DETAILS OF THE CLINTON/GORE
ACTIONS TO ENHANCE AMERICA'S ENERGY SECURITY
Energy-Efficiency Enhances Energy Security And Strengthens The Economy:
The strong performance of our economy over the past year, despite oil
price rises, underscores the dramatic improvements in energy efficiency
and reliability over the past quarter century. While past oil shortages
have taken a significant toll on the U.S. economy, the recent increases
in oil prices have yet to have a major impact on the U.S. economy.
Increased energy efficiency - in cars, homes, and manufacturing - has
helped insulate the economy from these short-term market fluctuations.
In 1974, we consumed 15 barrels of oil for every $10,000 of gross
domestic product. Today we consume only 8 barrels of oil for the same
amount of economic output. But we can do even better.
President Clinton And Vice-President Gore Today Announced Important
Steps To Promote Energy Security & Efficiency In America. These Steps
I. Establishing A Regional Home Heating Oil Reserve: The President
remains concerned about the effect that future shortages of home heating
oil may have on consumers of home heating oil, particularly in the
Northeast and New England. In order to reduce the likelihood that
future shortages will harm consumers, the President will:
Support The Establishment of a Regional Reserve: The President
supports the creation of a home heating oil reserve with an appropriate
trigger in the Northeast to combat future product shortages. In the
event of home heating oil shortages, heating oil can be sold from the
reserve in order to increase the supply on the market.
Direct DOE To Undertake Necessary Environmental Reviews: The President
has directed the Department of Energy to begin the appropriate
environmental reviews for the creation of a home heating oil reserve in
Call on Congress to Establish Reserve Through Legislation: The
President calls on Congress to pass legislation that authorize the
creation of a regional product reserve, and includes an appropriate
trigger. The President reserves his right to establish a reserve under
his existing authority, subject to the outcome of the environmental
reviews, in the event that Congress fails to act.
II. Reauthorizing the Strategic Petroleum Reserve: Current
authorization to operate the Strategic Petroleum Reserve expires on
March 31st, even as OPEC oil ministers will be meeting in Vienna to
discuss production quotas. In order to ensure that the President
maintains the ability to use all available tools to respond to the needs
of the United States economy, he will call on Congress to immediately
reauthorize Titles I and II of the Energy Policy and Conservation Act,
which authorize the Strategic Petroleum Reserve and the International
Energy Program at the Department of Energy.
III. Enacting A Comprehensive Tax Incentive Package: In order to
insulate the economy from the effects of future energy price increases,
the United States needs comprehensive and balanced package of tax
incentives. This comprehensive approach includes support for domestic
oil producers to reduce our reliance on oil imports and must include
incentives to continue expanding renewable energy and increasing the
energy efficiency of our economy. These tax proposals are either paid
for in the President's budget or will be paid for with offsets.
Preserving Productive Capacity of the Domestic Oil Industry: In
addition to calling for steps to decrease our demand for oil through
increased efficiency, the President is proposing new steps to support
new domestic exploration and production, and to lower the business costs
of producers when oil prices are low. These tax proposals will cost
less than $1 billion over ten years. The Administration will also
continue examining opportunities to preserve marginal well production.
Support New Domestic Exploration and Production: Major
technological advances in oil exploration, such as three- and
four-dimensional seismic drilling, are helping us to find more oil, at
greater depths, on and off-shore. At the same time, these technologies
have reduced the environmental footprint left by exploration and
production to 1/10th the size it was 25 years ago. We need to encourage
the use of these advanced technologies at the same time we support
exploration for oil and gas.
Expensing of Geological and Geophysical Costs: The President is
proposing to support domestic exploration and production by adjusting
the treatment of the costs of exploration and development -- geological
and geophysical costs -- in the tax code. Under current law, geological
and geophysical costs may be deducted in current year if exploration
activity was unsuccessful, but must be capitalized if the exploration
activity was successful. By allowing the industry to expense these
costs, we will be encouraging the discovery of new reserves. The
Department of Energy estimates that G&G will add 126,000 barrels of oil
a day to domestic production.
