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August 6, 1992 PRESIDENT BUSH ON ENERGY: ACCOMPLISHMENTS AND INITIATIVES "The driving force behind [our National Energy Strategy] is straightforward. It relies on the power of the marketplace, the common sense of the American people and the responsible leadership of industry and government." President George Bush February 20, 1991 Summary o The President introduced his National Energy Strategy (NES) a year and a half ago. The NES is a comprehensive and balanced approach toward energy production and efficiency and will improve our Nation's energy security, enhance environmental quality, and spur economic growth. o The NES builds on the President's record on energy and includes incentives to increase domestic production of oil and gas, promotes energy efficiency and conservation, encourages development and use of renewable and alternate sources of energy, and supports the clean use of our Nation's abundant coal resources and the safe use of nuclear power. o The President's NES includes measures to increase domestic energy production and efficiency. It does not impose new taxes or harsh command and control regulations on American industry and consumers. Instead, the NES removes regulatory barriers, relies on competition, and invests in research and development to achieve our energy goals. For example, it removes many of the current tax penalties on domestic extraction investments and at the same time relieves many of the regulatory burdens that prevent cleaner burning natural gas from reaching the marketplace. Oil and Gas o From his business experience as an oilman in Texas, President Bush understands how important the oil and gas industry is to the United States. He is committed to restoring jobs to this vital and valuable sector of our economy by encouraging domestic production and reducing the need for imports. o President Bush has proposed that Congress reform the Alternative Minimum Tax (AMT) as it applies to domestic oil and gas industries in order to remove serious disincentives to production. He has also fought Congressional efforts to restrict state prorationing and to expand the moratorium on leasing in certain areas of the outer continental shelf. o President Bush opposes an amendment recently passed by the House of Representatives which would prohibit certain forms of state regulation of natural gas production. This restriction on gas prorationing provides unnecessary Federal regulation and would hinder states from conserving resources, preventing waste, and protecting the correlative rights of gas producers and land and royalty owners. o President Bush pushed for and signed the Natural Gas Wellhead Decontrol Act of 1989, which will completely eliminate natural gas wellhead price controls by January 1, 1993. o The Bush Administration has proposed reducing royalties paid by stripper wells on Federal lands. The revised regulation will create a sliding royalty scale that will provide an incentive to continue operating marginal wells that are in danger of shutting down. o The President pushed through Congress $2.25 billion in oil and gas tax incentives in 1990, about $1.9 billion of which will accrue to the benefit of independents. o The Administration has proposed increased funding for natural gas research and development, particularly for technologies to increase utilization of natural gas for environmental compliance. The Department of Energy has also restructured its natural gas program to shift research and development activities to meet nearer-term objectives and cost-sharing investment with industry. o In order to free oil producers from unnecessary governmental burdens, the President's NES includes measures to reduce regulatory barriers and to enhance domestic energy production which could increase U.S. oil production by 3.8 million barrels per day over the next twenty years. The NES as a whole will reduce projected oil imports by one-third. o The President strongly supports efforts to develop new oil recovery technology as a means of keeping our oil industry healthy in the long-term. A central component of the NES is a new program of joint Federal/private investment to advance oil recovery technology. The initial 14 projects were approved in 1992 with a value of $97 million. The NES oil research program includes an aggressive technology transfer component specifically designed to assist independent producers. o The President supports the expansion of worldwide strategic petroleum stocks available to offset future oil supply disruptions and has resumed fill of our Nation's Strategic Petroleum Reserve. o As a part of his National Energy Strategy, the President has announced measures which will allow the gas business to operate with more flexibility and to seize market opportunities by removing regulatory barriers which impede natural gas use. -- Initiatives in President Bush's NES are expected to increase consumption of clean burning natural gas by 20% or about 3.8 trillion cubic feet by the year 2000. -- Revenue for domestic producers of natural gas is projected to increase by over $50 billion during the period 1992-2000. o President Bush knows that access is vital to the U.S. oil and gas industry. His NES calls for access to the previously restricted coastal plain of the Arctic National Wildlife Refuge (ANWR) and some Outer Continental Shelf areas under strict environmental safeguards. At the same time, the President has safeguarded the integrity of these areas by signing the Oil Spill Pollution Act, which requires double hull tankers, a $1 billion cleanup trust fund, and increases polluter liability and enforcement tools. The NES also supports an increase in the production of California heavy oil and access to export markets. o To promote domestic gas production, the President's NES proposes legislation which will streamline gas pipeline construction regulations and develop more efficient environmental review procedures. In addition, the Federal Energy Regulatory Commission issued the most sweeping reforms of natural gas transportation in fifty years (the "restructuring" rule) and removed regulatory barriers to the use of natural gas vehicles. o NES recommendations on alternative fuels and electricity regulatory reform through amending the Public Utility and Holding Company Act and issuance of the "WEPCo" rule will also substantially increase utilization of natural gas. Nuclear Energy and Coal o The President's National Energy Strategy proposes legislation to reform the nuclear licensing process and the removal of other barriers to permit nuclear power to contribute cleanly, economically, and safely to our future electricity needs. In addition, the Administration supported issuance by the Nuclear Regulatory Commission of a final rule for the renewal of existing nuclear powerplants' licenses where safety can be assured. o The NES supports research on next