ML19320C894
| ML19320C894 | |
| Person / Time | |
|---|---|
| Issue date: | 06/06/1980 |
| From: | Harold Denton Office of Nuclear Reactor Regulation |
| To: | Mcwethy P ASSOCIATION OF AMERICAN GEOGRAPHERS |
| Shared Package | |
| ML19320C895 | List: |
| References | |
| NUDOCS 8007180224 | |
| Download: ML19320C894 (21) | |
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UNITED STATES f-NUCLEAR REGULATORY COMMISSION 3,
WASHING ton, D. C. 20555 s~,
JUN 6 1980 Ms. Patricia J. McVethy Executive Director The Association of American Geographers 1710 Sixtee,th Street, N. W.
Washington, D. C.
20009
Dear Ms. McVethy:
With regard to your letter of May 15, 1980, to Dr. Joseph Hendrie, you may be interested in the enclosed " Overview" of the Second National Energy Plan transmitted by the President to the Congress on May 7, 1979 Like the resolution passed by the membership of the Association of American Geographers, this deals with a transition in sources of energy and includes the following statement:
"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 demand growth not only with oil and gas, but increasingly with coal, nuclear power, renewables, and high-cost unconventional sources."
The rois of the Nuclear Regulatcry Commission is to ensure the public health and safety at all nuclear power piants that are currently in operation or that may start operating in the future.
Sincerely, JW w
Harold R. Denton, Director Office of Nuclear Reactor Regulation
Enclosure:
Ove rview I
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...... House Document No.90-121 Mth Congress 1st Session SECOND NATIONAL ENERGY PLAN 1ESSAGE front THE PRESIDENT OF THE IhTITED STATES YdANSitrITING THC SECOND NATIONAL ENERGY PLtN. PCRSUANT TO SECTION S01 OF THE DEPARTMENT OF ENERGY ORGANIZATION ACT A,
MAT 7.1979.-Message and accompanying papers referred to the Committee of the Whole House on the State of the Union and ordered to be printed U.S. COVERNMENT PRINTING OFFICE 45-004 0 WAS111NGTON : 1979 E
C E R 'P T
a To the Congren of the United States:
I am pleased to transmit to the Congress the second National Energy Plan, as required by Section 801 of the Department of Energy Organt:ation Act (Public I.aw 95-91).
The First National Energy Plan. which I sent to the Conkress two years ago, was the first com'preherisive esort to deal with t..e broad scope of the Nation's energy problems. The resulting National Energy Act, oassed last autumn. acted on a number of my prooosals. and will have an important and lasting role in preparing for tne Nation's
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enerev future.
Bui. enuch 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 messawe our Nation's energy problems are real. They are serious. And the,y 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 pmvide 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 program to phase oet controls on do-mestic crude oil prices by September 30. 1991. 031 should be priced at its true replacement value if we are to stop subsidizing imports, 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 producers at the expense of cortsumers. For'this reason, I have proposed a tax on the windfall profits due to decontrol.
Proceeds from that tax would be used to establish an Energy Security which would be available, in part, to assist those low-Trust Fund, icans who can least aford higher energy prices.
iraome Amer 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-onstrr' ion of new energy technologies.
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IV Fourth, we must find ways to expeditiously develop and use our energy resources, while protecting and enhancing the quality of the j
environment. The length and complexity of many Federal, State, and I
local permitting procedures, however, has created needless complexity I
and increased time and cost, without improving the protection to the public or the environme.at. We must remove the needless red tape which is tying up many needed energy projects. I have signed an Executive Order to expedite FederaT decisionmaking for certain energy projects, which are deemed to be in the national mterest.
Fifth, we must provide international leadershir M deal with the crisis befon us today. The members of the 1..t
.stional Energy Agency have joined in a common commitment to rt_uce energy con-sumption in response to current shortages. The United States has provided leadership in gaining this commitment. I will assure the United States does its part to meet that commitment.
The energy program I announced on April 5th puts the country in a strong position to achieve these goals. 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 entironmental-which confront us. It presents a strategy for dealing forthrightiv with the uncertainties, with the threats anci promises of our energy [utum.
The analysis in the Plan shows the need to more ageressivelv to meet the grave energy challenges to our Nation's vitality. 31v Aprif 5th the'r with the Na-proposals confront those challenges squarely. Tog dation for dealing tional Energy Plan, we are providing a firm foun with these challenges today and for decades to come.
