Union of Concerned Scientists

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Summary of the 2005 Energy Bill

UCS and the Energy Bill
The Energy Policy Act of 2005, signed into law by President George Bush on August 8, was the product of over four years of congressional consideration.  Two earlier versions of the legislation died in conference in 2002 and 2003.  This year, however, a bipartisan bill was approved by the House in April, the Senate in June, and with remarkable speed, was sent to the president in July.   

UCS has been at the forefront of the debate over the future of the nation’s energy policy.  Despite all of our hard work, however, the Congress chose to largely follow the path of a 19th century fossil-fueled past instead of crafting an energy bill for the 21st century that would lead us to a clean energy future.  UCS opposed the bill because it fails to reduce our dependence on oil, fails to address global warming, fails to reduce home heating and gasoline prices, fails to significantly increase the deployment of renewable energy and actually increases the threat of nuclear terrorism.

UCS was actively engaged in many parts of the energy bill debate.  We deployed our organizing, advocacy, analytical and media tools to influence the outcome.  While UCS had some major victories and some unfortunate defeats, we are proud of what we were able to accomplish in this difficult political climate.

Victories

• Consumer Tax Credits for Fuel Efficient Vehicles.   After many years of UCS-led coalition work, consumer tax credits for hybrids and other advanced technology vehicles (from passenger cars up to heavy-duty trucks and buses) were finally enacted. Although the tax credits are not as strong as we had hoped, establishing credits for advanced vehicle technologies based on both fuel economy and emissions performance is a significant achievement.  To see what credit each current hybrid vehicle on the market will receive, please visit our HybridCenter.org incentives listing.
  
  
• Renewable Energy Production Tax Credit.  Tax credits for wind and biomass were extended for two years and additional tax credits made available for other renewables including solar, geothermal, and ocean energy.  In addition, we were successful in defeating an amendment offered by Senator Lamar Alexander (R-TN) that would have prevented the development of new wind facilities by imposing impossible siting requirements.
  
  
• Clean School Bus EPA Grant Program.  After four years of leading a unique coalition of industry and NGO’s, we were successful in enacting an EPA grant program to allow school districts to replace their oldest, dirtiest school buses with cleaner alternatives and retrofit newer diesel buses with emissions control equipment.  UCS’s School Bus Report Card was the catalyst for this action.
  
  
• Diesel Retrofit EPA Grant Program.  In addition to the school bus program, UCS worked with coalition members and Senator George Voinovich (R-OH) to authorize a $1 billion program to help fund emission control equipment for different types of diesel vehicles across the country—from construction equipment to delivery trucks.

Defeats

• Strengthening Fuel Economy Standards.   Not only did the House and the Senate overwhelmingly oppose increasing fuel economy standards, they also extended the “dual-fuel vehicle” loophole giving automakers credit for producing vehicles capable of running on alternative fuel but that almost never do. This provision will increase our gasoline consumption by 10 billion gallons through 2015.  Ironically this amount will wipe out the savings the administration claims will be achieved by adoption of proposed changes to fuel economy regulation.
  
  
• Renewable Electricity Standard.  Despite the 31,000 last-minute letters from UCS activists around the country, the final bill excluded a Renewable Electricity Standard that would have required major electric utilities to gradually increase their use of clean renewable energy such as wind, solar, and bioenergy.  Although the renewables standard passed the Senate with bi-partisan support, House leadership stripped it from the final bill.  One highlight was the support of the RES by Senators Pete Domenici (R-NM) and Orrin Hatch (R-UT) during the conference debate.
  
  
• Strengthening Export Controls on Highly Enriched Uranium.  The bill removes an existing requirement that recipients of highly enriched uranium—purchased for producing medical isotopes—commit to converting to the use of low enriched uranium when feasible.  This misguided provision would lead to unnecessary shipments of nuclear weapons-usable materials abroad, where they are vulnerable to theft by terrorists seeking to make nuclear bombs.
  
  
• Enacting Mandatory Global Warming legislation.  While the bill does not include any real action on global warming, for the first time, global warming was an integral part of the Senate's debate about our nation's energy future.  And, for the first time, a majority of senators (53-44) supported a non-binding resolution calling for mandatory action to address global warming.  UCS worked in support of the resolution that was supported by the energy bill leaders Senators Domenici (R-NM) and Jeff Bingaman (D-NM).
  
  
• Balanced Tax Package and Needless Subsidies.  Unfortunately, the 2005 energy bill is heavily weighted toward the traditional oil, gas, coal and nuclear power industries.  For example, loan guarantees for just one advanced nuclear power plant in Idaho amounted to over $1.2 billion.  Additional subsidies for oil and gas extraction and nuclear power were sprinkled thoughout the bill.  There were no comparable provisions for renewables.  The tax title was particularly lopsided in its approach.  Of the $14.5 billion tax package, renewable energy and energy efficiency received only $4.5 billion while fossil fuels received $5.6 billion and nuclear power received $1.3 billion.

• PUHCA Repealed.  The Public Utility Holding Company Act of 1935 (PUHCA) was enacted during the New Deal to reign in large interstate utilities that were gouging customers and becoming increasingly monopolistic.  Unfortunately, Warren Buffet and other large investors, alleging that PUHCA discouraged them from investing in the utility industry, convinced Congress to wipe away these protections.  The 2005 Energy Policy Act repealed PUHCA and transferred what little authority that remained over consumer protection and market integrity from the Securities and Exchange Commission (SEC) to the Federal Energy Regulatory Commission (FERC)—leaving uncertainty about how well consumers and the environment will be protected.

• PURPA Amended.  The Public Utility Regulatory Policies Act of 1978 (PURPA) was passed to help diversify the electric power industry.  PURPA required a utility to buy power from renewable energy and cogeneration plants when they can generate power less expensively than the utility, but the new amendment eliminates that requirement where FERC determines that competitive market conditions exist. Competitive markets may not support the long-term contracts that many renewable generators need to secure financing at affordable rates.

Where We Go From Here
Even before Hurricane Katrina developed, there was talk of Congress doing another energy bill when they returned from the August recess to address ever-increasing gas and energy prices.  Since Katrina hit the U.S., House and Senate leaders have already begun hearings and many are calling for a second energy bill.  The issues being discussed include: raising fuel economy standards and closing existing loopholes in the regulatory system and the tax code, opening up the Arctic National Wildlife Refuge (ANWR) for drilling, opening up the outer continental shelf to exploration, and providing incentives to building refineries.  These efforts are just beginning to get underway and it is difficult to predict how much Katrina might shake up the political status quo on these issues.  UCS is engaged in discussions with the community, the Hill and others and we are assessing the risk and opportunities of a bill dealing with both supply and conservation measures.  

Climate Change is also continuing to get attention on the Hill.  Chairman Domenici and Senator Bingaman are continuing to hold hearings on climate policy.  The strength of Hurricane Katrina has also provided an opportunity to get the global warming issue front and center.  UCS is working on a number of fronts:  (1) we are conducting a substantial radio tour talking about the connection between climate and hurricanes, (2) we are working with the community to develop a grassroots campaign to promote mandatory action to reduce global warming, and (3) we are engaged in a number of forums to help further develop climate policies.