S. 1131 - The Clean Power Plant and Modernization Act of 2001
Statement of Senator Patrick Leahy at the Introduction of the
"Clean Power Plant and Modernization Act of 2001"
June 28, 2001
Mr. President, the Administration finally released its National Energy Policy
last month. As I noted at the time, I have serious concerns about several of
its recommendations, not the least of which was its proposal to build 1,300 to
1,900 new electric power plants - many of them burning relatively dirty fossil
fuels - while, at same time, questioning the enforcement of clean air laws
that protect the public from excess power plant emissions.
Today, fossil fuel-fired power plants constitute the largest source of air
pollution in the United States. Every year, they collectively emit
approximately 2.2 billion tons of carbon dioxide, 13 million tons of acid
rain-producing sulfur dioxide, 7 million tons of acid rain- and smog-producing
nitrogen oxides, and 43 tons of highly toxic mercury.
How could pollutants still be dumped into our atmosphere at this scale? One
reason that cannot be ignored is that more than 75 percent of the fossil-fuel
fired power plants in the United States are still "grandfathered," or exempt
from modern Clean Air Act standards. When the Clean Air Act and its amendments
were passed, Congress assumed that old, 1950's era power plants would be
retired over time and replaced by newer, cleaner plants within 30 years. They
were not. Unfortunately, utilities have kept these inefficient, pollution-prone
power plants on line because they are inexpensive. Those grandfathered plants
continue to burn cheap fuel and refuse to invest in emissions control
technologies that protect air quality.
The continuing harm to our atmosphere, lands, waters, state economies, and
public health by excess power plant emissions is well documented. In my home
state of Vermont, acid deposition caused by emissions of sulfur dioxide and
nitrogen oxide has scarred our forests and poisoned our streams. Emissions of
mercury have contaminated our rivers and lakes to the point that statewide
advisories against fish consumption are necessary to protect citizens.
Emissions of greenhouse gas threaten to negatively change the climate for
Vermont maple trees - the source of Vermont maple syrup - and other economic
Vermont crops. And despite Vermont's tough air laws and small population,
out-of-state particulates and smog lower our air quality, endanger our health,
and ruin views of our Green Mountains.
Earlier this year, I cosponsored bipartisan legislation, the "Clean Power Act
of 2001," that strictly capped national power plant emissions and ended
"grandfather" loophole exemptions. To promote rapid and reliable changes in
the utility industry, that legislation also gave utilities the regulatory
tools needed to make those changes with incentives for free market trading of
emissions credits, a so-called "cap-and-trade" mechanism. I remain a supporter
of the Clean Power Act of 2001 and hope it becomes key to energy policy
negotiations in Congress. However, I believe we can do even more.
So today I am introducing a second piece of legislation covering power plant
emissions that I also intend to promote during the energy debate. The "Clean
Power Plant and Modernization Act of 2001" again strictly caps emissions and
ends the "grandfather" loophole on old plants. Instead of providing utilities
the incentive of free market trading, however, my bill creates strong financial
incentives, in the form of accelerated tax depreciation, for older utilities
that cut emissions and upgrade their plants to 45% to 50% efficiency. With
current average energy efficiency of U.S. power plants at only 33%, this bill
is another proposal that protects the environment and public health while
providing the energy industry with a comprehensive and predictable set of
long-term regulatory requirements.
Under this bill, mercury emissions would be cut by 90%, annual emissions of
sulfur dioxide would be cut by more than 6 million tons beyond Phase II Clean
Air Act Amendments requirements, and nitrogen oxide emissions would be cut by
more than 3 million tons per year beyond Phase II requirements. This bill
would also prevent at least 650 million tons of carbon dioxide emissions per
year.
And this bill goes beyond emissions caps and transition incentives to recognize
the emergence of energy technologies that are more environmentally sustainable.
It provides substantial funding for research, development, and commercial
demonstrations of renewable and clean energy technologies such as solar, wind,
biomass, geothermal, and fuel cells. It also authorizes expenditures for
implementing known ways of biologically sequestering carbon dioxide from the
atmosphere such as planting trees, preserving wetlands, and soil restoration.
The bill emphasizes the importance of immediately capping, if not totally
eliminating, the release of mercury from power plants. In December, the EPA
finally determined to regulate mercury emissions from electric utility power
plants -- an action I strongly commended. However, such regulations are years
away, and it is uncertain what form they will take. Yet, just last year, 41
states issued more than 2,200 fish consumption advisories because of mercury
contamination. Eleven states, including Vermont, issued statewide advisories.
In 2000, the National Academy of Sciences confirmed the health risks of
mercury, emphasizing the special vulnerability of unborn and young children.
I believe we need to do something now.