/M tGA 4,
JrmtT CARmt.
Tim Wirrrz Horsr.,.1/ay 7,1973.
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e 13 CVERVIEW the o!! embargo of 1973/74 signaled a fundamental change in the ability of tW industrialised nations to chart their own economic destinies and to guarantee the economic security of their citizens. Only major wars and recessions h sv e directly affected so many people in the world's oil-consuming nations. In the U.S.,
the oil embargo led to nationwide shortages of petroleus, a $60 billion drop in CNP, eore rapid inflation, and large balance-of-payments deficits that coattnue o plague the economy today.
In the winter of 1976/77 the U.S.
faced ancther energy e me rg e nc y--a ne*ur45 gas s ho rt ag e caused by abnormally said weather.
Factories ac tor, the country c!csed, leaving workers temporarily out of jobs and ' ramatica!!y reducing output.
In the winter and s pr in g of 1978, a nationwide coal strike idied thousands of workers. threatened millions of other jobs, and raised the prospect of not having enough energy to heat and light homes.
In the winter of 1978-1)?9, the U.S. and the world suf fered yet another blow--a substantial reduction in c rud e oil supplies with the almost coeplete eli=ination of Iranian production. The oil consuming countries have had ts horrow against cu rre nt stocks, cutting into their capacity to build up supplies against nest winter's cold.
In the near future, the U.S. will suf fer serious shortages of unleaded gasoline unless its refinernes are espanded and upgraded. Investments in new refinery capacity have beca discouraged in the past by regula-tices that did not allow for aderuste financial returna.
These past and prospective energy setbacks are osly sytytoms of the broader energy probles the U.3. and the world now face:
The U.S. and other major world consumers can expect more disruptions in oil supplies, at other places and at other times, as a ressit of events such as wars and unrest abroad, politically inspired embargoes, strikes, sabotage, asd other emergencies. Over the long-ters, the supply of oil will be f undamentally limited by the capacities and production decisions of those few countries in which world oil resources are concentsated.
Wen increases in production at current prices no longer can keep pace with rising world oil demand prices will rise sharply to bring markets into balance. As world oil supplies tighten under fundamental long-tern pressures, the lostability of the basic supply sources threatens even acre economic and political damage to the U.S.
It will sake even more d if ficul t the transition to the comics era of scarcer, more expensive energy supplies.
o.coe o. is.
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I 14 THE NATU1LE OF THE SEC"RITY FRC11.Dt is all too easy to be distracted by the crisis of the mesent, and to itoverreact or to lose sight of the fundamental problems that crials reflects.
It is also easy to re-interpret long-term trend. on the Even esa11 ssings in production and basis of today's headlines. or ahortfall in vorld oil markets almost consumption can create a glut ove rnigh t.
The public sense of urgency about the energy prcblem may the nation's political and economic change.
But the dangers posed to securtry have now become clear and present.
These dangers have arisen free Ame rica's rapid and massive shift to consu=ption of foreign oil.
In 1971, the U.S. imported 3.9 MMB/D.
ar4 paid only $4 billion for that oil to foreign producers.
In 1979, the U.S. will likely import 8.5 to 9.0 MMB/D and, with this year's tranian shortages, pay an import bill surge in prices arising from the of over $50 billion.
The origin of this sudden vulnerebility lies in the American econcey's historic depenonce on a flow of cheap energy.
T.nergy priced in the fell in real terms through most of this century.
Talling energy U.S.
prices encouraged greater-even profligate--use of desestic oil and gas r esources.
Yet the country's resources of oil and gas were finite.
These powerf ul forces did not collide untti 1ste in ths 1900s. Domestic oil production p eaked in 1970 and has declined since that time.
U.S.
production of natural gas peaked in 1973 Yet she Nation has clung to policies and habits that try to restore the past, keep pricus low and centinue vasteful pa tt e rns of use.
Many have been slow to recognize cost of each new barrel of oil being censu=ed is the cost that the true of imported oil brought in to replace domestic supply.
In the past 5 yests, the price of dependence on a few oil producer countries has been a series of unpleasant economic shocks.
The first OPEC price increase of 1973/74 quadrupled the cost of oil, helped push the U.S. into a recession, and required painf ul adjustments from which it has only lately recovered.
