ML19210C843
| ML19210C843 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 10/31/1979 |
| From: | Harold Denton Office of Nuclear Reactor Regulation |
| To: | Levan J AFFILIATION NOT ASSIGNED |
| References | |
| NUDOCS 7911200190 | |
| Download: ML19210C843 (23) | |
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g7 UNITED STATES
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'g NUCLEAR REGULATORY COMMISSION f
WASHINGTON, D. C. 20555 w,ygj 5,[ @.
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October 31, 1979
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e Mr. Jeff Levan 10 Harrise Drive Harrisburg, PA 17112
Dear Mr. Levan:
This is in reply to your letter to President Carter asking about his plans for nuclear plants, gasoline, and coal.
I am sorry for the delay in replying but we have been very busy with the aftemath of the Three Mile Island accident.
Enclosed is a message to Congress from the President on May 7,1979, transmitting his Second National Energy Plan.
The section of the plan entitled " Overview" is also enclosed.
That contains discussions of conservation, oil, natural gas, coal, nuclear, and renewable energy sources on'pages 21 through 27, which should be of interest to you.
Si ncerely, N
Harold R. Denton, Director Office of Nuclear Reactor Regulation
Enclosure:
As stated 1363 263' 7 911200 I cr o
- - House Document No.90-121 90!b Congress,1st Session - - - - -
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SECOND NATIONAL ENERGY PLAN MESSAGE FROM THE PRESIDENT OF THE WITED STATES TRAN6MITHNG TIIE SECOND NATIONAL ENERGY PIAN, PCRSUANT TO SDCTION FOI OF TIIE DEPART 51ENT OF ENERGY ORGANIZATIO? ACT N
i.7 b1AY 7,1979.-31essage and accompanying papers referred to the Codmittee of the Whole Ilouse on the State of the Union and ordered to be printed U.S. GOVERN 3!ENT FRINTING OFFICE 47,-004 O WASil!NGTON u 1979 E X C E t\\ f I :
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4 To the Congress of the United Staics:
leased to transmit to the Concress the second National I am Energy Iplan, as required by Section 601 of'~the Depw vent of Energy Organization Act (Public Law 95-91).
The First National Energy Plan. which I ant to the Cangress two years ago. vu the first coniprehensive effort to deal mth the broad
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icone of the Nation's energy problems. The resulting Natiaal Energy Aci. nassed last autumn. acted on a number of my proposals. and will have'an important and lasting role in prepanng for the Nation's enerev future.
But much remains to be done. And we must now deal jointly with a number of issues which have matured since April 1977.
As I said in my April 5th energy messagt, our Nation's energy problems are real. They are sarious. And they are getting worse.
Every American will have to help solve those problems. But it is up to us-the Congress and the Executive Branch-to provide the leadership.
We must now build on the foundation of the National Energy Act. In my April 5th energy address,Ilaid out a program for action in five areas.
First. in accordance with the Energy Policy and Conservation Act of-1975, I have announced a prograni to ph'ase out controls on do-mestic crude oil prices by September 30. 1981. Oil should be priced at its true replacement value if we are to stop subsidizing impons, increase U.S. oil production. reduce demand and encourage the development and use of new energy sources.
Second. the increased revenues from decontrol must not undulv or unjustly enrich oil prod.acers at the expense of consumers. For 'this reason, I have prope:.ed a tax on the windfall profits due to decontrol.
Proceeds from thr.. tax would be used to establish an Energy Security Trust Fund, which would be available, in part, to assist those low-income Americans who can least afford higher energy prices.
Third, we must provide additional emphasis on conservation and on the development of new domestic energy sources and technologies. The Energy Security Trust Fund will also pmvide funds for energy saving mass transit and for tax incentives and accelerated research and dem-onstration of new energy technologies.
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4 Fourth, we must find ways to expeditiously develop and use our energy resources, while protecting and enhancing the quality of the i
environment. The length and complexity of many Federal, State, and local permitting procedures, however, has created needless complexity I
and increased time and cost, without improving the protection to the public or the environment. We must remove the needless red tape which is tying up many needed energy proj,ects. I have signed an Executive Order to expedite Federal decisionmaking for certam energy projects, which are deemed to be in the national mterest.
Fifth, we must provide international leadership to deal with the crisis befon us today. The members of the International Energy Agency have joined in a common commitment to reduce energy con-sumption in response to current shortages. The United States has provided 'eadership in gaining this commitment. I will assure the United States does its part to meet that co r.mitment.
