Gulf of Mexifo Energy Security Act of 2006

GULF OF MEXICO ENERGY SECURITY ACT OF 2006 -- (Senate - July 27, 2006)

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Ms. CANTWELL. Mr. President, I rise today to join the discussion about the Gulf of Mexico Energy Security Act, and I want to say at the outset that I support legislation to open up lease sale 181 as reported out of the Senate Energy Committee, and I support new environmentally responsible energy exploration in the gulf.

Obviously, this legislation before us differs from what we passed out of the Energy Committee, and we are still looking at the various impacts of this particular legislation. Some of my colleagues have come to the floor to talk about the larger energy debate, and I wanted to make sure I came down and expressed my concerns and comments about what we need to do to move forward on not just having a piece of energy legislation come to the floor that only has one particular provision in response to our energy needs, but what we can do for a broader energy strategy.

Many of my colleagues may have also turned on the television and seen that oil companies continue to report astronomical profit, and the public has a right to ask why. I hope that next week, when we take up the legislation dealing with the reauthorization of the Commodities Futures Trading Act, we might be able to discuss the issue of price gouging and what we can do to protect the public from those kinds of activities. I know many people in America are shocked to see, again, quarter profits from companies like Exxon jump 36 percent, and that is over last year's $10 billion record profit. So a lot of people in America want to know what we are going to do not only in the short term, but also in the long term on this energy issue.

I know that while we are only discussing this particular proposed piece of legislation on one issue, this Senator thinks it is very important to bring up a broader global context to the challenges that the United States faces in this energy crisis and why it is imperative, with everything going on in the Middle East, that we continue to be very aggressive about a U.S. energy policy that will get us off of our focus on oil and get us on to being a leader in the world economy not just in the United States on energy technology but around the globe.

Earlier this month, I spoke to the Washington Council on International Trade. That is in Seattle. It happened to coincide with the 33rd anniversary that Senator Magnuson had taken a trip to China to visit with the Foreign Minister. Maggie led that congressional delegation after President Nixon opened up the door to China, and he had a 2-hour meeting with the Foreign Minister there. It is interesting because there are notes from that meeting in which Senator Magnuson said he was going to talk about everything from the Pacific Northwest to energy issues, but he happened to scribble a little phrase on a piece of paper that is still recorded in history, which says that China can no longer be an island in the world. I certainly believe that China can no longer be an island in the world. Three decades ago, this policy was correct, but it is even more important today as it relates to our global energy needs and the United States and China working together.

It is no surprise that China's influence has come to the forefront of the global economy debate and that everybody realizes that we are tied together in so many ways. President Hu was recently in Seattle, and we discussed a variety of issues between the Pacific Northwest and, obviously, we have a great economic relationship in selling airplanes, coffee, software, and a variety of agricultural products to China. We continued those discussions.

What we see today is that the global energy issues are prevalent in our trading relationship with China, and they are also important to our national security issues and, obviously, to our environmental issues. That is why I believe it is time for us to take up and establish a formalized, high-level dialog between the United States and China on energy policy. There are various accidents of geology in this world, and I think I have said many times on the Senate floor that the United States only has 3 percent of the world's oil reserves. So when it comes to that situation, basically, China and the United States have landed in the same boat; that is, neither one of us can drill our way to energy security within our borders. But both of our economies have grown increasingly susceptible to these global energy spikes, and we need to act aggressively together to address these issues from a global security perspective.

As a result, I think it is in our mutual interest not to view ourselves as competitors for scarce energy resources but as global partners in the race to move beyond the petroleum dependency. Establishing a sustained cooperative relationship with China on energy policy will open up new markets for new American technologies and companies that we can help create and foster with our energy policy here.

Recently, Thomas Friedman wrote that you can, with these new markets, ``turn Red China into green China,'' providing America with economic opportunity and a long-term environmental benefit.