Oil imports have directly raised t he cost of eve rything in the U.S.
thac uses atl or oil substitutes, and
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thus have been a direct and indirect source of U.S.
inflation.
They also have contributed to the large U.S. trade deficita in 1977 and 1978 which led to the recent depreciation of the dollar.
Finally, the rise in world oil prices h as affected eve ry American's j
standard of living. The U.S. economy has had to give up more and more goods and services to pay for the same amount of foreigo oil.
Ame ric ans are simply not as well of f when the ter=a on which t ey buy a vital commodity such as oil change so adversely.
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15 This dependence on foreign oil has also ushered in a new era of politi-In today's world--vich lictie warning--a revolution, cal inseabilities.
war, or political embargo in the Middle East can quietly and severely disrupt American econonic activity. The political and salitary security the world has become of major of a few producing countries around As the events in Iran signif ic ance fer all oil-consuming countries.
have demonstrated, internal unrest in any major OPEC producer country can cause sudden proble=s in world oli markets. Closure of the Persian Culf could plu:ceet the U.S. and the other industrialized nations into a vorld-wide dept ession.
Over the next decade, the energy security problems facing the U.S.
could worsen.
De unde rlying supply and de ma nd pressures f or major world oil price increases in the 1980s are great. Any surplus produc-tion capacity that individual CPEC countries may have developed in recent years will almost certainly vanish by the mid-1980s, perhaps Producer governments with limited ability tz ebsorb huge revenues have strong incentives to reduce output belou saximus techa sooner.
nical limits and keep world oil markets tight.
Unless thers are major changes in forecasted energy production and I
verld oil prices by 1J90 consumption trends or efforts by governments, Adjusted for inf1stion, this is up to $35 cr,uid reach $30 pet barrel.
per barrel in 1990 prices.
Dese increases are almost certain not to occur in any smooth or predictable way.
Re cent experience suggests that prices will rise in spurts as markers adjust, belatedly or pre-D as erratic maturely, deliberately or inadvertently, to new realities.
behavior is likely to aggravate the recessionary shocks and painful adjust =ents to higher prices.
The greater the long-tera rise in world oil prices, the more they will slow world economat growth, da: gen new inve s tr. ant, reduce employment and worsen inflation. Develeping countries would suffer even greater direct harm than advanc ed industrialized nations; with the. growing interdependence of the world economy, however vulnerability to energy pechless is a collective danger.
De U.S., and the gevanaents of the oGe r consumer nations which are are not powerless already linked in the International Energy Agency, to influence the world energy situation. however.
For their own security, they have no choice but to do so.
They can limit the economic damage from higher world oil prices, and limit world oil price it. creases.
Through policies that encourage conservation and gee of alternative fuels, consuming nations can reduce the demand p resur es that would lead to high wo rld oil prices.
ney also can stimulate i
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16 de v olep ue st of
- new, higher-cost energy technologies and rescurces, wue n e en ' 1stroduced at the proper times to help limit further price secreases.
It will be essential, as world oil prices rise, to ensure substitutes f or oil are available quickly and in hit er-cost h
that sae" the quantities needed.
Fi.Ay m c Fot UNCERTAINTT The U.S.
cannot develap a satisfactory energy policy until it recog-nises the need to plan for a wide racge of uncertainties. Despite a flood of energy forecasts and prognoses in recent years, no one can predict with certainty the Nation's energy future. But it is possible to understand better the forces that will shape that future.
The first set of uncertainties concern supply. The world has vast oil and gas reseurces. The basic docht is whether enough new eil sources can be discovered and produced at current prices to meet even a low grewth in world oil demand. More and more of the world's oil has come recently free high-cest, hostile enviroements. Many geologists believe that most of the world's largest fields have already been discovered, and that future discoveries may be smaller in size than in the past.
As prod uc tion from existing fields declines, auccessful discoveries wwld have to occur at a rate never before experienced to prevent large bots in world oil prices.
Me anst il a, some of the countries in which world oil resources are conce nt ra t ed are unlikely to prMuce at their maximus technical limit.
They will seek to stretch out their oil supplies, and to seek the level of revenues that best meets their wn needs for internal political and economic development.
These supply factors could change, however.
Stepped-up exploration outside OPEC could lead to unexpectedly large discoveries of new oil sources. Cha=ging revenue needs of CFEC govern-ments could lead to higher or lower cutput.
