Energy Policy Act of 2005

ENERGY POLICY ACT OF 2005

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Ms. MURKOWSKI. Mr. President, we have had some great discussion here on the floor of the Senate as we debate the merits of the Energy bill, and we have talked about conservation and about new production. We have talked a lot about renewables and alternatives.

One of those areas that we have not heard a lot of discussion on, in terms of the renewables, is the area of ocean energy. When we look at our globe and at all those colors, we recognize that we have a heck of a lot of ocean to deal with, and there is great potential there.

The Energy bill currently provides production incentives and Federal purchase requirement assistance to many forms of renewable energy: wind, solar, geothermal, and closed-loop biomass, but oddly enough, it doesn't provide such aid to this type of power that I am talking about--power that can benefit all 25 coastal States, and that is the area of ocean energy. This is a relatively new type of renewable power. It comes from harnessing the endless power of the ocean either by building the wave energy converters that transfer the power of waves into current; or the tidal and current systems that use tidal or current flows to spin underwater turbines; or the newest type, which is ocean thermal energy technology, and this generates electricity from the temperature differential of surface and deeper waters.

Ocean electric projects are relatively new in this country, but not necessarily overseas. Currently, there are operating projects in plants off the coast of Scotland, the Azores, Australia, and Portugal.

In America, we have some projects proposed off Hawaii, in Makah Bay in Washington State, in the East River off of New York City, and also for installation at Port Judith in Rhode Island.

The amendment that the Senate will be considering is one I am proposing that will simply try to level the playing field to see if the technology can be improved to bring down the cost of ocean power so it can be competitive with other forms of renewable energy. When wind energy first started, when we started getting into this technology in 1978, it was costing about 25 cents a kilowatt hour. Ocean energy is already starting at about half that cost, even before economies of scale, and years of technology testing and improvement have had a chance to reduce those costs.

In my State, we certainly care a lot about developing different sources of renewable energy.

Now, in Alaska, we have about 5.6 million megawatts of power that Alaskans use a year; 1.36 million megawatts come from lake taps or small hydropower. That is about 24 percent of Alaska's electricity, which is currently coming from hydro.

We also produce 3,600 megawatts of power from wind turbines, which are working great. They are out in the Kotzebue area and St. Paul Island in the Pribilofs and in other southwestern Alaskan communities. Alaska gains 6,000 to nearly 10,000 megawatts of power from burning fish oil. I have had people say: Wait a minute, did I hear you right, that you burn fish oil to generate power? That is correct. Given the health of Alaska's seafood industry, this is a renewable energy source that has great potential. There are new wind and landfill renewable projects proposed for near Bethel, at Fire Island near Anchorage, and a number of other projects proposed in rural communities. Alaska, in the efforts that we are making currently, might gain 286,000 megawatts of power or 5 percent of our needs.

I mention this to simply indicate that while we are committed to using renewables whenever possible, we have to acknowledge how far we can get with the technologies that we have and what is available to us. When you consider that in the State of Alaska we have about 125 villages and towns either on our coastline or near the mouths of coastal rivers and bays that could benefit from ocean current generation, it becomes very easy to see why we want to encourage ocean energy resources.

But ocean energy could also help hundreds of towns around Hawaii and all along our coastal communities in the lower 48. We have 23 lower 48 ocean States. If we provide enough assistance to help with this technology, to look through the research, this can become an economic venture.

Ocean current is environmentally friendly, completely clean. Already the plants in operation are able to be installed for $500 to $1,000 per kilowatt hour--costs that are very competitive to the roughly $1,200-per-kilowatt capital cost of nuclear power.

The Alaska delegation is also seeking an amendment to the tax title to extend ocean energy so that it qualifies for the existing energy production tax credit--currently 1.9 cents per kilowatt hour for wind. The additional cost of these two provisions is insignificant. But they could greatly diversify the Nation's energy portfolio in future decades. We recognize that the ocean is an

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energy source that is truly renewable. I am looking, through my amendment, to help aid Americans to harness that energy from our 12,000 miles of coastline. It is something that we need to look to as a positive reality and give the encouragement where necessary.

I want to change focus a little bit and talk for a moment this evening about an energy policy--an energy policy that belongs to a nation whose demand and consumption of oil far outstrips domestic, a nation that accounted for 40 percent of the growth in oil demands over the last 4 years, and a nation whose demand for oil is one of the leading factors driving oil prices to record-high levels.

I am not talking about the United States tonight. I am talking about China. Why the difference with China? They have an energy policy, and we don't. A couple weeks ago, I chaired a hearing in the Foreign Relations Committee on China's growth and what that means for the United States. One of the witnesses at that hearing, Mr. Mikkal Herberg, with the National Bureau of Asian Research, provided a very informative and eye-opening look at China's increasing role in the international energy market. To sum it up in one sentence: China is quickly becoming a major player in the geopolitics of global energy.

