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Administration Releases Plan for Energy Efficiency Investment

Today, President Obama and former President Clinton rolled out a new challenge, focusing on public and private sector investment in energy efficiency upgrades for federal buildings.  The first portion, dealing with private buildings, challenges the private sector to upgrade nearly 1.6 billion square feet of commercial and industrial property.

The second portion, focusing on federal building energy efficiency upgrades, highlights the Energy Savings Performance Contracts (ESPC).  Finally, the third portion, dealing with existing tax incentives, looks at improving section 179D of the Internal Revenue Code that allows for deductions for the cost of qualifying energy efficient commercial buildings. 

This is a welcomed announcement as manufacturers, using nearly one-third of the nation’s energy, rely on energy efficiency to reduce the cost and use of energy and pollution.  Furthermore, the streamlining of section 179D is an important step as it will improve utilization of the credit. 

Most importantly, as the challenge pushes for the private sector improvements, it also requires the federal agencies to enter into a minimum of $2 billion in performance-based contracts over the next 2 years.  It’s important to note that this financial commitment is based on the energy savings that the federal buildings will realize after the upgrade. 

This will allow manufacturers to assess and upgrade federal buildings while driving demand for these products and technologies and creating new jobs. This is a welcomed policy at a time when employment report for November shows a stall in manufacturing jobs.

Mahta Mahdavi is director of energy and resourced policy, National Association of Manufacturers.

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Additional Permits Issued for Alaska Drilling, Improved Process Needed

After spending billions over the last six years, Shell Oil moved one step closer to exploring for oil and gas off the coast of Alaska when the EPA finally issued an air permit for operations in the Chukchi Sea.   Shell is hopeful that other needed approvals and permits from  federal agencies will be issued, so that exploration in the 2012 can go forward. 

Alaska’s offshore likely holds world-class volumes of oil and gas.  Development of these resources will make a significant contribution to the nation’s energy security.  Jobs and government revenue will be generated not only in Alaska, but also in the Lower 48.  The University of Alaska estimates that development will create an average of nearly 55,000 jobs per year for decades and through 2057 and will generate a total of $145 billion in payroll. Federal, state and local government revenues will increase by almost $200 billion. 

While regulations that ensure offshore development is done safely and responsibly are important, the US government must also have a regulatory system that works fairly and efficiently. In Alaska, the government did years of environmental analysis before inviting companies to bid on offshore leases.

Since 2005, Shell Oil has paid the government over $2.2 billion for ten-year leases that in some cases are now six years old. Despite spending an additional $1.5 billion to prepare for exploring these leases, Shell has not  drilled even one well, largely due to the government’s inability to deliver useable permits in a timely way. 

At a time when the nation’s needs the energy, the jobs and the economic impact, developing Alaska’s resources should be a priority. Manufacturers are cautiously optimistic that the regulatory barriers will continue to be removed.    

Mahta Mahdavi is director of energy and resources policy, National Association of Manufacturers.

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Interior’s First Scheduled Lease Sale of 2011

The Department of Interior released a schedule of oil and gas lease sales in the Gulf of Mexico.  This is the first lease sale in 21 months.  It is an encouraging move by Interior as drilling in the Gulf of Mexico accounted for some 242,000 jobs in 2010 with 60,000 of those positions linked directly to the oil and gas industry and some 180,000 related to those industries that provided equipment and services. 

In total, offshore drilling can create 500,000 jobs and more than $190 billion in government revenues by 2025.  These are much needed jobs when the nation is facing a jobless rate of 9.1 percent. 

However, this schedule of lease sales comes with some strings attached.  The one that is most troubling is the increase in the minimum bid requirement which is nearly doubled.  This has the potential to discourage investment by companies that have been paying for leases that they didn’t used during a moratorium and the permitorium that followed.  While the Administration is putting a good foot forward by holding a lease sale, it is still placing a lot of demands and conditions on an industry that has the potential to create a lot of jobs.

Mahta Mahdavi is director of energy and resources policy, National Association of Manufacturers.

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The NRC Plans to Implement Report’s Suggestions before Substantial Deliberation

The U.S. Nuclear Regulatory Commission’s Fukushima Daiichi task force recently submitted a report to the congressional oversight committees on the first 90 days of its nuclear power plant review which examines the safety of nuclear energy facilities in the United States. The report also provides recommendations to improve the U.S. facilities’ safety procedures.