The recond set of uncertainties concerns world energy demand.
The world's ap pe tit e f or oil in the next two decades will depend on eco-nosic growth, which is ve ry difficult to predict.
Conservation can hold down energy demand growth, but government policies, consumer behavior and the energy-efficiency of new capital goods and buildings are notoriously hard to predict, and their ef f ects are hard to estimate.
These factors will detersine whether and how fast world oil demand reaches the limits of CFEC and non-CFEC production cagacity.
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17 Many other uncertainties stso will af'act future world oil price behst-ior.
These include technological clange, the policies of consumer-notion governs.ents in developing substitutes for oil, and the role that cos:su nis t governments will play in world oil markets as esporters, importers or both.
In short, the timing and size of price increases are clouded with uncertainty. Howe ve t, under a broad variety of assumptions that span the range of responsable opinion, it is almost inevitable that de=and at current pricts will exceed supplie s at those prices at some time during the 1980s.
It would be rash to ignore these uncertainties, take confort from the existence of optimistic forecasts, or use them to justify inaction.
The U.S. sust plan for pessimistic and o pt imist ic in all futures. and anticipate the probless and benefits that can emerge such futures.
Price is not the ont, nessura of a " good" or "had" energy future. Lov oil prices bring short-run eConceic benefits, but lead to higher import levels and greater long-run political insecurities and economic vulner-ability to import disruptions.
High oil prices may lead to reduced import levels, although non-market constraints on increased domestic supplies could emerge that would keep imports high. De U.S. must develop policies that balance and protect against the risks of higher prices, higher imports, or both.
TOWARD A U.S. ENEECY STRATEGY Since the first OPEC price increase of 1973/74, the U.S. energy situa-tion has continued to deteriorate.
While there has been increased e=phasis on conservation and de=and growth has slowed, doc.estic produc-tion of energy has ressaned stationary for almost a decade.
The Nation stands at the threshold of a major transition in its sources af energy supply. Over the next two decades, the U.S. will meet its future demand growth not only with oil and gas, but increasingly with coal, nucle ar power, renewables, and high-cost unconventional sources.
No longer can it easily turn to imported oil to fill the supply gap, 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 apg.srent and unacceptable.
The challenges of the transition period are inherently fo rmidable.
Developutent of new t ran s it ional supplies and the development of new 5
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15 markets for those s upplie s will taae many years and requare enormous over a long period of s tee.
Yet the effort is critic #1 savestments free political security benefits, the potential cost savangs and, apart would be e nc rmou s.
Ac tions too long delayed could have disastrous con seque nc e s.
To date, interminable conflict ov er the future of energy policy has been one of the most paralysing uncertainties in the country's energy is the future.
Only with the President's energy message of April Nation finally moving towards an oil pricing policy that ends the sub sidy for foreign oil.
Institutional barriers have blocked increased energy production and new energy projects. Frequently, businesses have hesitated to undertake new projects or raise their product. ion because of delays and uncertainties about government policies.
The ene rgy policy dekste has i een one of the most divisive i' recent years.
Energy policy touches every economic interest, every group in American society. It leads into a complea tangle of sometimes cospeting efficiency and greater production, equity among national goals--market income classes and regions, envisorusental protection, national security, economic growth, and inflationary restraint. It will be dif ficult, and sometimes imporsible, to reconcile all these goals.
build on the National Energy Act of 1978. It An energy strategy must must develop a consensus on issues that were not treated in the NEA, and on new issues that have arisen since. It must define a more active role for regional, State and local governments in addressing the vast array of energy problems that cannot be solved at the national level.
demonstrate a new creativity in reducing the welfare and equity It sust impacts of higher energy prices. It must determine how to balance the costs of short-run inflation with the benefits of long-run infl<tionary restraint.
There is no alternative but to confront the difficult chuices that lie ahead.
THE NATIONAL ENERGY STRATECY An energy strategy must balance those measures that improve the Nation's long-run security and those that better prepare it to deal with sudden crises.
It must recognize the dif f e r ent probless that can enerse in three time-frames:
the near term (from now to 1985), the aid ters
( f rom 1985 to 2000) and the long-ters (2000 and beyond).
The Nation cannot resolve all the energy issues facing it now or at any one t in.e.