Allowing Expensing of Delay Rental Payments: A "delay rental
payment" is an amount paid by a lessee to the lessor of a petroleum
resource when the lessee does not begin producing commercial quantities
of oil or natural gas as soon as was agreed to. The delay rental
payment is intended to compensate the lessor for the royalties he does
not receive while production is delayed. Currently, the Federal tax
code requires delayed rental expenses to be capitalized to the
depletable base of the property to which they relate if the property is
being held for development. Prior to 1993 all delayed rental payments
were allowed to be expensed in the year incurred. Allowing producers to
expense delay rental payments will lower the cost of doing business on
Examining Measures to Preserve Marginal Production: The
Administration will continue to examine measures to preserve marginal
well production, which accounts for over 20 percent of on-shore oil
production in the lower-48 states.
B. Improving the Energy Efficiency of the Economy: Any tax package
to improve the energy security of the country must include incentives to
improve energy efficiency and promote the use of renewable energy.
The President has proposed:
Tax Credits For Electric, Fuel Cell, and Qualified Hybrid Vehicles.
Cars and light trucks (including minivans, sport utilities, and pickups)
currently account for about 40 percent of the nation's oil consumption.
Tax credits for electric, fuel cell, and hybrid vehicles will help to
move advanced technologies that use less or no oil from the laboratory
to the highway. President Clinton is calling for Congress to:
Extend the current tax credit for electric vehicles and fuel cell
vehicles. Under current law, a 10 percent credit, up to $4,000, is
provided for the cost of qualified electric vehicles and fuel cell
vehicles. The credit begins to phase down in 2002 and phases out in
The President?s proposal would extend the tax credit at its
$4,000 maximum level through 2006.
Pass tax credits for hybrid vehicles. The President proposes a
$500 to $3,000 credit, depending on the vehicle?s design performance,
for all qualifying hybrid vehicles, including cars, minivans, sport
utility vehicles, and pickup trucks.
Tax Credits for Efficient Homes and Buildings. Increasing the
efficient use of power will reduce our reliance on fossil fuels. To
encourage energy efficiency, the President is calling on Congress to
pass tax incentive that will promote the use of energy efficient
practices and technologies in our homes and buildings.
Tax credit for new energy efficient homes. To encourage the
purchase of new energy efficient homes, the President proposes a tax
credit of between $1,000 and $2,000 for new energy efficient homes.
Tax credit for energy efficient equipment in new and existing homes
or buildings. To encourage the purchase of electric heat pump water
heaters, natural gas heat pumps, and fuel cells, the President proposes
a tax credit equal to 20 percent of the cost of the investment, subject
to a cap, for equipment purchased between 2001 and 2004.
C. Enacting Tax Credits To Diversify Fuel Sources in the Economy:
The President's Council of Advisors on Science and Technology, in its
1997 report to the President recommended that the federal government
invest in developing a broad portfolio of energy sources. To promote
the development of these new energy sources, the President has proposed:
Tax Credits for Efficient Non-Petroleum Based Sources of Power: In
support of the PCAST recommendation, the President has proposed, and
calls on Congress to pass tax credits to promote innovative and
sustainable sources of energy supply including:
Tax Credits For Solar Energy Systems. A 15 percent tax credit will
encourage the purchase by consumers and businesses of solar energy
systems. The maximum credit would be $2,000 for rooftop photovoltaic
systems and $1,000 for solar water heating systems.
Tax Credits For Wind Power. Current law encourages the production of
electricity from wind through a tax credit of 1.5 cents per kilowatt
hour (adjusted for inflation after 1992). The current tax credit covers
facilities placed in service before January 1, 2002. The President
proposes a 2.5-year extension of this tax credit.
