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10. Create a Comprehensive Energy Policy

One of the greatest challenges facing the private sector and State, local, and Federal Governments is ensuring that energy resources are available to meet the needs of our citizens. Adequate supplies of energy ensure the safety and security of our families, our communities, and our Nation. People need to know that when they flip on a light switch the light will turn on. They need to know that the bill they get at the end of the month is not going to eat into their food budget or their rent payment.

To help address this challenge, on January 29, 2001, the President asked the Vice-President to lead the development of a national energy policy designed to help the private sector, and Government at all levels, promote dependable, affordable, and environmentally sound production and distribution of energy for the future. In advance of the development of this policy, the budget includes a number of initiatives that will help families meet their energy needs in the near-term and better promote environmentally sound production of energy in the long-term.

Low-Income Home Weatherization

Low-income families spend a significant portion of their income on energy costs. In many cases they live in homes that are poorly insulated or have broken or inefficient heating systems. This causes many to spend even more on heating and cooling bills, while others resign themselves to living in unhealthy cold or hot conditions. To address this health, welfare, and energy-demand problem, the President proposes to increase funding for the Department of Energy's (DOE's) Weatherization Assistance Program (WAP) by $1.4 billion over 10 years. This will nearly double program funding. WAP funds are distributed by formula grants to States, which in turn distribute them to local organizations that perform or contract for the actual weatherization work. Some States supplement the DOE WAP funds with funds from the State's own budget, from contributions by local utilities, or from the State's allocation of Federal Low Income Home Energy Assistance Program (LIHEAP) funds. (States have the authority to use LIHEAP to augment WAP.) WAP spends an average of roughly $2,000 2,200 per home for weatherization. The program tries to target the poorest of the poor, and tries to give priority to homes with elderly residents or children. DOE has been considering ways to improve implementation of the program, and a portion of the additional funds may be used to test improving the delivery of services at the local level.

The funding for WAP has been held relatively steady for the past several years. The initiative takes the modest increase appropriated in 2001 ($18 million more than 2000) as a down payment, then provides growth through 2010.

Solar and Renewable Energy

While they are not capable of replacing fossil fuels in the near-term, solar and renewable energy will be an important part of the Nation's long-term energy supply. The Administration proposes increasing the performance of existing solar and renewable research and development by winnowing out those projects that are less promising and focussing on those areas that offer the greatest ability to tap or expand these new sources of energy. In order to help bring these new technologies to market, the Administration proposes tax credits for the installation of rooftop solar equipment and an extension of the tax credits for fuel produced from renewable sources.

The President also proposes linking near-term and long-term approaches by encouraging new oil and gas production on Federal lands, and using Federal income from that to support increased efforts to develop solar and renewable energy. The Administration's legislative proposals will include opening a small part of the Arctic National Wildlife Refuge to oil and gas leasing and production in an environmentally responsible manner. This process will generate an estimated $1.2 billion in bidding bonuses for the Federal Government from the winning bidders, assumed to become available in 2004. The Administration proposes to use these bonuses to fund meritorious research and development projects on solar power, wind energy, biomass power and fuels, geothermal energy, and other alternative energy technologies. Given the finite level of supplementary bonus funding available, the initiative is designed to start phasing down after 2008.

Research on the Clean Use of Coal

Coal is by far the most abundant U.S. energy resource, with domestic resources that exceed the energy potential of the world's oil resource. Americans want reliable and affordable power, and they want clean air too. To meet the rising electricity demands of our increasingly electronic economy will require the use of coal for the foreseeable future, and we must, therefore, develop the technology to eliminate the environmental barriers to continued coal use and extend the life of existing coal plants. Until now, most coal research funding was dispersed among a large number of technical topics and lacked a focused effort to overcome the most serious obstacles to market acceptance in the electricity sector.

The Administration proposes a new vision in advanced coal technology. Using a consortium of companies to direct research funds to those problems generic to the industry, a restructured coal research program will spend more than $2 billion over 10 years to reduce the environmental impact of using coal to make electricity through new technology and efficiency improvements. The refocused and reorganized program would avoid historical handicaps and increase research effectiveness. This approach addresses barriers to coal use that will benefit all companies and will select projects based on merit. Successfully implemented elsewhere in DOE, consortium-guided research focuses on the use of the commodity rather than producers or product vendors, and makes the most promising technologies the priority for funding.

To meet the coal challenge, funding would come from a consolidated budget that redirects research funds from the current Fossil Energy research and development coal budget, matched with balances in the Clean Coal technology account, to total more than $2 billion over 10 years. Existing Clean Coal projects are included in this total, and if they do not go forward, their funds would be made available for other coal research activities under this initiative. All projects would require some cost sharing by participants, with the industry share increasing as projects approach commercial stages.

Northeast Heating Oil Reserve

In 2001, DOE established a Northeast Heating Oil Reserve. The Reserve contains two million barrels of heating oil and is managed by the private sector. The Reserve was established because of concern about relatively low heating oil stock levels and short-term price increases experienced in the Northeast in the winter of 2000. While these temporary price increases were largely weather induced, and additional supply quickly came into the region from Europe, there was concern that if there was a colder than normal winter in 2001, there could be shortages of heating oil and price shocks. Heating oil was not released from the reserve during the winter of 2001, because January was unusually warm in the Northeast and significant imports of heating oil from Europe ensured adequate stock levels. The budget includes an additional $8 million to continue this initiative. The President supports a privately managed Northeast Heating Oil Reserve, and this initiative ensures its continued funding.

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