Every decision aust be made carefully with recognition that more knowledge will permit wiser choices later. The sairs objectives of the strategy, nevertheless, must be to of fer constant policy guidance for an uncertain future.
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o 19 The Near Ters (19'9-85)
Ov er the next few years. the Untted States and the rest of the world will be fortunate to escape a second radical increa e in world oil prices.
The adjustment process would again be painful.
Most of the energy producing and energy using equipment that will be i: spor t an t in that period is already in place.
Even with the benefits of last year's !fational E=ergy Act, imports are still unacceptably high, and without further aceton could be still higher by 1985.
As an immediate objective, which wi!! become even more tsoortant an the future, the Nation must reduce its dependence on f ore a tn 011 and its vulnerast11ty to suoply interruptions.
The challenge of the near term is to e ns ure that investments in new energy produc ing and consteing equipment are made in the degree and kind that reflest the new realities, and that existing stock and equipment are used in the sont ef fective way.
Movement towarJ the pricing of oil and gas at their true replace-me nt cost will prepare American coasumers better for long-tera price increases and stimulate greater production and conservation now.
Removal of barriers to new production will eliminate excessive regula-tory delays that now paralyse the construc tion of new r e fine rie s,
pipelines, and -* hee e ner gy projects. Fillir g the Strategic Petroleum te serve (SFP'
-ation of world oil soplies. and other actions will cushio
..ac impact of an interruation. All these seasures can set the
,, for actions that will buy e+ to greater energy security in the mid-ters.
_The Mid-Ters (1985-2000)
During the mid-ters, the U.S. and.ne rest of the world will begin to shift from reliance on oil and gas to new and higher-cost foras of energy. Energy consumption growth should be far slower than once antic ipa ted.
Direct coal use, electricity and decentralized renewable sources will increase their share of the market.
The uncertainties-especially those surrounding world oil supply and price--are auch greater for the mid-ters than for the near ters.
These uncertatacies will give the U.S. a major opportunity to influence more directly its own energy future.
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20 in the sid*t a rs, the Nation eust seek to f t) teep soporte suffaciently low t o protet
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securstv and to extend tne period betere world est desant reaches the Israte of rreduetten capacity a nd ( 2 ) develof the capattistv tv use new nagner-priced
(" backstop") technenceses as world ott prtces rise.
Secause of the uncertainties in the mid-ters outlook, t he U.g. cannot af ford to pursue an inflexible set of progress or actions. No one can be certain how fast or how slowly world oil prices will rise. The U.S.
press forward with those actions that are approyriate t od a y.
It must should begin now to develop the capability to use new technologies that rely en damestic or non4FgC resources, to be deployed if and only Intro-if they beccse coepetitive with imported oil at higher prices.
duction of these advanced technologies also will require innovative solutions in design and deployment to ensure compa.ibiltty with environ-mental gosta.
The Lear Ters (2000 and bevend)
The U.S. f aces two sajor transitions in energy markets between now and the siddle of the 21st century. The first will occur during the mid-ters when the U.S. noves from an energy system which has depended on traditional oil and gas sources (including Laports) to one relying on unconventional supplies. These " transitional" energy supplies include some renesable technologies, enhanced oil recovery, oil shale, unconventional gas, and coal-derived products.
a second transitier Since even tho se supplies are depletable, begin af ter the year 2000. A set of " ultimate" technologies, inc.sfing all the renewable and advanced nuclear technologies, would begin to displace traditional f ue ls and non-renesable tenventional searces.
The Nation's lont-ters ebiective is to have renewable and essentiallv_(S-?haustible sources of enerev t> sust aan a hesa 'y econcev.
Many promising technologies may prove excessively expensive.
- .nviron-mental and safety problems may render others infeasible.
' *.a r e is always the danger that pr ema*w e or overbearing yederal sup wrt for any one group of technologies ass foreclose more attractive :ptions.
The current generation cannot and should not impose its own.udgzents and values on generations yet to cose. The final choices abou. deploy-ment of variocs technologies aust be lef t to thee.
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21 A sustainable energy future cannot be achieved ove rn ight.
The U.g.
esanot espect " crash" technologies 1 breakthroughs to solee its energy encouraged by technical adva<xes that do occur are best problems. The diligent, aggressive research and development programs for the videst range of options.