Tax Credits For Electricity Produced From Biomass. Biomass refers to
trees, crops and agricultural wastes used to produce power, fuels or
chemicals. This package of credits would:
Extend Tax Credits For Closed Loop Biomass: Extend current
"closed-loop" biomass credit of 1.5 cents per kilowatt hour for 2.5
Provide Tax Credits For Open Loop Biomass: Expand the availability of
the biomass credit of 1.5 cents per kilowatt hour to include "open-loop"
biomass (certain forest-related resources and agricultural and other
sources) for facilities placed in service from 2001-2005, and provides
a 1.0 cent credit for electricity produced from 2001-2003 from
facilities placed in service prior to January 1, 2001.
Provide Tax Credits For Cofiring Biomass: Add a 0.5 cent per kilowatt
hour tax credit for electricity produced by cofiring biomass in coal
plants from 2001-2005.
Tax Credits For Methane from Landfills: Adds a 1.5 cent per kilowatt
hour credit for electricity produced from landfills not subject to EPA's
1996 New Source Performance Standards/Emissions Guidelines (NSPS/EG) and
1.0 cent per kilowatt hour for landfills subject to NSPS/EG. Qualified
facilities would be facilities placed in service after December 31, 2000
and before January 1, 2006.
IV. Making Common Sense Investments In Promoting Energy Efficiency And
Alternative Energy Technologies. In addition to providing tax credits
to promote domestic oil production and energy efficiency, the President
and Vice President have already presented budget requests for
appropriations that will further promote energy security. They have
proposed a budget that includes over $1.4 billion next year to
accelerate the research, development, and deployment of alternative and
more efficient energy technologies.
$275 Million To Make America's Homes and Buildings More Efficient:
The Administration has proposed funding for research to make offices,
homes, and appliances 50 percent more energy efficient within a decade
and has proposed $275 million in the budget to help do so. People
understand what that means for their home heating bill. Overall,
meeting this goal would save consumers $11 billion a year in energy
$173 Million To Weatherize Low Income Households: Our budget
proposes expanding DOE's Weatherization Assistance Program, which helps
low-income households make their homes more energy efficient. These are
the Americans that most need to reduce monthly energy costs. This
program has already weatherized almost 5 million low-income homes and is
saving 3.0 million barrels of oil each year. With funding from DOE and
the states, we plan to add more than 150,000 homes to the list in the
next year - which will save more than an additional 91,000 barrels of
oil per year. Our budget seeks $154 million for this important program
for next year and an additional $19 million for the current year in the
FY 2000 supplemental appropriation.
$255 Million To Make America's Vehicles More Efficient: Our
Partnership for a New Generation of Vehicles is on track to deliver
attractive, affordable cars that get up to three times the fuel
efficiency of today's cars. A car that gets twice the fuel economy of
today's comparable vehicle is the equivalent of cutting the price of gas
in half for the American driver. A typical consumer would save more
than $300 a year in fuel costs and SUV owners would save more than $400
a year. By 2010, DOE plans to develop and commercialize fuel
efficiency and alternative-fuel technologies that reduce oil consumption
by nearly 700,000 barrels per day. By 2020, these technologies will
reduce oil consumption by nearly 1.5 million barrels per day. Our
budget seeks $255 million for PNGV.
$410 Million To Promote Clean Renewable Energy: The President's
FY01 budget proposes $410 million for DOE efforts to develop domestic
sources of renewable energy, including wind, photovoltaics and
geothermal energy. In addition, the President's Bioenergy Initiative
will help us create new fuels for our cars that will reduce U.S. oil
consumption, create new income opportunities in rural America, and meet
environmental challenges, such as climate change.
Studies on Diversifying Fuels in the Northeast and New England: The
Northeast and New England are disproportionately reliant on home heating
oil as a fuel to heat and power homes, businesses and industry. On
February 16th the President directed Department of Energy to undertake a
study of ways the region could diversify its energy sources thereby
minimizing the effect of a volatile home heating oil market on the
regional economy. The Department is also studying the effects of
interruptible natural gas contracts on the home heating oil market in