Since the report’s release last week, Chairman Jaczko has announced that the Commission should review the suggestions within 90 days; and, for the industry to implement those suggestions within five years. While the Chairman claims that the 90 day review is ample and just, many in the nuclear energy industry would argue otherwise. In fact, any speedy regulation for the sake of regulation will be a roadblock for further developing the U.S. nuclear energy industry.  Additionally, the negative economic impact of burdensome proposed regulations will not just kill existing jobs, but also preventing the creation of new ones.

Since the events at the Fukushima Daiichi plant in Japan, U.S. nuclear facilities have been in the forefront of providing support. Additionally, they have been examining their own plants to expand on the safety measures that are already in place. The industry as a whole has always been committed to safety and will continue to be in order to ensure consumers have access to safe, clean, dependable and affordable source of energy, particularly manufacturers that use nearly 30% of the nation’s energy.  As a result, the Commission should take its time in reviewing any suggestions by the report.  Furthermore, the Commission should allow for deliberations that include stakeholders’ input in order to make certain that any regulations moving forward are balanced and provide for increased safety without a negative economic impact to the industry that would result in job loss and increase the cost of energy.

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API – NOIA Study: Offshore Permitting Delays Stifles U.S. Job Creation

The Department of Interior (DOI) has been slow in issuing deepwater drilling permits for exploration and development in the Gulf of Mexico.  Since the moratorium on offshore drilling was lifted in November 2010, companies, who can afford to, have kept their lease and rigs “warm” and continue to do so. 

The Gulf of Mexico remains to be a great source for development and exploration of domestic energy.  It is also provides a tremendous opportunity for job creation and government revenue.  A study by the American Petroleum Institute and the National Ocean Industries Association estimates that by streamlining the permitting process 190,000 jobs can be created by 2013 and the capital expenditures could increase by 140%, reaching $15.7 billion.  Furthermore, spending by offshore oil and gas industry would increase by 70%, reaching $25.7 billion of investments, with total contributions to the nation’s GDP being nearly $45 billion.  

Mahta Mahdavi is Director of energy and resources policy, National Association of Manufacturers

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Lawmakers Fight Back Against Irrational Coal Regulations

Yesterday, the House Energy and Commerce Committee, Subcommittee on Environment and the Economy marked up the H.R. 1391, the “Recycling Coal Combustion Residuals Accessibility Act.” This job-saving bill, introduced by Representative David McKinley (R-WV), would prevent the Environmental Protection Agency from regulating coal ash as a hazardous waste under the Resource Conservation and Recovery Act.  The EPA has proposed to regulate coal ash as a hazardous material through rulemaking which it undertook last year. 

After receiving an overwhelming number of comments in opposition to its proposed rule on coal ash, the EPA has decided to postpone finalizing a rule until next year.  As a result, the companies that sell and use this common product have been placed in a regulatory limbo, creating uncertainty and financial burdens.    

This legislation will prevent the EPA from regulating coal ash as a hazardous waste.  Furthermore, it would prevent coal-fired utilities from having to categorize a valuable byproduct as a costly liability.  Therefore, H.R. 1391 will prevent the loss of existing jobs and will stop the unintended consequences such as a higher energy and construction costs.

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Interior’s Solution to Oil and Gas Development is to Drill Less

Today, the Senate Committee on Energy and Natural Resources held a hearing with regards to the Outer Continental Shelf and domestic oil and gas production.  Secretary Ken Salazar testified before the Committee on a framework for “efficient and responsible” drilling.  Unfortunately, Secretary Salazar, much in line with the Administration’s misguided policies, promoted those principles that will ultimately raise the price of energy for manufacturers and consumers alike. 

Those pillars that were endorsed by Secretary Salazar include, but are not limited to:  (1) amending the Mineral Leasing Act of 1920 in order to reduce the time for oil and gas leases; (2) extending the time that the Department of Interior has for reviewing exploration plans submitted by companies; and (3) imposing fees on companies with non-producing oil and gas leases.  

The Interior is pushing for policies that are ultimately counterproductive and will not solve the current predicament of high energy, with little relief in sight.  The policies that the Interior highlighted as their “wish list” show that the Administration is out of touch with the American consumer and the needs of the manufacturing community, who consume a third of our nations’ energy. 

The Administration needs to refocus its priorities to ensure that more companies are given the opportunity to return to the Gulf of Mexico in order to explore and drill for oil and gas.  Furthermore, the Interior needs to streamline its permitting process and provide companies holding leases the time they need to safely and effectively explore and develop much needed domestic energy. 