The energy program I announced on A_pril 5th puts the country in a strong position to achieve thew gants. The Plan I am forwarding today shows how these programs relate to our overall energy problem, and to the other policies and programs which we must carry forward.
This National Energy Plan explicitiv recognizes the uncertainties-geologic, technological, economic, political, and environmental-which
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confront us. It presents a strategy for dealing forthrightiv with the uncertainties, with the threats and promises of our energy future.
The analvsis in the Plan shows the need to move ageressivelv to meet the grave energy challenges to our Nation's vitality. 31v Aprif 5th N
p,roposals confront those challenges squarely. Together with the Na-y Plan, we are providing a firm foundation for dealing tional Energ'allenges today and for decades to come.
with these ch r
//?f//
W Jixur CARTrJ Tur WinTr IIorst,.1/ay 7,1979.
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OVE RVIEW n e oil embargo of 1973/74 signaled a fundamental change an the ability of the industrisiised nations to chart thest own economic destinies and to guarantee the economic accurity of their citisens. Only major wars and recessions have directly affected so many peo ple in the world's oil-cons ming nations.
In the U.S.,
the oil emoargo led to nationwide shortages of petroletas, a $60 billion drop in CNP, more rapid inflation, and large balance-of pay ents deficits that continue te plague the economy today.
In the winter of 1976/77, the U.S.
faced another energy emergency--a natural gas shortage caused by abnormally cold weather.
Factories across the country closed, Icavir.g workers ter.porarily out of jobs and dramatically reducing output.
In the winter and spring of 1978, a nationwide coal strike idled thousands of workers, t hr e a t e s.e d s.illions of other j ob s, and raised the prospect of not having enough energy to heat -and light homes.
In the wanter of 1978-197', the U.S.
and the world suf fered yet another s
blow--a substantial reduction in c rud e oil supplies with the almost ee plete eliminstien ef Ire-is-prMuetien. Se eil consu=ing countries have had to borrow against current stocks, cutting into their capacity to build up supplies against rent winter's cold.
In the near future, the U.S. will suf fer serious shortages of unleaded gasolane unless ats refineries are expanded and upg ra d ed.
Investments refinery capacity have been discouraged in the past by r egula-an new tiens that did net allew for adequate financial returns.
These past and prospective energy setbacks are only a yrp t om s of the broader energy problem the U.S. and the world now Iace:
n e U.S. and other major world consumers can expect more disruptions in oil supplies, at other places and at other times, as a result of evetts such as wara and unrest abroad, politically inspired enbargoes, strikes, sabotage, and other emergencies. Over the long-term, the supply of oil will be fundamentally limited by the capacities and production decisions of those few c ount rie s in which world oil resources are concentrated.
Wen increases in production at current prices no lorger can keep pace with rising world oil de=and, prices will rise sharply to bring markets into balance. As world oil supplies tighten under funda= ental Icog-term pressures, the instability of the basic supply sources threatens even more economic and political damage to the U. S. It will make even more difficult the transition to the c om ing era of scarcer, more expensive energy supplies.
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THE NATURE OF THE SECURITY FROBLDS
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is all too easy to be distract.J Sy the crisis of the soment, and te Itoverreact or to lose sight of the fundamental problems that crisis retlects.
It is also easy to r *-interpret leeg-ters trends on the basis of today's headlines.
Evao small swings in production and or shirtf all in world oil markets almost consumption can create a glut ove rnig h t. The public sense of u rt' 'cy about the energy problea may change.
ht the dangers posed to the nation's political and economic security have now becoce clear and present.
These dangers have arisen f roc Ame rica's rapid and massive shift to consmption of f oreign oil. In 1971, the U.S. Imported 3.9 MKB/D, In 1979, and paid only $4 billion for that oil to foresi.n producers.
the U.S. will likely import 8.5 to 9.0 tes/D and, with this year's' in prices arising from the traciao shortales, pay an import bill surge of over $50 billion.
The origin of this sudden vulneratility lies in the American economy's historic dependence on a flow cf cheap energy.
Energy prices in the U.S. fell in real terms t h reuch most of this century.
Falling energy prices encouraged greater-even profligate-use of detestic oil and 6as rescurces.
Yet the country's resources of oil and gas were finite.
Tnese powerf ul f orces did not collide until late in the 19f.;s. D e=es t ic oil production peaked in 1970 and has declined since that t ime.
U.S.
preduction of natural gas peaked in 1973 Yet the Katicc tzs cleft tr' policies and habits that try to restore the past, keep prices Icw and centinue wasteful patterns of use.
