Analysis of Bush Administration’s energy task force report released on May 17, 2001, by Cena Swisher, Program Director. Taxpayers for Common Sense
Following is an analysis of the Administration’s Energy Task Force Report.
If the recommendations are enacted, this report proposes more giveaways to
profitable and mature energy industries. For more information, please call
me at (202) 546-8500 x108 email.
Clean Coal Technology: The Bush Administration has already made a new round of Clean Coal Technology projects a priority for the next ten years. In DOE’s budget highlights for fiscal year 2002, the Administration requested $150 million for the program. DOE and Secretary Abraham have also stated the
Administration has a ten year commitment to this program. The intended
purpose of the program would be to eventually develop and demonstrate
advanced clean coal technologies for coal-fired power plants.
In 1984, Congress authorized an up-front appropriation of $2 billion for the
first Clean Coal Technology Program. The current CCTP encourages private
companies to develop cleaner burning coal technologies by providing matching
federal funds (up to 50 percent) for projects designed mainly for existing
power plants. The problem is that CCTP projects waste millions of taxpayer
dollars each year on research that has already been done and that the coal
industry should conduct with private funding. The coal industry is capable
of supporting its own research and development costs. According to the
Energy Information Administration, 1.04 billion tons of coal was consumed in
the U.S. in 1998, while the net income of coal companies in 1998 was $500
million.
The “Clean Coal “ technology program is fraught with waste, fraud and
abuse. The General Accounting Office (GAO) has released over seven studies
documenting the waste and mismanagement within the CCTP. In fact, a GAO
report from March 2000, found that eight ongoing CCTP projects “had serious
delays or financial problems.” Two of the eight projects are in bankruptcy
and are unlikely to be completed, and the other six are seriously behind
their original completion schedules. The first CCTP is still authorized to
receive appropriations and the Administration has requested $82 million for
FY 2002 for the old program. The Administration is proposing this new round
of Clean Coal projects that will cost taxpayers at least $2 billion over 10
years.
Provide tax breaks for developing clean coal technologies: These proposals could allow companies that use clean coal technology to receive tax credits for research and development. This means that not only will companies participating in the Clean Coal Technology Program (CCTP) receive the spending subsidy for developing the clean coal technology, but they will also receive tax breaks for using the technology -- in effect, a double subsidy. The Administration supports in this effort the permanent extension of the R&D tax credit. (TOP)
Nuclear
Speed up process to ensure disposal of nuclear waste: Reprocessing is a vestige of the Clinch River Breeder Reactor killed in 1983, and the Advanced Light Metal Reactor that Congress killed in 1994. Both were enormously expensive nuclear reactor systems that would have produced and run on plutonium-based fuel. The cancellation of both the CRBR and ALMR led to DoE advocating the technology of reprocessing or Pyroprocessing separately from these reactor systems as a way to reduce the volume of nuclear waste. However, Pyroprocessing simply produces different kinds of nuclear wastes that will not obviate the need for a nuclear waste repository.
The federal government has already spent $9 billion to develop breeder
reactors, and spending more taxpayer money on components of this wasteful
and inefficient technology will not help alleviate our country’s energy
woes. Furthermore, according to the CRS, the commercial nuclear power
industry received $66 billion in R&D subsidies from 1948 through 1998, not
including money for the Price-Anderson Act. More taxpayer money should not
be thrown at an industry that has proven economically inefficient and
ineffective. In fiscal year 2000, the federal government appropriated over
$70 million for both nuclear research and development programs, such as
Nuclear Energy Research Initiative and programs that include pyroprocessing
activities.
Reauthorize law that limits industry liability from a nuclear accident: The Price-Anderson Act was initially passed as an amendment to the Atomic Energy Act in 1957 after a vice president from General Electric told Congress that his company and others would not build nuclear power reactors unless they could be shielded from full liability in the event of a major nuclear accident. Since no private insurance companies would insure the reactors, Congress stepped in by passing the Price Anderson Act. In 1988, it was modified again and extended for another 15 years. By 2003, President Bush will have to decide whether to grant another extension.
Price-Anderson limits the liability of the nuclear power industry in the event of a nuclear accident. Without this insurance subsidy, the nuclear power industry would not exist. As of August 1998, Price-Anderson capped the insurance coverage for any single nuclear accident at $9.4 billion, which is not sufficient to pay for human health and property damages that could result from such an accident. Taxpayers would inevitably have to make up the difference. In 1999 dollars, the estimated subsidy for all 110 nuclear power plants operating in 1991 was $3.6 billion. (TOP)
Other Tax Incentives:
Expansion of Section 29 tax credit for non-conventional fuel source
production: The report recommends that the Administration work with Congress to expand the Non-conventional fuel source tax credit to new landfill methane
projects. Currently, Section 29 of the Internal Revenue Code allows oil and
gas companies to take a production tax credit for fuels produced from
non-conventional sources. The JCT estimates that this credit costs
taxpayers approximately $7 billion over five years, and $12 billion over ten
years. Congress has separately proposed to extend the life of the credit
through 2008 and then phase it out by 2013.
This program is a remnant of the Carter Administration’s “synfuels” program,
and was instituted to decrease American dependence on foreign oil. However,
it has not lead to major increases in alternative fuel production and has
not helped to decrease our reliance on foreign oil. (TOP)
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Taxpayers for Common Sense is a non-partisan budget watchdog that serves as an independent voice for American taxpayers. Now in its second decade of service to the nation, TCS works to ensure that our government spends taxpayer money efficiently and responsibly by working to eliminate wasteful and harmful federal spending.
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