AN AGENOA FCR ACTION The Tederal governmen'. State and local gov ernment s. and the private sector all have important responsibilities to advance conservation and specific fuel tet>sologies in all three t ime periods.
Bis section describes Federal policies and programs.
Conservation Conservation continues to of fer the greatest prospect of reducing imports. reducing energy costs, and meeting dependence on unstableThe objectives of the Administration's donserva-environmental goals.
tion policies are two:
to reduce the rate of growth in desand for energy and to improve the productivity of energy use--by increasing the
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efficiency of esisting and future capital stocks of buildings.
vehicles, homes. and industrial operations while sustaining economic energy objectives will le mainly the The tools for achieving these of higher acergy prices, the conservation tas incentives in the growth.
br ct a
Energy Tam Act, and regulatory sessures.
o Conservation will be encouraged by policies for replacement-cost pricing. Os esbodied in the Nature! Cas Policy Act. the phased decontrtl of crude oil prices, and the Public Utilities Eegulatory Folicy Act.
e The residential and industrial conservation tax credits in the Energy Ta x Ac t will be an important sechanise to encourage near-ters energy conservation.
in new belldings and appliances will be reduced by ustag the regulatory authy i'ies in the Conservation Policy o Energy use Act and other legislation.
Enargy use in automobiles will be tegulated by fuel econcey 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 continue to be provided to low ancome fasitaes, schools, and herpitals to improve the energy eff acaency of residential and cosanity f acilities.
e The Administration will seek sad exploit oFportNaities to demonstrate conservation and increased efficiency in energy use and productivity at the institutional and coreuesty level.
greater esussrvation will be reduced Institutional barriers to by intervening in ut ility rate pr oceed h ag s and by acquainting the public with opportunities to conserve.
o The Federal gevernment will lead the way in energy conserva-tion, starting with its own buildings, processes, and transpor-t a t iost.
- The Department of Energy will support research and development (R&D) to improve ef ficiency where the benefit s of new develop-ments will not be captured by industry witnout governnes t in-volvement.
M.sjor RT&D targets include industrial o pe r a i !ons,
buildings, and new automotive propulsion systees.
Oil Tinancial incentives and the reduction of testitutional barriers are the er jor tools to raise oil production.
Domestic production will be increased by rapidly phasing out J
o controls on cruae oil and, until ( splete escontrol in 1981, by providing price incentives targeted for production from new discoveries, wareinal wells, and os vee of enhanced oil recovery techniques.
e To prevent excessive revenues from flowing to producers in the wake of decontrol, the President has requested that the a Windf all Profita Tas.
Its proceeds would be Congress enact to help low-income families, to encourage mass transit, and used to create an Energy Security Fund.
o Alaska and California production will be stimulaind through steps to accelerate t rans po rt a t ion systems to bring oil more cheaply from the 1.e s t Coast to mid-Continent, Culf, and East Coast markets.
Ey crts or swaps of Alaskan oil are also under conalderation as a wey to strengthen markets for West Coast production.
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23 o 011 Shale technology will be developed and tested on a com-sercial scale through a production tax credit financed by the Windfall Profits faz.
o To proeide security in the event of a possible disruption, the Strategic Petroleum Reserve will be filled, ultimately to a level of one billion barrela.
o Sources of production worldwiJe will be diversified.
Th e Adelaistration will support multilateral bank financing and other incentives for exploration, development, and produc-tion la less developea countries. The Administration will eleo encourage accelerated development of improved techralogies for estraction of heavy oils and tar sands.
Natural Cas Th e estural gas policy has two high priority elements--use of the temporary domestic surplus to substitute for oil imports and incentives to increase convent.onal domestic production.
o Domestic production will be encouraged by financial incen-tives, including the higher prices s t e== ring from the recently enacted Natural Cas Policy Act; through a more etable and pre-dictable regulatory enviroment1 the desygulation of high-cost gas, most totably that below 15 thousand feet; and, deregulation on a predictable basis.
o surplus gas and reasonably-priced supplemental swre es of gas will be used to displace foreign oil in existing industrial and utility f acilities capable of burni=g both oil aat gas; coal will continue to be the preferred fuel for existing coat-capeMe units and all new boiler facilities.
o Supplemental sources of gas will be used in the e: Jar si their co st-e f fe c tiv ene s e and security.