China's demand for energy is a reflection of its two-decade-long economic growth. China surpassed Japan in 2003 as the world's second largest consumer of oil. It is the world's third largest importer and now imports more than 40 percent of its total oil needs.

The International Energy Agency forecasts that China's imports will rise more than fivefold by 2030. This is from the current level of about 2 million barrels per day to nearly 11 million barrels per day, when imports will account for 80 percent of China's energy needs.

The East-West Center predicts that by 2015, 70 percent of China's oil imports will come from the Middle East. China is very much aware of the vulnerable maritime choke points that this oil must pass through in order to reach its shores. Fifty percent of Asia's current daily oil supplies must transit through the Straits of Malacca near Singapore.

Mr. President, the United States currently imports around 58 percent of the oil consumed in this country. What would happen to us in the United States if we were 80-percent dependent on other nations for our economic growth? For our transportation and our security needs? For our home heating needs?

We might very well do what China is doing today--not just investing heavily in other countries but seeking to control all aspects of the oil production. For example, in Sudan, a Chinese State-owned oil company owns 40 percent of a conglomerate that produces 300,000 barrels of oil per day. The same company has a major stake in the oil pipeline to the coast, they built and own a share of an oil refinery, and they helped build oil-loading port facilities on the coast.

While we in the United States naturally gravitate toward an economic model of supply and demand for energy resources where oil is fungible on the worldwide market, China does not abide by this market-based system.

As Mr. Herberg noted at the hearing, China is unilaterally trying to secure its future oil and gas needs by direct state intervention. They are taking equity stakes in oil and gas fields and promoting the global expansion of their three national oil companies.

I note that one of them, China National Offshore Oil Corporation, is looking to submit a counterbid to Chevron's offer to purchase Unocal Corporation. China is promoting state-to-state deals of new oil and gas pipelines to channel supplies directly to China and developing broader financial, diplomatic, and military ties with key exporter nations. In the past 5 years, the Chinese Government has signed strategic energy alliances with eight countries.

Their push to develop a Shanghai Cooperation Organization to focus on combating terrorism in the region can also be attributed to their desire to forge stronger energy ties and more secure energy supplies. China has major oil investment in Kazakhstan and is currently building a large oil pipeline from Kazakhstan to western China.

Many of my colleagues may be aware that China is investing heavily in Alberta, Canada's oil sands, the same fields that moved Canada up into the No. 2 slot in the world for proven oil reserves. China is also looking to construct a pipeline to Canada's west coast to export that oil to China.

China has signed at least 116 major energy investments in 37 countries since 1990, with another 25 proposals still pending. They have significant holdings in Sudan, Iran, and Venezuela. In Angola, the bidding process for the large offshore Greater Plutonio oilfield was additionally won by Indian's national oil company, but the Angolan Government mandated that the deal instead go to the Chinese, and this, of course, came on the heels of a $2 billion aid offer from China.

China's energy security strategy is making waves throughout Asia. When you think of the large economies of Japan and South Korea, each nation is highly dependent on oil imports for their energy needs. The idea of China locking up future sources of oil cannot be comforting to them, leading to their own efforts to lock in stable sources of energy.

As China and other Asian nations raise their level of diplomatic and political involvement in the Middle East, their influence will increase as well. Already, nearly two-thirds of the Persian Gulf's oil exports go to Asia, and this share will only increase. The United States will find its position as the traditionally dominant outside power in the Middle East significantly challenged in the future.

My point tonight is not to criticize or to demonize China for their moves to secure an energy supply. In fact, China's growing energy demands also point to opportunities for American companies to promote greater energy efficiency and higher oil recovery rates for China's domestic production.

My point is simply this: As a developing nation, China looked to the future and determined that it needed secure and more sources of energy. They developed a long-range plan. They have been implementing that plan and, as a result, will have continued access to energy resources in the future.

China's foreign policy reflects their long-term strategy of gaining access to, and to some degree, control over energy sources for their needs. Our energy policy, on the other hand, has not nearly been as focused. It has sometimes been referred to as a ``tin cup'' policy where we go begging for oil from exporting countries when there is a shortage or high prices.

Yet as other nations look to the Middle East to secure their own sources of energy, our influence in the region may diminish. Our cries for OPEC to increase production and output will be weighed against the interest of China and other developing nations.

Congress could have--or should have--passed comprehensive energy legislation years ago, but that is the past. We have another opportunity in front of us to prepare this country for the future to look at our long-term energy needs and determine the best way to address them.

I thank Chairman Domenici and Senators Grassley, Bingaman, and Baucus for their work in crafting this legislation. I think we all would agree it is long past time for Congress to enact a much needed energy bill. It is time for this country to have an energy policy of its own.

Mr. President, I suggest the absence of a quorum.

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