I thank the Senator for yielding. I appreciate the filing of that amendment. What Americans are frustrated by--and I think the Senator realizes that--is the lack of balance. He and I have said that. We can conserve and we can change and we…
I thank the Senator for yielding. I appreciate the filing of that amendment.
What Americans are frustrated by--and I think the Senator realizes that--is the lack of balance. He and I have said that. We can conserve and we can change and we can adjust and we can adapt, but we also have to produce, and that brings the balance. I think what you and I did very early this year helped drive the debate that is on the floor now, when we looked at biofuels and efficiencies and production in the SAFE Act and began to argue and articulate those points of view. I thank the Senator for filing that amendment because that completes a very necessary package that brings us to the reality of what Americans want from their energy portfolio.
Mr. President, the debate that has had the Senate occupied for the last several days is a fundamentally very important debate, for not only this Senate but certainly for the American people. There are a variety of things that have grasped the attention of the American consumer at this moment. Obviously immigration has been one, and we have been aggressively involved in that in the Senate the last month. The other thing happens weekly, when that consumer goes to the gas pump and pulls his or her car up and fills it. All of a sudden, they pay a $45 or a $50 or a $60 or a $70 fuel bill. They say: My goodness, how am I going to readjust my family budget to fit these kinds of needs?
The broad bill we have before us is in part attempting to address that issue. There is no question about that. We are working very hard to get this country back into the business of production but in a diversified way. That is important. We should not be held hostage by foreign energy suppliers. Yet over the years we have drifted into that environment for a lot of reasons, some of them of our own doing, because we constantly restricted our own ability to
produce and we have set standards that make it much more expensive to produce. Some of that production has gone offshore. But we have also grown, and we demand more. We have larger cars, and that is our choice in the marketplace.
At the same time the American consumer is being hit by pump shock today, or nozzle shock, whatever you want to call it, in the reality of what we are about.
On the electricity side of the issue--because that is a bit more subtle, because that bill doesn't happen every day or every other day or twice a week at the pump by the digits rolling in the pump to show you what it is going to cost you--it comes once a month in a power bill or it may even be automatically deducted from your checking account. The subtlety of energy costs from the electrical side are less, but they are still very real. In creating an abundant electrical market, we ought to be extremely careful that we don't limit it in a way that continually drives up the cost of electrical production.
We have said, and we are continuing to say, the old concepts of electrical production are largely out or at least they aren't as clean as we want them to be. Because in the context of this whole energy debate, several years ago entered the concern about climate change, therefore, the emission of greenhouse gases that some believe are a major contributor to the warming of our globe. That is in dispute. I believe it is legitimately in dispute as to what or how or in what volume greenhouse gases play to climate change and warming, but the reality is, Americans say today: It has to be clean, or you shouldn't produce it. So we are now on the floor debating, if you will, cleanliness. Some years ago we started talking about that and we said: Well, the only way, 10 or 12 years ago, you could get clean into your electrical production was wind and solar.
In the Clinton years, because of the environmental movement and the power they had over that administration, they no longer said hydro is allowed to be considered a renewable or a clean fuel. It is an anomaly of the past, and it dams up rivers and changes the ecosystems of aquacultures. We can't go there anymore. So they pulled hydro out of the mix and out of the blend. As a result, it doesn't get fitted into the environment of a renewable portfolio standard of the kind we are debating today.
What evolved out of a 1990s debate to today is a standard we call RPS the Senator from New Mexico has introduced, and it is largely a wind standard. Yes, it includes biofuels, but it is dominantly driven by wind today. It creates a unique niche in the electrical market for wind, and it subsidizes wind. It requires that to meet the standard, you pretty much have to go wind.
I have not disagreed in total with it in the past, although I have opposed it because I think it is an arbitrary act on the part of Government to distort the marketplace. But at the same time there is no question, through tax subsidy, a tax credit, that we have, in fact, driven the marketplace toward wind. That was then. What is now?