Many have been slow to recegnize of each new barrel of oil being censu:ed is the ccst that t he t rue c os t of imported oil brought in to replace domestic supply.
N In the past 5 ye ar s, the price of dependence on a few oil producer countries has been a series o' unpleasant econczic shocks.
The first OPEC price increase of 1973/74 quadrupled the cost of oil, helped push the U.S. into a recession, and required painful adjustments from which it has only lately recovered.
Oil imports have directly raised the cost of ev e ryt hing in the U.S. that uses oil or oil substitutes, and been a direct and indirect source of U.S.
inflation.
They thus have contributed to the large U.S. trade deficits in 1977 and 1978 also have which led to the recent depreciation of the dollar.
Finally, the rise in world oil prices has affected every American's and standard of living.
The U.S. economy has had to give up more more goods and services to pay for the sa:e a: cunt cf fcreign oil.
Americans are simply not as well of f when the terms en which they buy a vital commodity such as oil change so adversely.
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15 This dependence on f oreign oil bas also ushered in a new era of politi-s In today's world -with little warning--a revolution, war, or political embargo in the Middle Ea st can quickly and severely cal instabilities.
The political and military security disrupt American economic activity.around the world has become of major of a few producing countries significance for all oil-consuming countries.
As the events in Iran demons tr a t ed, internal unrest in any major OPEC producer country Closure of the Persian have can cause sudden problems in world oil markets,the U.S. and the other industria11 red nations
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Gulf could plummet world-wide depression.
Over the ne.
- decade, the energy security problems facing the U.S.
could worsen.
' - underlying supply and demand pressures f or major world oil price increase; in che 1980s are great.
Any surplus p roduc-tion capacity that individual CPEC countries may have developed in recent years will almost certainly vacfah by the mid-1980s, perhaps Producer governments with limited ability to absorb huge revenues have strong inc entiv es to reduce output below maximum tech-sooner.
nical limits and keep world oil e.arkets tight.
Unless there are major changes in forecasted e ne r gy production and by 1990 consumption trends or ef forts by governments, world oil pricesAdjusted for inflation, thi could reach $30 per barrel.
per barrel in 1990 prices.
Th es e increases are almcst certain not to wae.
Recent experience suggests occur in any smooth or predictable that prices will rise in spurts as markets adjust, belatedly or pre-This erratic maturely, deliberately or inadvertently, to new realities.
behavior is likely to aggravste the recessionary shocks and painful adjustments to higher prices.
long-tera rise in world oil prices, the more they will The greater the da: pen new investment, reduce employment
- growth, slow world economic Develcping countries would suf f er even greater and worsen inflation.
direct harm than advanced industrialized nations; with the. growing however, vulnerability to energy interdependence of the world economy, problems is a collective danger.
governments of the other consumer nations which are The U.S., and the already linked in the International Energy Agency, are not powe rle ss to influence the world energy attuation, however.
For their own to do so.
They can limit the economic security, they have no choice but damage from higher world oil prices, and limit world oil price increases.
Through po li ci e s that encourage conservatioc and use of alt e rna t iv e f ue ls, consuming nations can reduce the demand pressures that would lead to high world oil prices.
They also can stimulate 3
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16 d e vo lepue s t of
- new, higher-cost energyl. technologies and resources, it.troduced at the preter times to help limit further price we se n s aa 1,e increases.
It will be essential, as world oil prices rise, to ensure substitutes f or oil are available quickly and in that ese" higher-cost the quastittaa needed.
e ruxx1NG TOs t'NCERTAINIT The U.S.
ca nnot develep a satief metery eeergy policy until it recog-nises the need to P an for a v'ide recte of uncertainties.
Lespite a l
fland cf energy foreceste and pregneses in recent years, no one can predict with certainty the Nation's energy future.
Evt it is possible to understand better the forces that will shape that f uture.
The first sat of uncertainties concern supply.
The world has vast oil and gas resesrees. The teste doubt is wSether enough new oil sources can be discovered and p r od uc ed at current prices to seet even a low growth in world oil demand.
More and more of the world's oil has come recently f rom high-ces t. hostile environment s.
hany geologists believe that mest cf the werld's largest fielde have stready been discovered, and that f uture discoveries may be an.alle r in size than in the past.
As productio) from existing fields declines, successful disc ov e rits woald have to oc cur at a rate never Icfere experienced to prevent large jumps in world oil prices.
Meanwhile, rcme of the countries in which world oil resources are concentrateJ are unlikely to produce at their maximas technical limit.
