Oil, EPA don't mix at energy hearings

By Kris Bevill | April 15, 2010
Posted May 3, 2010

In his April 28 testimony to the House Subcommittee on Energy and the Environment, Charles Drevna, president of the National Petrochemical & Refiners Association, warned subcommittee members not to financially pressure the domestic oil industry through clean energy policies. "I don't believe Congress wants to over-tax or over-regulate the industry into extinction, only to see them replaced by their foreign competitors exporting their products to our shores," he said. "But make no mistake: Overzealous policies could have disastrous effects and become a self-inflicted wound as our country struggles to climb out of the Great Recession," he added.

The subject of the subcommittee's hearing was "Clean Energy Policies that Reduce U.S. Dependence on Oil." Drevna, who was defensive in his testimony from the beginning, suggested that the focus be altered to review "affordable" and "economically sensible" policies, which includes an increase of domestic oil production. "It's indisputable that petroleum-based fuels are abundant, easily accessible and very efficient," he said. "Until alternative energy sources can make that claim, we not only should, but must and will continue to use these resources wisely and efficiently for decades to come."

Drevna painted a grim picture of what the U.S. economy would experience if the U.S. EPA is allowed to regulate GHG emissions under the Clean Air Act. "Regulation of stationary sources under the CAA would overwhelm state and local permitting offices, halting business growth and expansion," he said. "New business and industry would not be built, and existing business would not expand. Further, refining and petrochemical facility upgrades and related equipment modifications, including those to comply with future fuel regulations and those to modernize facilities, would likely be hamstrung by CAA GHG control regulations and permitting requirements."

Earlier in the hearing, EPA Administrator Lisa Jackson reminded subcommittee members that if Congress nullifies the EPA's endangerment finding on GHGs, it will also severely impact the U.S. automotive industry by removing the EPA's tailpipe emissions standard. "Eliminating the EPA standard would forfeit one-quarter of the combined EPA-U.S. Department of Transportation program's fuel savings and one-third of its greenhouse gas emissions cuts," Jackson said. "California and other states that have adopted California's greenhouse gas emissions standard would almost certainly respond by enforcing that standard within their jurisdictions, leaving the automobile industry without the nationwide uniformity that it has described as vital to its business."

On the Senate side of the chamber, Energy Secretary Steven Chu testified at a Senate Energy and Water Development Subcommittee hearing April 28, where he stressed the importance of developing a domestic clean energy sector. "China largely missed out on the IT revolution, but it is playing to win in the clean energy race," Chu said. "For the sake of our economy, our security, and our environment, America must develop decisive policies that will allow us not only to compete in this clean energy race, but to become the leader in providing clean energy technology to the world."

Chu recommended that legislators develop policies with two priorities: accelerating innovation and driving private sector investment in clean energy. Among other items, he testified that carbon capture and sequestration barriers need to be addressed and overcome, and that the government must financially support research and development of clean energy technologies.

After reciting his list of recommendations, Chu finished by stating that the one key element which must be included in U.S. energy policy is a cap on carbon emissions that becomes more stringent over time, which will provide industry the regulatory certainty that is currently lacking. He provided an example of a hypothetical utility company that must replace an old, coal-fired power plant, but has to decide whether to make the investment now or later. "Eventually, there will be a [carbon] cost, but if you didn't know when, you would try to limp along with the old coal plant until you knew what the costs would be and how they would be structured," Chu said. "Providing certainty will drive investment and job creation today as well as the changes we need in our energy mix over the long term."