The world has changed since the mid-1990s, since the concept of RPS. But we are still here having a 1990s debate when we ought to be having a 2010 and a 2020 debate. That debate is not all about renewable and all about wind. It is partially about it, but it is not all about it. Today it is about wind, biomass, biofuels in a lot of forms, nuclear-- clean, nonemitting sources. It is about new hydro efficiencies. We are learning very rapidly that efficiencies in the marketplace can create quantum leaps in savings and, therefore, less growth rate in demand of production.
All of those ought to be a part of a test today, if we are going to establish national policy. If we are going to demand certain levels of performance out of the production side of our utility industry, our electrical industry, then we ought to be balanced. We ought to be broader and, most importantly, we ought to use a new, modern definition, a new, modern screen, a measurement. I don't think it is RPS anymore. I think it is clean.
Having said all of that, if RPS survives this debate, here is what is going to happen. It is going to be a very expensive trip for the consumer and the taxpayer. If RPS survives and we don't move to a newer standard and we put into place the kinds of demands that take us to a 15-percent requirement and then we turn to the Finance Committee, I believe Senator Baucus and Senator Grassley--and we will debate that as it relates to wind energy and a tax credit on a 1, 3, 5, sometimes 10 years, someday probably a 10-year involvement--what will it cost? It is estimated it could cost $3 billion, $5 billion, $10 billion, $15 billion, in a direct Government subsidy, a tax credit, to produce the RPS requirement that is being proposed.
Fairness is fair. A CPS requirement will cost some money. We are having it costed out today. We don't believe it will be anywhere near as dramatic, because it will be spread amongst a much broader portfolio than the narrowest of an RPS. Is this an expensive process? You bet it is. When you enter a new technology into the market that isn't as efficient or competitive, you subsidize it.
That is what we are doing with wind today. But we are creating a new uniqueness. We are saying: OK, here is a market niche for your wind. We are going to give you some of the market. Then we are going to give you tax credits and benefits to get into the market because we want you producing wind. So we are creating a very unique market niche, and we are saying to all the utilities: You have to meet it.
Well, 23 States are already out in front of us. They have some form of RPS or renewable portfolio standard. Some of them are higher than the Bingaman standard, some of them are lower. But there is a movement out there, and there ought to be flexibility in that movement, instead of the rigidity that is the reality of the current RPS. That is what we offer in a CPS or a clean portfolio standard--broaden the base, get modern, let's do not keep regurgitating the past.
I am always amazed that once one group--any group, any interest group--locks on to an idea they can capture the mind with, and they ride that idea for decades, sometimes when it no longer fits the technology of the day or the demands of the marketplace. I believe RPS is that idea that got locked on to in the mid-1990s that no longer fits the marketplace today. I do believe CPS fits the climate change concern, fits the regional disparity as a result of the geography of our country, where there is wind and no wind. I tell some of my southern Senator friends there is a lot of hot air in the South but there is not any wind. Well, there is not any wind in the South. So they have to go out and buy it.
You have utilities in Florida buying wind farms out in the Midwest. Is that somehow going to make Florida cleaner? Why don't we give Florida the opportunity to build clean energy right in Florida, instead of buying something out in the Midwest to offset? It is a strange thing. It is kind of like: Well, we believe in a very green standard. You are going to have to buy your way in if you cannot produce your way in.
I disagree with that. I think you ought to be able to produce your way in. I do not mind clean standards, but I do not think you ought to disadvantage certain regions of the country by the standard you are requiring. CPS changes that. It says we are requiring a cleaner standard in new production. You can do it through wind, as the Senator from New Mexico is proposing; you can do it through biomass; you can do it through new nuclear; you can do it through new hydro; You can do it through new efficiencies. If someday--and I believe it will--coal to liquids comes on line, you can do it through carbon sequestration or, ultimately, we may be able to retrofit our existing coal-fired generation facilities in a way to capture that carbon and sequester it. If we can, shouldn't they get credit for it? Shouldn't there be some benefit for cleaning up the air, instead of letting that remain dirty, but you buy your way out of it by going somewhere else to buy something that is clean?