They vill seek to stretch out their oil supplies, and to seek the level of revenues that best meets their own needs for internal political and economic development.
These supply factore c ould change, hewever.
Stepped-up exploration outside OPEC could lead to unexpectedly large discoveries of new all sources. Changing revenue needs of OPEC govern-ments could lead to Iigher or lower output.
The second set of uncertainties concerns world energy demand.
The wo rl d's appetite fer cil in the next two decades will depend on eco-nosic growth, which is ve ry diffirait to predict.
C ons e rva t ion can hold down energy demand growth, cut government policies, consumer bet avlor and the energy-efficienc; of ne,r capital goods and buildings are notoriously hard to predict, and their ef f ects are hard to estimate.
These factors will de t e rmine whether and how fast world oil demand reaches the limits of CPEC and non-OFEC production capacity.
4 s.
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o Many other uncertainties also will af fect future world oil price behav-ior.
Inese include technolegical change, the policies of consumer-nation severe =ents in developing substitutes for oil, and the rcle that communist governments will play in world oil markets as emporters, importer s or Doth.
In shert, the timing and size of price increases are clouded with uncertainty.
however, under a broad variety of assu=ptions that span the racee of responsible opinien, it is almost inevitable that d em and at current prices will exceed supplies at those prices at some t im e during the 1980s.
It would be rash to ignore these uncertainties, ta ke comf ort from the entstence of optimistic forecasts, or use them to justify inaction.
The U. S. must plan for pe s sim i s t ic and o pt imis t ic and anticipate the problems and benefits that can emerge in all
- futures, s uc h futures.
Pr ic e as not the oniv measura of a " good" or " bad" energy future. Low cil prices bring short-run economic benefits, but lead to higher i= port greater loeg-run political insecurities and economic vulner-levels and ability to irport disruptions.
High oil prices say lead to reduced import levels, although nonmarket constraints on increased domestic supplies could emerge that would keep ieports high.
The U.S. mu st develcp polactes that balance and protect against the risks of higher prices, higher imports, or both.
TOWARD A U.S. ENERGY STRATEGY Since the first CPEC price increase of 1973/74, the U.S. energy situs-tion has continued to deteriorate.
While there has been increased e ;hasis on conservation and demand growth has slowed, domestic produc-tion of energy has remained statio ary for almost a decade.
The Nation stands at the threshold of a major transition in its sources of energy supply.
Over the next two decades, the U.S. will meet its future desand growth not only with oil and gas, but increasingly with coal, nac le a r power, renewables, and high-cost unconventional sou rc e s.
No longer can it easily turn to imported oil to fill the supply pap, as it has in the past.
Foreign oil will no longer be cheap and readily available. Moreover, the political costs of dependence will have become even more apparent and uracceptable.
The challenges of the transition period are inherently formidable.
Develop:ent of new transitional supplies and the development of new 5
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e tarkets for those s upplie s will take cany years and requare e nc rzeu s over a long period of time.
Yet the effort is critical snvestments savings f rom political securigy benefita, the potential cost and, apart Ac tion s too long delayed could have dis as t rou s woul d be e no rmou s.
c on seq uenc e s.
To date, interminable conflict over the f uture of energy policy has been one of the seat paralyra rg uncertainties in the country's energy future.
Only with the President's energy message of April 5 is the ends the Natica finally moving towards an oil pricing policy that Institutional barriers have blocked increased s ub sidy f or f oreign oil.
Frequently, businesses have energy production and new energy projects.
to undertake new projecta or raise thest production because hesitated of delays and uncertainties about government policies.
De energy policy debate has been one of the mest divisive in recent touches every economic interest, every group in wears.
Energy policyleads acto a complea tangle of se=etimes coepeting Americ an society. It efficiency and greater production, equity among national scals--tarket income classes and regions, enviter== ental protection, nat sonal security, economic p rowth, and inflationary restraint, le will be difficult, and sonettmes i s ssible, te recencile all these goals.
- k. energy straterv aust build on che Noticnal Energy Act of 1978. It must develop a consensus on issues that were not treated in the F! A, issues that have arisen since.
It must define a core active and en new role for regional, State and local govern =ents in addressing the vast array of energy problems that cannot be solved at the nat ional level.
welf are and equity demonstrate a new creativity in reducing the It must impacts of higher energy prices.
It must determine how to balance the N
costs of short-run inflation with the benefits of long-run inflationary restraint.
The*e is no alternative but to confront the dif ficult choices that lie ahead.