But here are some of the facts: Today, China accounts for 40 percent of the increase in oil demand. The number of passenger vehicles on the Chinese roads have more than tripled since 2001 and may equal the United States by 2030. So China faces a massive transportation infrastructure modernization. We know there are still 30 million Chinese who didn't, in 2004, have electricity. So trying to keep pace with the growing demand, China is essentially adding a huge 1,000-megawatt coal-fired plant to its grid each week. That is like adding the capacity every year to serve the entire country of Spain.

These new coal plants have created problems such as widespread pollution. Sixteen of the world's 20 most air-polluted cities are in China.

Even with the influx of plants and patchworks to the grid, there are various areas of the country that still have uncertain access to power. In 2004, China had a power shortage in 24 of its 31 provinces. They are struggling with the mammoth task of trying to keep pace with their energy needs. Since 2001, their consumption has grown at a rate 1 1/2 times the growth of its overall economy. So we see that China, because it was poorly endowed with natural resources--except for coal--has increasingly become dependent on oil imports.

Now China relies on the Middle East for half of its oil, which is similar to our circumstances. Beijing has been racing around the world trying to lock in production for oil and gas in Canada and Saudi Arabia, and they are looking at suppliers for a variety of energy needs. Unlike the United States, they are looking in places such as Sudan, Angola, Burma, and Iran. As one of our distinguished international national security experts, Henry Kissinger, has suggested, energy resources may cause international conflict in the coming years.

So what do we need to do about that? I believe we need to get serious about this effort here and that the United States and China share concerns about high oil prices. We have a common interest in working together to mitigate global supply shocks and resulting price spikes.

Both nations need to work harder to increase energy efficiencies and to achieve continued economic growth. There is no reason the United States and China should not work together on the same side in virtually all international energy negotiations.

Currently, this is far from the case. Today, China views the United States as a competitor in these energy markets, and we look at them the same way.

The congressionally chartered U.S.-China Economic and Security Review Commission warned of a ``petroleum collision course well before the world's aggregate petroleum supply is exhausted.''

I think they are saying that because they realize this collision course could be avoided if we work aggressively.

This Senator believes we must take three concrete steps that will put us on a proactive path for engagement and cooperation.

First, President Bush should work with President Hu to convene a U.S.-China energy summit.

Second, we should put at the top of our agenda an effort to establish a U.S.-China working group with Cabinet-level leadership from the administration. Establishing such a group was one of the major recommendations of the U.S.-China Economic and Security Review Commission in a report to Congress in 2005.

Specifically, this proposal reinvigorated a 1995 U.S.-China energy efficiency and renewable protocol which I think we should get back to.

At the time, over 30 U.S. firms were involved in activities and programs which were designed to strengthen the bilateral cooperation and advance the role of the private sector by the United States in China's energy development.

A permanent working group would also be necessary to oversee any kind of joint R&D effort and could serve as an arbiter and negotiator for technology transfer issues.

And, third, I believe, in addition to the bilateral engagement, we should work to bring China into a membership of the International Energy Agency.

I know the Presiding Officer has thought a great deal about energy issues, energy cooperation, and protocols. The International Energy Agency is an intergovernmental organization with 26 different member organizations which prepares and seeks information about how to mitigate global supply and shocks.

In recent years, this organization has served as a clearinghouse for information on global energy prices and technologies. With China's membership in this organization, I believe we would see a lot more cooperation and information that could help us mitigate some of these spikes.

Some people have looked at China's energy policy and called it ``mercantilistic'' as they go around and buy up these resources at the wellheads in various regions of the marketplace. Encouraging them instead to be involved in the IEA would move Beijing to be a more constructive player in the global energy marketplace.

Clearly, these initiatives--a Presidential summit, establishing a direct U.S.-China working group, and promoting China's engagement in the International Energy Agency--are just a few steps down a very long road to a complicated energy security issue.

But it is clear that the economies of the United States and China are now intertwined, and our energy security should be considered with a common purpose.