generation and advanced reactors. In February 1992, the Department of Energy signed a cooperative agreement with industry to jointly fund a $200 million effort to develop advanced light water designs to the point of commercial standardization. o The NES also contains initiatives to ensure progress on the management and disposal of nuclear waste, and the Department of Energy has resumed investigative work at the Yucca Mountain candidate site after successful conclusion of years of legal dispute. o The President has supported full funding, including $500 million in the fiscal year 1993 budget, for the Clean Coal Technology Demonstration Program, a $5 billion industry cost-shared demonstration program aimed at introducing innovative methods of using our Nation's abundant coal resources more cleanly, efficiently, and economically. o The Administration has expanded efforts to promote the export of U.S. coals and clean coal technologies to enhance the U.S. balance of trade, create American jobs, and aid both economic growth and environmental protection in countries facing rapid increases in electricity demand. o The Administration issued regulations (the "WEPCo" rule) to facilitate compliance by the electric utility industry with new Clean Air Act requirements and remove uncertainty about power plant modifications under the new source review requirements. Renewable Energy and Alternative Fuels o The Bush Administration has encouraged development and use of renewable energy sources such as solar, wind, and hydroelectric power and other energy sources like ethanol. The President's FY93 budget increases renewable energy research and development to $250 million, over 65% more than when he took office. -- In addition, the President established the National Renewable Energy Laboratory in September 1991, indicating the importance attached by the Administration to renewable energy research. o The President signed legislation extending tax incentives for domestically produced ethanol through the year 2000. These incentives, totalling more than $220 million over five years, will help the farm economy and ensure the widespread availability of this clean, secure fuel. The Administration also supports legislation to remove an artificial barrier to greater use of ethanol by expanding tax exemptions and credits for ethanol blends. -- In addition, the Bush Administration has launched an accelerated research effort to develop cost- competitive, clean-burning domestic fuels from a wide variety of agricultural products. The President proposed spending more than $50 million on this initiative in fiscal year 1993. o The President has supported legislation extending renewable energy investment tax credits for solar and geothermal facilities. o The President signed legislation amending the Public Utility Regulatory Policy Act (PURPA) to allow large facilities using renewable energy projects to qualify for the benefits PURPA provides. As part of the National Energy Strategy, the Bush Administration proposes to further amend PURPA to remove project size limits in PURPA and reduce fuel use restrictions for such facilities. o The Administration issued new regulations to simplify the process for improving efficiency at privately-owned but Federally licensed hydroelectric projects and launched Hydropower 2002 an initiative to improve efficiency and increase production at Federal hydropower facilities. As part of the National Energy Strategy, the Administration has proposed substantial regulatory reform to enable us to take advantage of our ample hydroelectric power resources, especially those at existing dams, while protecting environmental quality. o The NES further encourages the development and use of alternative fuels and technologies through research and development and by requiring centrally-fueled fleets to purchase vehicles capable of using alternative fuels. The President has directed all Federal agencies to maximize their purchases of alternative fuel vehicles. The government has already purchased over 3,000 such vehicles and plans to acquire 5,000 more in FY93. o In October 1991, the President announced the creation of the U.S. Advanced Battery Consortium, a four-year, $260 million joint research venture with the Nation's three largest automobile manufactures, the electric utility industry and others to develop a new generation of batteries to make electric vehicles attractive and available by the year 2000. Increasing Energy and Economic Efficiency o Along with increasing energy production, President Bush is committed to achieving greater efficiency in every element of energy production and use. The President's FY93 budget proposes over $330 million for conservation energy research and development, double the amount when he took office. o The President, leading through example, issued an Executive Order on Federal Energy Management, directing all Federal agencies to reduce overall energy consumption in Federal buildings by 20% by the year 2000 and to reduce fuel consumption in Federal vehicles by 10% by 1995. These conservation measures will save American taxpayers an estimated $800 million in annual energy costs and cut Federal energy consumption by about 100,000 barrels per day of oil equivalent. o To increase efficient use of energy, the Department of Energy has strengthened efficiency standards for many energy-consuming household appliances. o The Administration also initiated a number of voluntary programs to increase private investment in more efficient lighting, building, computer and related technologies in support of the energy, economic and environmental objectives of the National Energy Strategy. o The President signed the National Affordable Housing Act, which includes provisions for energy efficiency standards for new construction of publicly-assisted housing and for mortgage financing incentives for energy efficiency. o The Bush Administration has expanded efforts to support development by States and utilities of integrated resource planning, a process in which new supply resources and investments in energy efficiency compete to satisfy electricity needs. The Administration also provided tax free treatment of utility discounts on consumers' electricity bills for efficiency investments. o The Bush Administration has supported legislative and regulatory changes to reduce electricity prices to consumers through increased competition in wholesale power markets and expanded access to electricity transmission services. o The President proposed, negotiated, and signed into law major new transportation legislation, the Intermodal Surface Transportation Efficiency Act of 1991, which will reduce oil use in the transportation sector by increasing Federal funding of mass transit and by giving State and local governments flexibility to fund other energy conserving transportation projects.


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