already been realized. This further improvement is possible using readily available technology. The largest single impediment to further improvement is the capital or budget constraint facing member companies. Energy efficiency improvement projects must compete against other possible uses of company funds, and there are budget restraints to implementing all worthwhile energy efficiency projects. This leads to the conclusion that the most useful measures Congress might take to foster additional energy efficiency projects would be measures to increase the supply of capital and to lower the cost of capital to U.S. firms. Section 3005 envisages voluntary guidelines for energy efficiency audits of industrial facilities. Many utilities already offer such services to their consumers. Given these utility services and given the considerable expertise of many industrial consumers, CMA questions the need for the additional program proposed in Section 3005. Section 3007 envisages expanded energy use data collection by the Energy Information Administration. Although this section would require the EIA Admistrator to take data reporting burdens into account, CMA fears that any significantly expanded data colletion effort would inevitably impose significant and costly new burdens on industrial consumers, to the detriment of U.S. international competitiveness. Section 3201 would permit State regulated utilities' investment in and expenditures for energy conservation, energy efficiency resources and other demand side management measures (not further defined) to be as profitable as investments in and expenditures for new generating facilities. CMA is concerned, first, that the cost of poorly-justified measures will ultimately fall on industrial consumers. Second, CMA sees no need for federal legislation in an area where State commissions already have the authority to institute programs such as this, when many States are already moving in this direction. CMA supports measures to expand the use of coal in an environmentally responsible manner. The nation should utilize its most abundant energy resource. This Section 5002 envisages a plan for research, development, and demonstration with respect to technologies for non-fuel use of coal, including production of chemical intermediates that are precursors of value-added chemicals; production of chemicals from coal-derived synthetic gas; and production of coal-based chemical feedstocks. plan would include an analysis of the costs, benefits and economic feasibility of using coal products in these and other ways. Because the chemical industry must have access to competitively priced feedstocks in order to compete successfully in world markets, good economic analysis as part of the Section 5002 plan is of crucial importance. Coal-based inputs to the chemical industry at non-competitively high prices would not be useful and would in fact be detrimental to the economy. Section 5101 deals with the applicability of new source review to existing electric utility steam generating wits, the so-called "VEPCO issue". CMA agrees with Senator Johnston's analysis of the problem caused by this issue, as recorded in his remarks upon introducing S.341. CMA welcomes efforts to devise a solution to the problem Title VI Research, Development, Demonstration and Commercialization Natural gas is the chemical industry's largest single energy source. We use it both for fuel and for feedstock purposes. In many of its applications, the replacement of natural gas by other energy sources would be difficult or expensive. CMA and its members are concerned that the increased emphasis on the use of natural gas as the "environmentally preferred" fuel, or for national security reasons, may result in significant real increases in the price of natural gas, in tightness or shortages in the natural gas market, or both. these would adversely affect our industry's international competitiveness. Either of CMA therefore believes that the "mandated" use of natural gas should be avoided. Adequate supplies and the informed choices of consumers should determine natural gas use, not government requirements. In addition, CMA believes that measures to expand the supply of natural gas are equally as important as increased emphasis on natural gas use. Therefore, CMA welcomes Section 6004's proposed natural gas supply enhancement program for research, development and demonstration to increase the recoverable natural gas resource base. Title VII Strategic Petroleum Reserve CMA considers the "oil security premium" proposed in Title VII to be in effect a tax on imported oil and products with payment in kind. CMA remains strongly opposed to oil import restrictions in any form: tax, fee, quota, price floor, or oil security premium. However, we do support an adequate Strategic Petroleum Reserve and would welcome the opportunity to work with Congress to explore other options, such as leasing, to fund this program. Please refer to the "Written Statement of the Chemical Manufacturers Association Before the Senate Committee on Energy and Natural Resources on Title VII of S. 341, the 'National Energy Security Act", dated March 11, 1991. Title VIII Outer Continental Shelf Our views on exploration and development of outer continental shelf resources are similar to our views