 Finally, those companies that are not able to produce oil and gas at a given time should not be penalized, as they spend a millions of dollars exploring and developing in reliance on their leases.  Perhaps the Administration needs to look at opening those areas that are currently under a moratorium in order to ensure that companies are exploring and developing those areas with the most potential to contain oil and gas, providing more domestic energy while creating a climate for economic growth and job creation.

These misguided policies must be addressed by the administration and they must reverse course and put in place common-sense policies so energy producers can get back to work, producing domestic energy and reducing our dependence on foreign oil. This will spur job creation and continued economic growth; two critical factors that will help this country recover from the economic recession we have been battling.

Mahta Mahdavi is director of energy and resources policy, National Association of Manufacturers

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The EPA Muddies the Water With Its Clean Water Act Guidance

Today, the White House along with a number of agencies that included the Environmental Protection Agency (EPA), the Army Corps of Engineers (Corps) and the Department of Interior held several press briefings and industry calls on clean water policy.  In addition to these briefings and calls, the White House, along with the EPA and the Corps released two documents. 

The White released its comprehensive framework on clean water that highlights a vast number of initiatives that the Administration has either undertaken or will undertake.  The EPA and the Corps also released their joint guidance on the Clean Water Act.  This guidance would replace an earlier guidance released in 2008 by the previous administration that defined the scope of the Clean Water Act more narrowly.   The guidance expands the definition of the “waters of the United States,” and by extension the EPA’s and the Corps’ jurisdiction over these bodies of water.  Ultimately, this guidance serves as nothing but the continuation of the Administration’s burdensome environmental agenda that has been overwhelming manufacturers as they try to recover from one the hardest recessions.

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President’s Speech on Energy was Short on Taking Responsibility

Manufacturers agree with President Obama’s comments Wednesday on the need to increase domestic oil and gas production. Domestic energy producers want new exploration and drilling and to resume projects that were forced to shut down under the moratorium imposed last spring.

While the Administration is advocating for greater domestic production, it simultaneously is preventing the permit process from operating in a timely and efficient manner. The Administration bears the responsibility to grant leases and permits for exploration and production to begin. Implicating domestic energy producers for lack of action, shortage or delay is irresponsible and inaccurate. It is time this Administration follow the policies it proposes. Action is required, not additional oratory.

The National Association of Manufacturers supports an “all of the above” approach to energy supply. To successfully compete in a global marketplace, American manufacturers must have reliable, affordable and secure energy sources. By increasing domestic production and incorporating renewables into a larger energy portfolio, manufacturers will be protected from the unpredictable price swings that come along with foreign energy sources, providing the stability needed for manufacturers to grow, create high-paying jobs and invest in the future.

Mahta Mahdavi is NAM director for energy and resources policy.

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The Department of Interior Issues Its Fifth Permit – But It’s Still Not Enough

The Obama Administration, today, issued its fifth deepwater permit since lifting the Gulf drilling moratorium, approving Chevron’s request to drill a “wildcat” well in 6,750 feet of water more than 200 miles off the coast of Louisiana.  This is the most important permit so far, in that it is actually for a new exploratory drilling as opposed to a permit that was previously issued.  It is also the second permit to be approved which is using the containment system designed by Marine Well Containment Company as its solution in the case of a loss of well control.  This is a good step forward and, we hope, marks the Administration’s intention to move more expeditiously on the other pending permits.  In addition, with the unrest in the Middle East, and the increasing oil prices, there is now talk of a possible double-dip recession.  Therefore, it is essential for the Interior to move on these permits as quickly as possible to ensure that as many companies are able to return to the Gulf of Mexico to safely drill and explore for domestic sources of oil and gas. 

Offshore drilling is a significant part of the U.S. economy.  The federal government estimates that the Gulf of Mexico Outer Continental Shelf contains proven reserves of 20.3 billion barrels of oil and 183.7 trillion cubic feet of gas.  Moreover, the waters off Alaska’s coast contain about 27 billion barrels of oil and 132 trillion cubic feet of natural gas.  These reserves can provide a dependable and secure source of energy which will keep energy costs low. 

With its action on Chevron’s application, Interior has shown itself capable of approving permits for new deepwater drilling.  Let’s see the agency follow through by moving on all these pending permits, ensuring that many companies are able to return to the Gulf of Mexico to safely drill and explore for domestic sources of oil and gas.

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