That is an interesting concept, but that is the concept if you do not identify with the marketplace and you do not identify with the regions and the capability of the regions and the uniqueness of our country today. That is why Southern Senators are frustrated at this moment, because the amendment on RPS says you cannot do it by what we say so you have to go somewhere else and buy it.
Let's make the standard uniform. Let's make it fit all parties. Let's allow it to reflect the diversity of the countryside and the resource that is available in the countryside. We think that is possible. We think if you do it, it is less expensive than the RPS that is currently being proposed.
Here is what I am suggesting to those who are a little concerned about budget exposure because we have not seen what the Finance Committee will do. But if the Finance Committee brings about the tax credits that we think for a 1-, a 3-, and a 5- and someday a 10-year reality, that cost could be $3 billion, $5 billion, $10 billion, $15 billion. Current law is here. Future law could well be here based on what we think the Finance Committee will offer. So we create the marketplace niche today for wind, and tomorrow we finance it. It is a very expensive proposition.
I have wind farms coming up in Idaho, and I am glad they are there, and they are going to blend and be a part of our overall economy. I am all for wind, but I am not just for wind. Again, it is a concept whose day has matured. It is an idea that now fits well beyond the 1990s into the year 2000 and beyond, as new concepts come on board.
In other words, let's get modern. Let's build a policy for the future. Let's don't simply react to the past because the interest groups of the past are still here driving it. Let's think beyond that.
I yield the floor.
Mr. President, that is my understanding, I say to the Senator, if there is a renewal of the tax credit based on what we think Finance will do. Here is the problem--
It assumes there is a renewal of it. Because what you do, what you know you are doing, if your policy becomes law--there is no opt out at this point--you drive the entire national utility marketplace to a standard. By driving them there, you give them this opportunity, and it is a U.S. tax opportunity. There is no question that is the tax credit. You must go here. And when you go there, you can identify with the tax credit under the assumption--and that is fair--the Finance Committee is going to come forth with it. And we have every reason to believe they will.
That is what drives it. The reason it does is because, if you do not, you put the industry in a very precarious situation. Wind today does not pay its way. It is still on the margin. Based on its productivity in certain wind patterns, it has to be subsidized to fit into the market. How you subsidize it is through the credit, or you are simply saying you are going to do something you cannot afford to do, so you are going to have to go right to the ratepayers and charge them a much higher price than you otherwise would with the credit to come into compliance with the RPS.
Yes. So that is the appropriate assumption of this chart.
And new hydro, where it fits, and efficiencies and sequestration, yes.
Mr. President, I say to the Senator, you are correct to assume a CPS standard would have a budgetary impact as much as an RPS standard. The RPS standard--as I have said, it is a bit old school, so it is considerably more measurable, and you are forcing production into a narrower slot in the marketplace--wind and bio--whereas we are broadening the slot dramatically.
Yes, there are some of those new nuclear plants, as you know, as it relates to the Energy Policy Act of 2005 that are going to have some tax benefits. The first certain numbers are. Sequestration, more than likely--to encourage it, and to make it reasonable in the marketplace-- is going to have some tax consequence. We promote efficiency in the marketplace through that. But in all fairness to the Senator, it is not yet a measurable item. Those who are looking at it now say it is probably spread and less costly, but it is also more than just a cost item.
As I said, if you take a Florida utility that meets the standards by buying wind in the Midwest, it does nothing for the airshed in Florida; whereas, a CPS says you can build clean in Florida and benefit the airshed of Florida. I think there is the other side of that value.
Lastly, if I could react, and the Senator would allow me to, I am all for biofuels. But driving the biofuel market under the current technology--I am surprised some environmentalists are not reacting because it is not a totally clean emitting technology. We are all for it because it is renewable. I am for it because it helps us clean up
the forest floors and do a lot of other things that are the right things to do out there. But we also know when you burn it--and you are burning it--you have carbons, and that is escaping to some degree.
So driving it is the right thing but giving clean options is also the right thing. That is what CPS does.
Thank you.