regarding resources in the Arctic National Wildlife Refuge. We believe OCS oil and gas can continue to make important contributions to the nation's energy supply mix. We believe that exploration and development can take place in an environmentally responsible manner. And we suggest that any adverse environmental impact of OCS exploration and development must be weighed against the potential adverse environmental impact of the increased international tanker traffic to be expected in the absence of OCS exploration and development. CMA believes that further moratoria on OCS exploration and development should be avoided and that environmentally responsible exploration and development activities in the OCS should be allowed to proceed in an orderly way. Title IX Oil and Gas Leasing in the Arctic National Wildlife Refuge CMA strongly supports the stated purpose and policy of this title .to authorize competitive oil and gas leasing and development to proceed on the Coastal Plain..." CMA supports the development of all domestic energy resources in an environmentally responsible manner. believe enhanced energy supply must be a cornerstone of any national energy policy. To repeat, CMA supports environmentally responsible development of energy resources. Our concern with Title IX in this respect is that Section 9401's "no significant adverse effect standard" could be interpreted or implemented so strictly as to effectively prevent oil and gas leasing and development in the Coastal Plain. We urge the Committee to ensure that the final version of S.341 makes clear that this will not be allowed to happen. We As stated above in our comments on Title VI, natural gas is the chemical industry's largest single energy source. We use it both for fuel and for feedstock purposes. In many of its applications, the replacement of natural gas by other energy sources would be difficult or expensive. Access to competitively-priced natural gas is therefore crucial to the chemical industry's ability to compete successfully in world markets. For a number of years CMA has worked to promote open-access, non-discriminatory transportation of natural gas on interstate pipelines as one means of achieving access to competitively-priced natural gas. CMA is continuing to review the complex provisions of this title to see whether they are in accord with CMA's basic goal. CMA believes an expanded role for nuclear power as one component of the nation's s energy supply mix is indispensable. We believe the increased use of nuclear power is desirable both for environmental and national security reasons. And we believe nuclear power can play an expanded role in a manner which is fully consistent with the related health, saftey, and environmental concerns of the American people. CMA believes S.341's approach to this issue, addressing as it does the commercialization of advanced nuclear reactors, nuclear reactor The need for a reliable domestic supply of uranium, andresses several major issues directly relevant to the 2 nuclear power. sprests that the issue of nuclear waste management Surther vital issue that must be addressed to make the sec aeclear power a reality. antress this issue directly in S. 341. We urge the Committee and the Public Utility Holding Company Act Reform This ed earlier in this statement, CMA member companies have ACTORS Tg used cogeneration to provide heat and electricity. en de sustantially contributed to the improved energy use efficiency of our industry. We have also increased our use of actexty generated by independent power producers. super rance indicates, however, that a major impediment to the further ssion of both cogeneration and independent power production is lack Our members' of adequate access to the electricity transmission grid for purposes of whosting power from the source, whether cogenerator or independent power producer, to a potential customer at a different location. believes that increased access to the grid for wheeling purposes must be an integral part of efforts to increase the supply of electric power and to increase the efficiency of electricity generation in the United States CMA the P & chemical industry makes vital contributions to the growth of the US economy and to the quality of the lives of American citizens, as evidenced notably by the trade surplus of $16.5 billion earned by the chemical Industry in 1990. The chemical industry must have Count tuned access to competitively-priced energy and related feedstock supplies to continue to contribute to the nation's wellbeing and to walutain our International competitiveness. We therefore welcome and support measures to expand domestic energy resources, in an sayCrumentally responsible manner. We oppose measures which will Tact appear to energy supplies or unilaterally raise U.S. energy costs Latative to those of foreign competitors. Specifically, we oppose the all amcurity premium proposed in Title VII of S.341, and would oppose Cha hill so long as this provision remains in it. On February 26, 1991, J. Michael Davis, Assistant Secretary for Following the hearing, you submitted written questions on behalf If we can be of further assistance to you or your staff, please Enclosures Sincerely, Jacoph C. Kampirali fr Jacqueline Knox Brown Assistant Secretary Congressional and Intergovernmental |