THE N ATIONAI. ENERGY STRATEGY An energy strategy must balance those seasures that improve the Nation's l ong-r un security and those that better prepare it to deal with sudden crises.
It must recognise the dif f erent probleas that can emerge in time-fra=es:
the near ters ( f r om now to 1985), the mid ters three
( f rom Ic". to 2000) and the long-ters (2000 and beyond).
The Nation cannot resolve all the energy issues facing it nov or at any one time.
Every decision must be made carefully with reccgnition that more knowledge will permit wiser choices later. The sain objectives of the strategy, nevertheless, sust be to of fer constant policy guidance f or an uncer t ain f ut ure.
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The hear Term (1979-85)
Over the next few years, the United States and the rest cf the world will be fortunate to e sc a pe a second radical increase in world oil praces.
Tne adjustment process would again be painful.
Most of the energy-producing and energy-ustng equipeent that will be important to that perio/, is already in. place.
Even with the berefits of last year's National Energy Act, imports are still unacceptably high, and without further act io n could te still higher by 1985.
As an inznediate objectnve, which will become even more ireortant an the future, the hatton must reduce its dependence on foreign ett and ats vulnerabalatv to supply interruptiens.
The challenge of the near term is to ensure that ir.v e s tme nt s in new energy p r od uc ing a r.d cea.
ug e q u i,~: e at are made in the degree and kind that reflect the new realities, and that existing stock and e mpent are used in the enet ef fective way.
Move ent teward the pricing of oil and gas at their true replace-ment cost will prepare Ameracan consumers better for leng-tere price increases and stimulate greater production and conservation now.
Removal of barriers to new production will eliminate escessive regula-tory delays that now paralyse the construc tion of new refineries, Fryelines, and other energy projects. Filling the Strategic Petroleum Reserve (SPR), diversification of world oil sueelies, and other actions will cushion the economic impact of an interruption. All these measures can set the stage for actions that will buy even greater energy security in the mid-ters.
The Mid-Term (1985-2000)
During the mid-term, the !!. S. and the rest of the world will begin to shift from reliance on 'cil and gas to new and higher-cost forms of energy.
Energy consumption growth should be far slower than once anticipated.
Direct coal use, electricity and decentralized renewable sources will increase their share of the market.
Th e uncertainties--
especially those surrounding world oil supply and price -are much greater for the mid-ters than for the near t e rs.
These uncertainties will give the U.S. a major opportunity to influence more directly its own energy f uture.
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In th e es d.y era. the hation must seek to (1) meep smoorts suffacientiv low t o prot e c' L.f.
securarv ana to entend the'reriod before world oil de=and reaches the limits of productnen capacity red ( 7) develee the esoability to use new h a rme r-priced ("b ackst op") technolosses as world oil prices rise.
Because of the uncertainties in the mid-ters outlook, the U.S. cannot af ford to pursue an inflexible set of prograss or actions. ho one can be certain how fast or how alowly world oil prices will rise. The U.S.
e must press fcrward with those actions that are apprepriate t oday.
It should begin now to develop the capability to use new technologies that rely on dcases t ic or non-CTEC resources, to be deployed if and only if they becc=e co=petitive with imported oil at higher prices.
Intre-duction of these advanced technologies also will require innovatave solutions in desigs and de;1cy=ent to ensure cerpatibility with environ-sental goals.
The tent Tere (2000 and bevond)
The U. S. f aces two rejer transitions in energy markets between now and the middle of the 21st c e r. t u r ). The first vill cettr during the mid-ters when the U.S. moves f r om an energy system which has depended tradittenal oil and pas sources (including :=perts) to one r ely a ng onon unconventional supplies. These " transitional" energy supplies include some renewable technologies, er.hanced oil recovery, oil shale, unconventional gas, and coal-derived products.
Eince even these supplies are depletable, a second transition will N
begin after the year 2000. A set of " ultimate" technologies, including all the genewable and advanced nuclear techeelegies, would begin to displace traditional f ue le and ncn-renewable conventional sources.
The hation's long-tern objective is to have renewable and essentially trembaustible sources of energy to sustain a healthy economy.
Many promising t ec hnol ogies say prove excessively expensive.
Environ-mental and safety problems may render others infeasible.
There is always the danger that precature or overbearing Federal support for any one group of technologies say foreclose more attractive options.
Tne current generation cannot and should not iepose its ew judrrents and values on generations yet to cose.
The final choices about deploy-ment of various technologies must be left to them.
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21 A sustainable acergy future cannot be achifved overnight.