This issue will color our relationship with China for decades to come, but if we are direct and proactive in our engagement, there is also opportunity, and an opportunity for the United States in meeting China's energy needs is key to their domestic stability and economic growth. Improved cooperation between our nations could have significant economic benefits for both countries.

Let me talk about that innovation for a second.

The reason I am raising this issue within the context of today's debate is because we are missing an opportunity today. Rather than simply focusing on drilling, we should be debating what is going to give America and American companies the lead in 21st century energy technology.

Because there is an opportunity on the horizon in China and other growing economies, there is a huge opportunity to export American technologies and products, but we need to seize the technology lead to do so.

Earlier, I spoke about the challenges China faces with its incredible growth in demand. Modernizing China's domestic energy infrastructure will require a $35 billion investment. That is every year for the foreseeable year--$35 billion in investment every year for the foreseeable future.

So we must work to open up these Chinese markets to grid management software, smart metering technology, new transmission technology, biomass and biofuels, and related innovations. These things are emerging technologies in the United States, which we could further accelerate not just for our domestic benefit, but also as a supplier for that growing, demanding Chinese market.

Given the evolving nature of China's energy industry from its complete state-controlled entities into more hybrid models, we can help crack open these markets, I believe, overnight, and gaining entry, once again, requires us to be very proactive and engaged, with a sustained commitment. I believe whoever develops these technologies that break through to these economies will hold the key to the 21st century. I want the United States to be the technology leader there, and I want us to continue to look for these huge market opportunities to do so.

Essentially, China today has a 20-percent more fuel-efficient target than we do. The 2005 renewable energy law mandates that 15 percent of China's energy comes from renewables by 2020, and the plant also sets a 20-percent savings standard for new appliances and other technologies.

Consistent bilateral involvement with U.S. counterparts through a U.S.-China energy working group could help foster the changes that we would like to see with U.S. technology companies and could help us grow those businesses and opportunities.

Figuring out how to navigate these barriers, as I said, I believe requires greater cooperation and greater administration involvement in making sure there is a U.S.-China relationship.

The International Energy Agency estimates that China will spend $2.3 trillion over the next 25 years to meet its growing energy demands, and that just modernizing its electricity grid would require $37 billion annually, a figure that I referred to a few moments ago.

So these are great opportunities for U.S. markets. They are great opportunities to show that we can work together to be effective. For example, already some organizations on the west coast are working together with private foundations and public-private partnerships. For example, last year the State of California signed a pact with a sister province in China to provide technical assistance to work together on demand-side technologies. The agreement came in large part due to the work of the U.S.-China Efficiency Alliance, a nonprofit group that counts as its founding members and leaders various State officials, academics, environmentalists, and, obviously, some of the large utilities.

The reason China is a huge market for these kinds of opportunities and that this is taking place, obviously, from the west coast perspective is because the west coast has already had an aggressive trade relationship with China and also has been aggressive about these clean energy technologies. So this is happening to a certain degree already on the west coast, but it is a great economic opportunity for our entire Nation if we continue to accelerate it.

The question I have in mind today is, why are we ignoring this larger debate and opportunity? Why are we not debating a larger energy bill for the 21st century in which we continue to promote the energy innovation that can lead to a cleaner environment, better energy security, and certainly greater national security?

Fourteen years before he went to China, Senator Magnuson told the Seattle PI newspaper that failing to trade with China was basically ``pretending 700 million people in the world don't exist.''

Thirty-three years later, it is about time that the United States really understand that phrase. It is time that we understand the internal transformation and opportunity to work together on energy policy to solve some of our common problems and realize some of our great economic opportunities.

I hope next week we will continue to discuss various energy policies. I hope we will continue to open up this legislation to further amendments so that we can get to other issues that will really help the United States succeed in addressing our energy challenges.

Mr. President, I yield the floor and suggest the absence of a quorum.

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