Under present cirem etences.
the order of attractiveness is: Alaska production; pipelite gas f rom Canada and/or Mexico; short-haul liquefied natur&1 gas (LNC); domestics 11y produced synthetic gas, depending upa the resolution of certain technical problems and cost; and long-haul L5C.
o Tinancial Incentives or R&D as appropriate will be used to quicken the production of unconventional sources of gas, includ-ing gas f rom tight sands. Devonian shale, geopressurized methane, and coal bed methane. R&D progra=s will be directed at determia-ing the size of the resource base, the cost of estraction, and the possible environmental ef fects.
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24 c al Coal, the Nation's most abundant fossil energy resource, should be used in place of oil and gas wherever economically and enviroesentally feasible.
Pros t a=s that increase the use of coal as a substitute for oil will receive the highest priority.
o Direct t7se The Powerplant and ledustrial Fuel Use Act (FIFUA) will be used to require coal use in all new electric utilities and major industrial fuel burning installations. nd in esisting coal capable fe:ilities; Research, development, and demonstration (RD&D) programs will be used to develop environmental control technologies and environmentally acceptable seans of direct coal use to enhance the overall sau bet for coal and to increase the regulator} options available under the FIFUA.
O Coal liquefaction
- E &D for direct coal liquefaction processes will be used to develop the capability by the 1990s fer comercial deployment of plants producing the most economic synthetic liquid fuel.
Indirect coal lique f ac tion processes based on existing technology will be emasined to deterzine whe t he r they offer additional economic or envircemental benefits.
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o Coal Casification j
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- The Administration supports favorable rate treatment and loan guarantees for first-generation Lurgi technology.
t The two second generation gasifiretion technologies now being considered for demonstration will be developed and i
analysed further, leading to a decision in early FY 1980 whether to proceed with a demonstration plant.
- Research and development on advar.ced technologies will be e'
continued.
Funding levels wi!! be based on whether the processes appear to promise more economic end environmental benefits than available technologies, and on whether this supplemental source of gas is needed.
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_ Improved Effielenev Coal Conversion o
g&D on advanced coal conversion systems such as magneto-hyd rodynae f es (IGtD), crobined cycle, pressurise! flutdized bed, a nd fuel cells will attempt to resolve key te:hnical, econoasc, and environmerr:a1 questions.
_ Nuclear The Presidentf *1 Consission will provide a cocplete accounting of the causes of the !\\ree Mile Island accident and its handling by utility.
State, and Tederal of ficials.
The Nation needs to develep s a fegua r d s that will allow light water reactors to continue to meet an increasing share of electrical energy =eeds.
o Linkt Vater Resetor
- The Administration will work toward resolving nuclear waste management issues, including both away-from-reactor storage and persanent disposal, in accordance with the recoc=endations of the Interagency Review Croup.
Nuclear siting and licensing legislation will be proposed to streamline procedures without in any way sacrificios the safety of new power planta.
Cenerie R&D will be undertaken to improve light water reactor (LVR) operations, to i= prove the s a fety o f LVRs, and to improve their efficiency and snus extend the uranius resources they utilise.
i teliable and economic uranium enrichment s e rv ic e s for i
domestic and foreign users will be astured byt o Operating and expanding the existing ga seous diffusion plant capacity.
o Cowercialising gas centrifuge technology by establishing a machine manufacturing industry and building a cor.mertial centrifuge enrichment plant.
o Deve10 ping advanced isotope separation enrichment tech-nology.
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e 26 o Breeder teactor so that cessercial R&D on breeder reactors will continueif justified by future market development can be initiated, conditions and nr--polif eration policies.
3reeder reactor demonstration will be deferred pending the re sult s of the Inte rnat ional Nuclear Fuel cycle Ev aluation and interagency revieu.
_ Fusion o
and inertial confinement concepts magneticthe objective of demonstrating sciectific Research on the will continue with feasibility in the mid-1980s.
will be gov-The pr ogr am for developent of fusion energy erned by a struptieve of sequential decision points to selectconstruction of large candidate technologies and to initiate If all goes well, the first commercial use of f a cilitie s.
fusion will occur in about the year 2020.
Renewable Enarev Sources The Nation's capacity to use renewable resources should be enhanc ed.
The mat.rity of these technologies varies greatly; so=e are economic Federal support must be others are in the early arages of R&D.