As the energy landscape of our nation changes, this bill also recognizes the
need to train a new national energy work force. As U.S. power plants become
more efficient and more power is produced by renewable technologies, less
fossil fuel will be consumed. This will have an impact on the workers and
communities that produce fossil fuels. These effects are likely to be greatest
for coal, even with significant deployment of clean coal technology. The bill
provides funding for programs to help workers and communities during the
period of transition. I am eager to work with organized labor to ensure that
these provisions address the needs of workers, particularly those who may not
fully benefit from retraining programs.
Finally, this bill holds the electric power industry, and Congress,
accountable for any and all taxpayer dollars used to aid the transition to
cleaner electric generation facilities. To assess how well clean air laws and
emissions reductions are working, our nation must have robust, nationwide
monitoring networks capable of generating reliable, consistent, long-term
data about natural ecosystems. Networks such as the National Atmospheric
Deposition Program currently provide the national data needed by scientists
and federal agencies to accurately assess the trends in pollutant deposition.
Yet, over the past 30 years, these networks have struggled to survive with
ever-decreasing funding. My bill provides modest appropriations for both
operational support and modernization of scientific sites that are so critical
to understanding of our ecosystems and our public health.
The American public overwhelmingly supports the environmental commitments that
we have made since the early 1970s. It is our responsibility to preserve the
environment for our children and grandchildren, and it is our duty to protect
their health as well. The proposed energy policy of this administration needs
to be less about drilling and more about energy efficiency and protection of
air quality. This bill will, I hope, add another way in which we can ensure
reliable, affordable electric power while modernizing energy efficiency and
protecting our national resources.
Mr. President, I ask unanimous consent that this statement, the full text of
the bill, and the section-by-section overview of the bill be printed in the
Record.
Summary of the
"Clean Power Plant and Modernization Act of 2001"
What will the Clean Power Plant and Modernization Act of 2001 do?
The Clean Power Plant and Modernization Act of 2001 lays out an ambitious,
achievable, and balanced set of financial incentives and regulatory
requirements designed to increase power plant efficiency, reduce emissions,
and encourage the use of renewable energy and clean power generation methods.
The bill encourages innovation, entrepreneurship, and risk-taking. In the long
term, the bill will reduce acid precipitation, decrease mercury contamination,
help mitigate climate change, improve visibility, and safeguard human health.
Section 4. Combustion Heat Rate Efficiency Standards for Fossil Fuel-Fired Generating Units
Fossil fuel-fired power plants in the United States operate at an average
combustion efficiency of 33%. This means that, on average, 67% of the heat
generated by burning the fuel is wasted. Without changing fuels, increasing
combustion efficiency is the best way to reduce carbon dioxide emissions.
Section 4 lays out a phased two-stage process for increasing efficiency.
In the first stage, by 10 years after enactment, all units in operation must
achieve a combustion heat rate efficiency of not less than 45%. In the second
stage, with expected advances in combustion technology, units commencing
operation more than 10 years after enactment must achieve a combustion heat
rate efficiency of not less than 50%. Carbon dioxide emission reductions on
the order of 650 millions tons per year are expected, and the potential exists
for even larger reductions.
If, for some unforeseen reason, technological advances do not achieve the 50%
efficiency level, Section 4 contains a waiver provision that allows the owners
of new units to offset any shortfall in carbon dioxide emission reductions
through implementation of carbon sequestration projects.
Section 5. Air Emission Standards for Fossil Fuel-Fired Generating Units
Subsection (a) eliminates the "grandfather" loophole in the Clean Air Act and
requires all units, regardless of when they were constructed or began
operation, to comply with existing new source review requirements under
Section 111 of the Clean Air Act.
Subsection (b) sets mercury, carbon dioxide, sulfur dioxide, and nitrogen
oxide emission standards for units that are subject to the 45% thermal
efficiency standard set forth in Section 4. For mercury, 90% of the mercury
contained in the fuel must be removed. For carbon dioxide, the emission limits
are set by fuel type (i.e., natural gas = 0.9 pounds per kilowatt-hour of
output; fuel oil = 1.3 pounds per kilowatt-hour of output; coal = 1.55 pounds
per kilowatt-hour of output). 95% of sulfur dioxide emissions and 90% of
nitrogen oxide emissions are to be removed, and emissions may not exceed 0.3
pounds of sulfur dioxide and 0.15 pounds of nitrogen oxides per million BTUs
of fuel consumed.
Subsection (c) sets emission standards for units that are subject to the 50%
thermal efficiency standard set forth in Section 4. Standards for mercury,
sulfur dioxide, and nitrogen oxides are the same as those in Subsection (b).
Greater combustion efficiency results in lower emissions of carbon dioxide,
and the fuel-specific emission limits are lowered accordingly (i.e., natural
gas = 0.8 pounds per kilowatt-hour of output; fuel oil = 1.2 pounds per
kilowatt-hour of output; coal = 1.4 pounds per kilowatt-hour of output).
Section 6. Extension of Renewable Energy Production Credit
Section 45(c) of the Internal Revenue Code of 1986 is amended to include solar
power and geothermal power and to extend the renewable energy production
credit through 2015. (This credit is currently set to expire in 2001.)
