ENERGY POLICY MAY 12, 2006 JOHN BUSH

CAN WE ANSWER THESE QUESTIONS? What is an energy policy? Does the US have an energy policy? Does California have an energy policy? Who makes Energy Policy?

WHO ARE THE ACTORS IN ENERGY POLICY? In theory the elected government establishes the policy and private enterprise implements it Voters generally select from a slate of candidates endorsed by private enterprise Voters are strongly influenced by local and “pocketbook” issues The clearest lead indicator of energy policy may be the way that private enterprise is placing its investments

COMPONENTS OF ENERGY POLICY A vision—what is to be accomplished? A strategy—how is it to be accomplished? –Qualitative and quantitative goals –Timing of meeting the goals Tactics—what is to be done? –Technical –Economic –Political –Social Implementation—how will it be done? –Legislative framework –Budgets in appropriate time frames –Administrative rules –Management structure Measurement—how will success or failure be measured? –Development of appropriate measures –Financial measures –Periodic reports

EXISTING ELEMENTS OF CALIFORNIA ENERGY POLICY Greenhouse Emission Reduction –Executive Order S-3-05—June 1, reduce to 2000 level 2020 reduce to 1990 level 2050 reduce to 80% below 1990 level –California Code of Regulations Title 13 Section August 4, 2005 Passenger cars 36% reduction by 2016 Light duty trucks 24% reduction by 2016 Renewable Energy Increase –California Renewables Portfolio Standard program— Public Utilities Code Section (2005) –Electricity target of 20% generation from renewables

CALIFORNIA ENERGY LEGISLATION 2005 AB 1229 Global Warming Label on cars: revises the smog sticker- Passed 10/6/05 SB 1 Million Solar Roofs: Killed in Assembly SB 107 Goal of 20% renewable energy for electricity production by 2010 instead of current 2017: Killed in Assembly* SB 1223: Internet sale of hybrid vehicles* SB 757: Goal for statewide reduction of petroleum demand by requiring purchase of “cost-effective” alternative fuels* *likely to be reintroduced in 2006

IS THE ASSEMBLY THE PROBLEM? Initiatives: California’s option to by-pass the Assembly The Clean Alternative Energy Act –Energy Independence Fund: fee paid by producer for “privilege” --up to 6% of gross value of oil (exempts strippers) –Allocated to Service debt incurred by other provisions Reduce gasoline and diesel 57.5% Research and innovation acceleration 26.75% Commercialization acceleration 9.75% Vocational training 2.5% Administration and “public education” 3.5%

EXAMPLES OF TACTICS Diesel and Gasoline Reduction: 10 billion gallons in 10 years –Loans and buydowns –Production incentives –Incentives to build refueling stations –Incentives to install infrastructure –Research grants to private enterprises Research and Innovation Acceleration: grants to California Universities –Renewable energy technologies –Energy efficiency technologies Commercialization Acceleration: loans and grants for start-up costs Vocational Training: grants to Community Colleges Administration and Public Education –Propagandize the people –Monitor the Assessment –Administer the Authority

IS THIS GOOD POLICY?

US ENERGY POLICY Is California a proper model for the nation? –1 Concern for transportation –2 Concern for Greenhouse Gas emissions –3 Concern for electricity supply (little coal) The National policy current priorities: –1 Security of oil supply –2 Concern for nuclear proliferation –3 Concern for economy –4 Concern for transportation

PRESIDENT’S NATIONAL ENERGY POLICY: 2005 Energy Policy Act 2005 left issues unaddressed Opening the Arctic National Wildlife Refuge to oil and gas exploration Expediting investments in refineries Streamlining the New Source Review process Increasing production from the Outer Continental Shelf Accelerating building of the Alaska Natural Gas Pipeline Enacting Clear skies legislation to encourage investment in cleaner coal technologies

ADVANCED ENERGY INITIATIVE Vision: “the principal energy challenges we face” –“Promoting energy conservation” –“Repairing and modernizing our energy infrastructure” –“Increasing our energy supplies in ways that protect and improve the environment” Goals –“Keep America Competitive” –“For the sake of our economic and national security” –Ensure “reliable, affordable, clean supplies of energy” Strategies –“Changing the way we fuel our vehicles” –“Changing the way we power our homes and businesses”

ADVANCED ENERGY INITIATIVE FUELING VEHICLES Existing technologies –Increase CAFÉ Standards –Tax incentives for hybrids and clean diesels –Clean diesel regulations –Renewable ethanol and biodiesel –Tax credit for alternative fuel facilities Advanced batteries for plug-in hybrids Ethanol from cellulose Hydrogen fuel-cell vehicles by 2020

ADVANCED ENERGY INITIATIVE POWERING HOMES AND BUSINESSES Existing technologies –Make it easier to find and produce natural gas domestically –Expedite permitting of LNG terminals –Establish energy efficiency standards for large appliances –Foster investment in “newer, cleaner coal technologies” –“Encourage investments in safe and reliable nuclear power” –Provide tax incentives for electricity production from renewables Clean coal technology research Global Nuclear Energy Partnership Reduce cost of photovoltaic technologies

IS THIS GOOD POLICY?