Th e U.S.
cannot espect c r a sh" technological breakthroughs to solve its energy to occur are best encouraged by problers. Tne tec nnical ad.'acce s that diligent, aggressive research and development programs for the waoest range of cptiens.
AN ACEEA FOR ACTION and the private The Federal governeent, State and local g ov e rnment s, cor.servation and sector all have asportant responsibilities to advance specific f ue l technologies in all three time periods.
This section describes Federal policies and pregraas.
Censervatien Conservation continues to offer the greatest prospect of reducing dependence on unstable irratts, reducing energy costs, and meeting Adm a nis t rat ion's c on se r v a-environcental goals.
The objectives or tne tson policies are two:
to reduce the rate of growth in demand for energy and to improve tne proouctivity cf ener;7 use--by increasing the energy ef ficiency of existing and future capital stocks of buildings, vehicles, hoc,e s, and industrial ope r a t io ns while sustaining economic growth.
The tools for achieving these objectives will be mainly the impact of higher energy prices, the conservation tan incentives in the Energy Tam Act, and regulatory ceasures.
o Conservation will be encouraged by policies for replacement-N cost pricing, as ededied in the Natural Cas Policy Ac t, the phased decontrol of crude oil prices, and the Public Utilities Eegulatory Policy Act.
O The r e sid e nt ial and industrial conservation tax credits in the Energy Tax Act will be an important sechanism to encourage near-term energy conservation.
buildings and appliances will be reduced O Energy use in new by usang the regulatory authorities in the Conserystion Policy Act and other legislatico.
Energy use in automobiles will be regulated by fuel economy standards.
The Administration will work to resolve promptly the issues surrounding future use of the diesel engine.
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22 o Grants will contanue to be provided..to low ancoer familaes, i
improve /he energy efficiency of schools, and hert tals to residential and consunity f acilitaes.
o The Administratien will seek and exploit opportunities to use demonstrate conservation and increased ef ficiency an energy and productivity at the institutional and community level.
Institutional barriers to greater conservation will be reduced by intervening an utiltty rate pr oc eeding s and by acquainting the public with opportunities to censerve.
o The Federal goverrrent will lead the way in energy c on se rva-tion, starting with its own buildings, pr oc e s se s, and transpor-tation.
o The Impartment of Energy will support research and develcreent (HD) to improve afficiency where the benefits of new develop-ments will oot be captured by industry withcut g ev e rneent in-volvement.
P.sjer E t4 D targets include industrial operations, buildings, and new automotive propulsson systems.
S.I.1 Financial incentives and the reduction of institutional barriers are the major tools to raist cil p roduc tion.
o Domestic production will be increased by rapidly phasing out controls on cruae oil and, until co=plete decentrol in 1951, by providing price incentives targeted for production from new discoverses, *ereinal wells, and the use of enhanced oil recovery techniques.
o To prevent excessive revenues from flcwing to producers in the wake of decentrol, the Fresident has requested that the Congress e nac t a Windfall Profits Tam.
Its proceeds would be used to help low-income families, to encourage mass transit, and to create an Energy Security Fund.
and California production will be stieulated through o Alaska steps to accelerate transportation systems to bring oil more cheaply from the best Co a s t to sid-Continent. Culf, and East Coast markets.
Exports or swaps of Alaskan oil are also under for West Coast a way to strengthen tarkets consideration as production.
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4 o 011 Shale technology will be developed and tested on a com-zercial scale through a production, t an credit financed by the Wind f a11 Profita Tam.
o To provide security in the event et a possible disruption, the Strategic Petroleum Reserve will be filled, ultimately to a level of one billion barrela.
o Sources of production verldwide will be diversified.
The Administration will support multilateral bank financing and other incentives for exploration, development, and produc-tion in less develeped countries. The Administration will also encourage accelerated development of improved technologies for entrac tion of heavy oils and tar s ends.
Natural Gas The natural gas policy has two high priority elements--use of the temporary domestic surplus to substitute for oil imports and incentives to increase conventional domestic prohctier..
o Domestic production will be encourseed bv financial incen-tives, including the higher prises stec:mics from the recently enacted Natural Cas Policy Act; throveh a more stable and pre-dictable regulatory e nvir et=en ti the deregulation of high-cost gas, mest notably that below 15 thousand fect; and, deregulation on a predictable basis.
N o su rplu s gas and reasonably-priced supplemental sources of gas will be used to displace foreign oil in existing industrial and utility facilities capable of burnicg both oil acd gas; coal will continue to be the preferred fuel for existing coal-capable units and all new boiler f acilities.
o Supplemental sources of gas will be used in the order of their cost-effectiveness and security.