- now, tailored to each stage of development.
o solar Energy Tan credits and other financial incentives will be used accelerate market penetration of solar are econceld or me.rly economic now (solar vbere necessary to i
technolet es that hot water he ating, certain foJsstrial process heat systems, wood burning, and 'ov head passive solar systems, direct hydro).
RD&D and/or product support will advants thsee te<hnologies that hav e significant sarket potential and that replace oil and gas, but which are not yet competitive in the mass heat systems, market (certain solar industrial process solar space heating, conversion of biomass to liquid active and gaseous fuela, and wind systtas).
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o 27 g&D and limited product support will develop those technot*
gies with eignificant long-tere potential, but which are far from economic application (solar cooling, photovoltaics, solar thermal, a nd ocean thermal energy conversion (OTEC)).
The Administration will continue to study the possible applications of technologies with highly uncertain etential (solar power satellites, photo-chemical conversion).
o _Ceothermal
- Tas incentives and loan guarantees are the primary tools to encourage the use of hydrotneraal resources. 236D will be used where the technology has not been demonstrated.
Research and development will be used to develoa the tech-sology-to use hot dry rock geothermal resources.
- The Administration will encourage the development of geo-pressurized energy primarily as sources of methane and secon-darily as sources of heat from hot water.
_ Cross-Curting policies In addition to these prograas designed to ameliorate the Nation's fundamental energy problems in future years, it is necessary to con-front today's c rises.
The ways in which the Federal government deals with energy probless must be streamlined. And energy policy must treat all tititens fairly.
o
_Deallet with the Current Crisis With conservation and other seasures, the United States will meet its causitzent, reached jointly with other member nations of the International g,ergy Agency, to cut by 5 peseent by the latter part of 1979.
energy consumption
- E=errency presarednete The Copertaant of Energy, is coopera t ion with state and local governments, will continee to develop and refine planning and management capabilities to deal with emergency shortages of supply.
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N o Manstement of Enerty Processe_s The Administration will seek to clarify and staplify pro-l cesses and procedures for alting and licensing new energy g
opportunity to carefully sacrificing the
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f acilities, without balance conflicting policy objectives.
l closely with St a t e s and local j
Administration will workthey participate fully and ef fee-g
- The hat sovernments to ensure t tively in developing and implementing the Nation's energy g
e policies.
The Administration has proposed the Energy Manage =ent Partnership Act to pr ovide funds to accomplish l
I this objective.
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Tlit SIGNITICANCE OF NEF-11 actions already undertaken, and those currently proposed. will I
sound and long-la sting footing.
l The place the Nation's energy policy on apricing for.: rude oil, coupled with os natural gas pricing, will build a coherent Movement toward replacement coat economic framework for making scre rational decisions about energy j
last year's action future.
about the Nation's energy production and consumption-and thusvariety of seasures, Such as the e,
These actions are coupled with a
Windf all Profits Taa, designed ts, assure equity f or consumers.
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roadblocas to tisely and equitable decision-esking on energy projects, the Nation can increase production of its i
ly beginning to remove the Ay s p.tri ; the development of new technologies, I
the U.S. will lay the groundwork for their future use as world oil domestic
- resources.
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l prices rise.
The decade of the 1960s, and the early 1970s, saw importa climb steadily, both in absolute terve and, more dan;erously, as a percentage I
the Nation became more With each passing year, l
of total consumption.
dependent on oil imports, and thus acre vulnerable.
The National Energy Act, and *he acticos and proposals recently an-daunce4 by the President, will arrest those trends. By 1985, the in tae National Energy Act will reduce imports 2.5 to 3. 0 those they wuld have been without seasures million barrels per day betov what this year 'will save over one actions.
The additional steps proposedall imports are expected to drop As a result, Although imports sillion barrels per day.
a percentage of total energy consumption by 1985. levels. U.S. vulnerability will be as will still be comparable to currentavailability of the str ategic petreletan reduced substantially by the reserve.
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few years, crises that resulted 1.f ter the series of crises over the lastis now clear that it is impossi-in shortages of oil, gas, and coal itall the policias that ultimately may ble to lay out, in one doceent, prove necessary for the Nation's long-ters future.
Instead. WEF-11 information available at the present provides the Congresa with the best time with which to make future decisions, to deal with fttare develop-
- ents, and to capitalize on future technological advances.
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