Section 7. Megawatt-Hour Generation Fees and Section 8. Clean Air Trust Fund
To offset the impact to the Treasury of the incentives in Sections 9 and 10,
the bill establishes the Clean Air Trust Fund. The Trust Fund is similar to
the Highway Trust Fund or the Superfund. The revenue for the Trust Fund will
be provided by assessing a fee of 30 cents per megawatt-hour of electricity
produced by covered electric generating units.
The Trust Fund will also be used to pay for assistance to workers and
communities adversely affected by reduced consumption of coal, research and
development for renewable power generation technologies (e.g., wind, solar,
and biomass), and carbon sequestration projects.
Section 9. Accelerated Depreciation for Investor-Owned Generating Units
Under the Internal Revenue Code of 1986, utilities can depreciate their
generating equipment over a 20 year period. Section 9 amends Section 168 of
the Internal Revenue Code of 1986 to allow for depreciation over a 15 year
period for units meeting the 45% efficiency level and the emission standards
in Section 5(b). Section 9 also amends Section 168 to allow for depreciation
over a 12 year period for units meeting the 50% efficiency level and the
emission standards in Section 5(c).
Section 10. Grants for Publicly Owned Generating Units
No federal taxes are paid on publicly-owned generating units. To provide
publicly-owned utilities with comparable incentives to modernize, Section 10
provides for annual grants in an amount equal to the monetary value of the
depreciation deduction that would be realized by a similarly situated
investor-owned generating unit under Section 9. Units meeting the 45%
efficiency level and the emission standards in Section 5(b) would receive
annual grants over a 15 year period, and units meeting the 50% efficiency
level and the emission standards in Section 5(c) would receive annual grants
over a 12 year period.
Section 11. Recognition of Permanent Emission Reductions in Future Climate Change Implementation Programs
This section expresses the sense of Congress that permanent reductions in
emissions of carbon dioxide and nitrogen oxides that are accomplished through
the retirement of old generating units and replacement by new generating units
that meet the efficiency and emission standards in the bill, or through
replacement with non-polluting renewable power generation technologies, should
be credited to the utility sector and to the owner/operator in any climate
change implementation program enacted by Congress.
Section 12. Renewable and Clean Power Generation Technologies
This section provides a total of $750 million over 10 years to fund research
and development programs and commercial demonstration projects and partnerships
to demonstrate the commercial viability and environmental benefits of electric
power generation from biomass, geothermal, solar, and wind technologies.
Types of projects may include solar power tower plants, solar dishes and
engines, co-firing biomass with coal, biomass modular systems, next-generation
wind turbines and wind verification projects, and geothermal energy conversion.
Section 13. Clean Coal, Advanced Gas Turbine, and Combined Heat and Power Demonstration Program
This section provides a total of $750 million over 10 years to fund research
and development programs and commercial demonstration projects and partnerships
to demonstrate the commercial viability and environmental benefits of electric
power generation from clean coal technologies, advanced gas turbine
technologies, and combined heat and power technologies.
Section 14. Evaluation of Implementation of this Act and Other Statutes
Not later than 2 years after enactment, DOE, in consultation with EPA and
FERC, shall report to Congress on the implementation of the Clean Power Plant
and Modernization Act. The report shall identify any provisions of other laws
that conflict with the efficient implementation of the Clean Power Plant and
Modernization Act. The report shall include recommendations for legislative or
administrative measures to harmonize and streamline these other statutes.
Section 15. Assistance for Workers Adversely Affected by Reduced Consumption of Coal
Beginning 3 years after enactment, this section provides a total of $975
million over 13 years to provide assistance to coal industry workers who are
adversely affected as a result of reduced consumption of coal by the electric
power generation industry. The funds will be administered under the economic
dislocation and worker adjustment assistance program of the Department of
Labor authorized by Title III of the Job Training Partnership Act.
Section 16. Community Economic Development Incentives for Communities Adversely Affected by Reduced Consumption of Coal
Beginning 3 years after enactment, this section provides a total of $975
million over 13 years to provide assistance to communities adversely affected
as a result of reduced consumption of coal by the electric power generation
industry. The funds will be administered under the economic adjustment program
of the Department of Commerce authorized by the Public Works and Economic
Development Act of 1965.
Section 17. Carbon Sequestration
This section authorizes $45 million over 3 years for DOE to conduct research
and development in support of a national carbon sequestration strategy. This
section also authorizes $300 million over 10 years for EPA and USDA to fund
carbon sequestration projects such as soil restoration, tree planting,
wetlands protection, and other ways of biologically sequestering carbon.
Section 18. Atmospheric Monitoring
This section authorizes $13.6 million over 10 years to support the operation
of existing instrument networks that monitor the deposition of sulfates,
nitrates, mercury, and other pollutants, as well as the effects of these
pollutants of ecosystem health. This section also authorizes a one-time
expenditure of $13.6 million for equipment modernization for these instrument
networks.