Under present circumstances, the order of attractiveness is: Alaska production; pipeline gas from Ca nad a and/or Mexico; short-haul lique fied natural gas (LNC); domestically produced synthetic gas, depending u po n the resolution of certain technical problems and cost; :..d long-haul LNC.
O Pinancial incentives or R&D as appropriate will be used to quicken the production of unconventional sources of gas, includ-ing gas f rce tight sands, Devonian shale, geopressurized sethane, and coal bed methane. RAD progra=s will be directed at determin-ing the site of the resource base, the cost of estraction, and the possible environmental e f fec t s.
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24 Coal Coal the Nation's post abundant fossil energy resource, snould be used in place of oil and gas wherever economically and environmentally feasible.
Programs that increase the use of coal as a substitute fer oil will recetve the highest priority.
o Direct t!ae
- The Powerplant and Industrial Fuel Us e Ac t (FIFUA) will be used to require coal use in all new electric utilities and major industrial f uel burcir.g installatices. eed in existing coal capable f acilities;
- Re se arc h, development, and demonstration (RD&D) programs will be used to develop envirorsental centrol technolegies and environmentally acceptable means of direct coal use to enhance the over all zarket for coal and to increase the regulatory options available under the !!TUA.
o Coal Liquef action
- ED&D for direct coal lique f act ion processes will be used to develop the capability by the 1990s f or eee-ercial deployment of plants producing the most econoste s yn t he t ic liquid f ue l.
- Indirect coal liquefaction processes based on esistieg N
technology will be esamined to determine whether they of fer additional economic or environmental benefits.
I I
3 o Coal Casification j
The Administration supports favorable rate treatment and loan guarantees for first generation Lurgi technelegy.
- The two second generation gasification technolegies now being considered for demonstration will be developed and 8
analysed further, leading to a decision in early FY 1980 o
whether to proceed with a demonstration plant.
- Eesearch and develeprent on advanced technologies will be cortinued.
Funding levels will be based on whether the processes appear to premise more econcaic and e nvit erse nt al l
benefits than available technologies, and on whether this supplemental source of gas is needed.
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_laprovedEfficienevCoalConversion o
- R&D on advanced coal conversion systems such as magneto-hydrodynamics (NHD), c oc hined cycle, pressurized fluidized bed, and fuel cells will attempt to resolve key technical, economic, and environmental questions.
huelear The Fresidential Commission will provide a complete accounting of the causes of the Th ree Mile Island accident and its handling by utility, State, and federal offacials.
Th e Nation needs to develop safeguards that will allow light water reactors to continue to meet an share of electrical energy needs.
increasing o Light bater Resetoe
- Tne Adminis t r a t ion will work toward resolvirg nuclear waste sa nag eme n t tasues, including both a wa y-f r oc-rea c t or storage and permanent disposal, in accordance with the recoctendataons cf the Interagency Review Group.
- Nuclear siting and licensing legislation will be proposed to streamline procedures without in any way sacrificing the safety of new power plants.
- Generic R&D will be undertaken to improve light water
=se reactor (LWR) operations, to improve the sa fet y of LkRs, and to improve thear efficaency and enus extend the urantum resources they utilize.
- Reliable and economic uranium enrichment s e rv ic e s for domestic and foreign users will be assured by:
o Operating and expanding the esisting gaseous diffusion plant e.spaetty.
O Com=e rc i ali zing gas centrifuge technology by establishing a machine manu f ac turing industry and building a coccercial centrif uge enrichment plant.
o Developing advanced isotere separation e n ric h= e nt tech-nology.
13
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o treeder Resetor consercial will continue so that develo pect can be initisted, if justified by f uture market
- R&D on breeder reactors conditions and non prolif eration policies.
descastration will be deferred pending the results of the late rn at ional huelear Fuel Cycle Evaluation Breeder reactor and interagency review.
o Fusion and inertial confinement conc e pt s magneticthe objective of demonstrating scientific Pesearch on the Ell! centinue with f easibility in the mid-1980s.
for developent of fusion energy will be gov-strutture of sequential decision points to select The program initiate construction of large erned by a c andidate tecnnologaes and to f acilit ie s.
If all goes well, the first ecar.nercial use of fusion will c:eur in about the year 2020.
Derewable Enerry Sources.
Be Katien's capacity to use renewable tesources should be enhanced.
Tne naturity of these technologies varies greatly; seme are economic others are in the early stages of R&D.
