*EPF111 04/02/01
U.S. Officials Cite Serious Energy Shortage
(Mandatory reductions of carbon dioxide could undermine economy) (1320)
By Jim Fuller
Washington File Science Writer

U.S. officials report that the United States is facing an energy crisis due to rising energy demand and tightening supplies, and that any plan to regulate power plant emissions of carbon dioxide (CO2) -- believed to be a major contributor to global warming -- could further undermine the economy.

President Bush said recently that his administration would not seek major reductions in U.S. power plant carbon dioxide emissions at a time of "serious energy shortage."

"We're now in an energy crisis," Bush told reporters on March 29. "And that's why I decided to not have mandatory caps on CO2 ... "

Earlier, in a letter to Republican senators, Bush said: "At a time when California has already experienced energy shortages, and other Western states are worried about price and availability of energy this summer, we must be very careful not to take actions that could harm consumers. This is especially true given the incomplete state of scientific knowledge of the causes of, and solutions to, global climate change ...."

Greenhouse gas emissions from fossil fuel burning in electricity generation and transportation are thought by many scientists to have reached levels that require prompt action.

Under the 1997 global warming treaty -- negotiated and signed in Kyoto, Japan -- the United States and other industrial nations agreed to cut emissions of carbon dioxide and other heat-trapping greenhouse gases to an average of 5.2 percent below 1990 levels by 2012. However, the U.S. Senate has refused to ratify the treaty, and Bush has said he opposes the agreement because it exempts developing countries and would harm the U.S. economy.

Christine Todd Whitman, administrator of the U.S. Environmental Protection Agency, said in a March 16 statement that the president continues to believe global warming is a serious issue, and will "fully examine" global climate change issues, including working with allies to find innovative ways to address concentrations of greenhouse gases in the atmosphere. But Whitman emphasized that the administration does not believe the government should impose mandatory carbon dioxide emissions reductions at a time when the cost of energy is soaring in the nation.

"I agree with the president that we must be very careful not to take actions that could harm consumers," Whitman said.

U.S. Energy Secretary Spencer Abraham said in a March 19 speech to the U.S. Chamber of Commerce's National Energy Summit that rising U.S. electricity and natural gas prices were serious enough to tip the nation into recession.

The National Association of Manufacturers has estimated that soaring fuel prices between 1999 and 2000 cost the U.S. economy more than $115,000 million -- cutting a full percentage point off the gross domestic product. A January survey of its 5,500 members revealed that nearly one quarter were forced to curtail operations. The Food and Agricultural Policy Institute reports that farmers are likely to see their income drop 20 percent over the next two years due to increases in energy costs.

Abraham said the demand for energy in all forms is rising, particularly for natural gas and electricity. He blamed the limited supplies on government regulations that have failed to keep pace with advances in technology. Moreover, he said the country's network of generators, transmission lines, refineries and pipelines that converts raw resources into usable fuel was "woefully antiquated and inadequate" to meet future needs.

U.S. consumers are already feeling the impact of transmission systems stressed by rising demand. Transmission bottlenecks have contributed to recent power outages in the state of California, shutting down traffic lights, darkening schools and closing businesses.

"America faces a major energy supply crisis over the next two decades," Abraham said. "The failure to meet this challenge will threaten our nation's economic prosperity, compromise our national security, and literally alter the way we live our lives."

According to a recent report by the U.S. Energy Information Administration (EIA), over the next 20 years U.S. energy demands will increase by 62 percent for natural gas, 33 percent for oil and 45 percent for electricity.

But as consumption surges, production continues to decline. For example, according to Abraham, U.S. electricity consumption has far outstripped projections during the 1990s, driven by an energy-hungry information economy. "Some experts calculate that the demands of the Internet already consume some 8 to 13 percent of electricity," he said. "If demand grows at just the same pace as during the last decade, we'll need nearly 1,900 new plants by 2020 -- or more than 90 every year -- just to keep pace."

Abraham emphasized that any plan to limit carbon dioxide emissions from U.S. power plants would require a drastic reduction in the use of coal, which accounts for more than 50 percent of the electricity generated in the United States. He added that while the administration will continue to invest in clean coal technology, it will not regulate coal out of existence as a power-generating fuel source.

"We will not support measures that will threaten electricity supplies and significantly raise electricity prices," he said. "President Bush made the right decision ... not to impose new federal mandates on the emissions of carbon dioxide. If America is to have reliable electricity over the next 20 years, coal must continue to play a major role."

According to the findings of the EIA report, reducing carbon dioxide emissions by 7 percent below 1990 levels -- the U.S. target under the global warming treaty -- would lead to a dramatic shift from coal to natural gas for electric power generation and significantly higher electricity prices. Coal has a carbon content more than 70 percent higher than that of natural gas.

The report projects that, with stringent limits on carbon dioxide, the share of U.S. generation coming from natural gas would grow from 15 percent in 1999 to as high as 45 percent in 2010 and 56 percent in 2020.

"Electricity markets and the associated markets for coal, natural gas, renewables and other fuels would need to make rapid changes, which could prove difficult to accomplish in a short time," the report said. "In addition, increasing dependence on natural gas for electricity production could lead to greater volatility in electricity prices as they move with changes in gas prices."

When compared to the 1999 price, the EIA report projects electricity prices would increase by 26 percent in 2010 if carbon dioxide emissions are reduced by 7 percent below 1990 levels.

But even without stringent limits on carbon dioxide emissions, the Department of Energy projects that by 2020 Americans will consume 62 percent more natural gas than they do today, and more than 9 out of 10 new electric generating plants will be fired by natural gas. At the same time, new discoveries of natural gas in the United States have fallen for three straight years, creating increasing pressure for more imports.

Bush told reporters March 29 that he decided against mandatory caps on carbon dioxide because "in order to meet those caps our nation would have had to have had a lot of natural gas immediately flow into the system, which is impossible. We don't have the infrastructure able to move natural gas."

President Bush, who has worked in the oil industry, has created a new Energy Task Force, headed by Vice President Cheney, to prepare detailed recommendations for ways to boost the domestic production of oil, natural gas and coal, increase conservation and energy efficiency, and encourage investment in new technology to further the development of renewable energy sources.

Cheney recently warned that the United States must generate more of its own energy or the country risks power shortages like those in California for the last several months, but on a national scale.

"It's very important we get on with this business of making certain we've got enough energy in the future or we will find that the problems in California today are in fact national in scope and affect all parts of the country," he said.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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