sea that you can't see them."

Alexander's stand-alone bill also addressed the need to streamline the liquefied natural gas (LNG) facility siting process. "I think we are likely to see some resolution of the difficulties over LNG siting," he said.

He disagrees with the House version of the LNG siting issue that would give the Federal Energy Regulatory Commission (FERC) final say on whether or not an LNG terminal would be located in a particular place.

"If the [House version] doesn't allow a state to exercise its rights under the clean air, clean water and Coastal Zone Management Act, then I do disagree. I think it is possible for FERC to have an efficient LNG siting process and still allow state and local governments to have some say."

Asked whether there were any other Republicans that agree with his LNG siting stance, Alexander said, "Well, we'll find out."

As for areas of support in the energy bill, Alexander said he sees a lot of consensus on conservation issues and coal-gasification and carbon recapture. He also sees a growing consensus in support of nuclear power and making LNG siting simpler.

On the outside looking in, Alexander said there are still issues regarding whether there will be incentives for hybrid vehicles or Corporate Average Fuel Economy standards in addition to the issue of a "so-called renewable fuel standard," as well as the MTBE issue.

Alexander also questioned the merits of pursuing wind power, saying the U.S. "should stop tilting at windmills." He thinks nuclear power offers a much better option on the menu of emissions-free energy resource choices available to the country over the next several years.

"I think we should stop tilting at windmills and start getting serious about a national energy policy with a reliable supply of low-cost American-produced, clean energy." He added that it has been 20 years since the country has built a refinery and even longer since a new nuclear power plant project has been started.

"We are going to give by the year 2010 $900 million to $1 billion to investors in wind power," Alexander said. "I would like to see whether [the money] could be better used and more effectively used to reduce carbon and clean the air by giving incentives to conservation, by giving incentives to hybrid cars, [or] by creating loan guarantees for coal gasification and nuclear power."

Alexander noted that the big difference is the incentives for wind power "go on forever," while the incentives for nuclear power and coal gasification are just to get them into the market, "but then they will have to survive on their own."

There are also some real questions about wind power, Alexander said. "If the goal is a large supply of low cost reliable clean energy, wind power is a puny supply of high cost, unreliable energy and many of the European countries that started to use it are now backing away from using it." Alexander also noted that the wind power machines are "preposterous" in size. "I think [wind power] has been used as an excuse to avoid hard choices."

Because President George W. Bush is "paying more attention to energy this year, we should have, I hope, a much more aggressive bill," Alexander said, with issues like "aggressive conservation and aggressive support for alternative fuels such as nuclear power and...clean-coal gas.

"I think we should improve the subsidy for solar among renewable energies and hopefully we will have money for research and development for carbon recapture, which is further away than coal gasification or clean coal gas, but if we can find a way to launch into the marketplace...technologies that make gas from coal and then recapture the carbon, we will have gone a long way towards producing a reliable supply of large amounts of low cost energy that is produced in the United States and will have set a good example for the world.

"As I look at the real world over the next 20 years and I am looking for a low-cost reliable supply of American-produced clean energy, nuclear power is far and away number one as the leading option."

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