Federal support zust be
- now, tailored to each stage of develo pent,
_ Solar Energy o
- Tan credits and other financial incentives will be used accelerate market penetration of solar are economic or nearly economic now (solar where necessary to technologies that hot water heating, certain industrial process heat systems, p a s s iv e solar systess, direct wood burning, and low head hydro).
ItD&D and/or product support will advance those technologies that t.av e significant sarbet potential and that replace oil and gas, but which are not yet cospetitive in the sess heat systems.
matket (certain solar industrial process solar space heating, conversion of biomass to liquid active and gaseous f uels, and wind systems).
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- R&D and limited product support will develop those technola gies with significant long-term potential, but which are far frc: economic application (solar cooling, photovoltates, solar thermal, a nd ocean thermal energy conversion (OTEC)).
- The Administration will continue to study the possible applications of technologies with highly uncertain potential isolar power satellites, photo-chemical conversion).
c Ceothermal
- Tax incentives and loan guarantees are the primary tools -
to encourage the use of hydrothermal resources. RD&D will be used where the technology has not been demonstrated.
- Research and development will be used to develop the tech-nology-to use hot dry rock geothermal resources.
- The Meinistration will encourage the development of geo-pressurized energy primarily as sources of methane and secon-darily as sources of heat from hot water.
Cross-Currice Policies In addition to these programs designed to aseliorate the Nation's fundamental energy proble=s in future years, it is necessary to con-front today's c ri s e s.
The ways in which the Federal government deals N
with energy prc,blems must be streamlined. And energy policy must treat all citizens fairly.
o Dealint with the Current Crisis With conservation and other m e a s t.r es, the United States will meet its commitment, reached jointly with other member nations of the International Energy Agency, to cut energy c on s ump t io n by 5 percent by the latter part of 1979.
O E=ertency Preparedness The De pa r tment of Energy, in cooperation with state and local g av e rna.ent s, will continue to develop and refine planning and management capabilities to deal with emergency shortages of supply.
15 1363 28I
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of Energy Processes ganatement Administration will seek to clarffy and simplify pr o-l o
for siting and licensing new e ne rgy The sacrificing the opportunity to carefully l
cesses a r.4 precedures i
f acilities, without balance ennflicting policy objectives.
i
- The Administration will work closely with St ate s and local l
governments to ensure that they participate fully and e f fec-l tively in developing and implcmenting the Nation's energv g
Administration has proposed the Energy accomplish policies.
Tn e Managezent Partnership Act to provide funds to I
i this objective.
~1 e
i THE SIGNIFICAbCE CT 13-11 The actions already unde r t ane n, and those currently proposed, will I
a sound and long-l a st ing footing.
g Move =ent toward reelarement cost pricing for crude oil, coupled with hation's energy policy on place the natural gas pricing, will build a c oher ent rational decisions about energy 6
last year's action on economic framework for taking core prouuttion and c on s um p t io n-- and thus about the Nation'a energy f ut ure.
I such as the These actions are coupled with a variety of measures, l
hind fall Frofits Tax, aesigned te assure equity f or consumers.
1 a
roadbloc'es to timely and equitable decision-making on energy projects, the hation can increase production of its i
the By beginninF to remove By s p.rrir.; the development of new t echnol og ie s,
j the U.S. will lay the groundwork for their f uture use as world oil domestic resources.
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prices rise.
f.
imports climb and the early 1970s, saw The decade of the 1960s, te m and, more dangerously, as a percentage steadily, both in absolute With each passing year, the Nation became more of total consumption.
dependent on oil imports, and thus core vulnerable.
The National Energy Act, and the actions and proposals recently an-nounced by the President, will arrest those trends. By 1985, the measures in the National Energy Act will reduce imports 2.5 to 3.0 those they would have been without million barrels per day below what actions.
lhe additional steps proposed this year will s av e over one oil imports are expected to drop I
million barrels pe r da y. As a result, 1965. Although imports percentage of total energy consumption by levels, U.S. vulnerability will be as a will still be coeparable to current reduced substantially by the availability of the strategic petrcleum reserve.
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1365 282 1
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few years, crises that resulted After the series of crises over the lastis now clear that it is impossi-in she,rtages of oil, gas, and coal, it ble to lay out, in one document, all the policiee that ultimately may necessary for the Nation's long-ters futuer.
Instead, NEP-11 information available at the present prove provides the Congress with t5e bestfuture decisions, to deal with future sevelop-time with which to c ue ments, and to capitalize on f uture technological advances.
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