Energy Policy:

Rep. John Shimkus discusses energy bill's chances for passage, MTBE, 'Clear Skies'

What are the chances of an energy bill making it to President Bush by August? Will it have an MTBE compromise? Does "Clear Skies" have a chance in the House this year? And what effect will EPA's mercury rule have on different coal types and power plants? Rep. John Shimkus (R-Ill.) joins OnPoint to discuss a wide range of coal and other energy issues.

Transcript

Darren Samuelsohn: Hello and welcome to OnPoint. I'm Darren Samuelsohn. Joining us today in the E&ETV studios in Washington is Congressman John Shimkus, a Republican from southern Illinois. Congressman Shimkus thanks for being with us.

John Shimkus: Thanks Darren, good to be with you.

Darren Samuelsohn: The energy bill is moved through the House and it passed by about 250, I think, to 180. It's in the Senate and they're debating it right now and marking it up in the energy bill, in the energy committee. President Bush wants it by August to his desk. I'm curious, what are your thoughts? What are the chances that this is actually going to happen?

John Shimkus: Well, it's very promising. The Senate did go through a couple of titles yesterday and they're working through it. Now we don't know it's going to happen with other things that are going in the Senate and will that stop all activities? They need to pass a bill so that we can go to conference. We're very excited. We think now is the time. I think the public really understands the crunch that we're feeling on energy and they really understand we need to have a plan. They may disagree on the plan, but I think most people understand you've got to have a direction that you're going to go so that the people who are going to invest and really do the work to improve either fuels or electricity generation have some more certainty. And that's what we're trying to do in this bill.

Darren Samuelsohn: I've heard President Bush probably give four, five or six speeches on this now in the last couple of months. He's really pushing this, more so than I think anytime during his first term. How much is President Bush's push on energy actually helping or not helping?

John Shimkus: Well, I think the high gas prices are what's really helping the debate. It's unfortunate because we'd all like to have lower gas prices and I think he's using the bullet pulpit to move this agenda that we've been talking about for years. A lot of us have been dealing with an energy bill for, this is my ninth year.

Darren Samuelsohn: Right.

John Shimkus: And we've been wanting to see one passed.

Darren Samuelsohn: Yeah, ever since you came into Congress.

John Shimkus: Ever since I've been here. So there's a convergence of events and I think by him talking about it also gives the public a perception that we're trying to do something about it.

Darren Samuelsohn: And for the public, I mean, President Bush is very careful to caveat that he can't wave a magic wand over gas prices. So this is not anything really short term. Do you see any short-term things that can help or is it more long term?

John Shimkus: I don't see any short-term things that you can do, even if you're on the let's do energy conservation and raise CAFE standards. It would still take so long that it wouldn't affect immediately the price at the pump.

Darren Samuelsohn: One of the biggest motivations for you, probably ethanol and the ethanol limits.

John Shimkus: Well, in southern Illinois we're blessed with, we're really an energy-rich area. So ethanol yes, because it's one out of every seven rows of corn, but soy beans for soy diesel in the renewable fuel issue, a large Illinois coal basin, the whole state of Illinois really is underneath good coal for using that. Marginal oil wells, we are a net exporter of power, so expansion of the transmission grid will allow us to export power. For Illinois, especially for the southern part of the state, this is a huge bill across-the-board.

Darren Samuelsohn: The ethanol piece specifically is tied to the MTBE debate, and the Senate is saying it's not going to move along, at least many senators are saying they're going to filibuster the bill if it has this MTBE liability language in there. Do you think that you can resolve this? Can the House agree to not deal with the MTBE liability?

John Shimkus: No, we're going to deal with it somewhat because it's not all what it's cracked up to be or it's made up to be. What we're saying is that if someone negligently spills or handles and pollutes, they should be held accountable. That's what our bill says. It does address the debate of do we allow trial lawyers to go after the deep pockets and say, "You produced a faulty product knowingly," and close down refineries? Now that's not a Republican or a Democrat issue. That's, you know there's a lot of Democrats especially from the Houston area --

Darren Samuelsohn: Sure.

John Shimkus: Who say this is their livelihood. So they have fought this valiantly with us. I think what's interesting is if you would have the observed how the bill moved on the floor, the only real contentious vote was when Lois Capps brought up an amendment and the people who helped defeat that amendment were some of our moderates from New England because I think we will move in conference and moderate that provision on the MTBE, which should probably show the folks who are using that as an excuse that they're going to have to support the bill.

Darren Samuelsohn: And that's pretty much one of the major stopping points in past energy bills, moving --

John Shimkus: I think if you believe the opposition. I think a lot of us said if we wouldn't have addressed that last year something else would've come up that would've said --

Darren Samuelsohn: Something else would've popped up then?

John Shimkus: Yeah, because there was no real desire to move a comprehensive energy plan.

Darren Samuelsohn: OK. One of the other things moving right now or at least being talked about actively in the Senate has to do with climate change and whether or not the Senate is going to try and do anything. And Senator McCain has confirmed that he is interested in trying to move his McCain-Lieberman bill that would cap greenhouse gas emissions from, I think, the industrial sectors, power plants, transportation. But now he's talking about trying to moderate this thing and trying to get some more Republicans onboard with some nuclear power incentives. And that might get him a couple more votes and actually get something into the Senate. Domenici has said that he's expecting some climate debate. The House though, you're not interested really in taking up climate in the energy bill? What's the House's position on this do you think?

John Shimkus: Yeah, I, the answer is no. I mean we weren't initially at first, but I'm not sure, I mean maybe that's something that they bring over from the Senate side. I mean I'm a big nuclear state, 11 operating nuclear power plants, we need to address the waste issue that's on site and of course Yucca Mountain. And now it is, nuclear power is now in vogue again because of the climate issues. I mean it still has other issues that people, that will split the environmental community because they like the no emissions issues but they don't like the high level of nuclear waste. So that might be an opportunity for us to address some changes because I support nuclear power. What we need to have is a diversified energy portfolio and electricity generation, which is some coal, some nuclear. We're still going to need natural gas. I think that's a wasted use of that fuel. We've got hydroelectric and some renewable electricity generation.

Darren Samuelsohn: Do you think the United States electricity and energy production, I guess the industry, should be operating in a carbon constrained world at some point in time in the next 10, 15, 20 years?

John Shimkus: I think there's a lot of ways that we can start addressing carbon either through sequestration and that's, the DOE, Department of Energy, is talking about the FutureGen proposal, which we hope to get located in southern Illinois. There's other states that are fighting for it and that will address some of these questions on carbon. You know we think you can sequester it either, there's talk about doing it in plants and stuff, but there's another way of doing it, injecting it back into the ground which might help us reclaim some of our marginal oil from the field. So I think there's positives behind that.

Darren Samuelsohn: FutureGen is President Bush's zero emission power plant proposal that he wants --

John Shimkus: Zero or near zero. I mean very, right, that's correct.

Darren Samuelsohn: What do you have to do? Is it like an Olympic bidding process to try and get the plant built in Illinois?

John Shimkus: Well, you know, we're trying to make the case that science should trump the issue. If you're going to have a prototype plant that's going to try to do all these things, new zero emission, deal with carbon sequestration. And geologically I think that's where Illinois stands head and tails above a lot of the other states because geologically we meet the requirements and that's my push. I hope political equations don't come in and we lose it to one of the other states that might be more favorable to the administration.

Darren Samuelsohn: Could it be a red state blue state kind of even, you know, this is a big --

John Shimkus: I'm hoping it's not, but it could. I mean we just went through the BRAC --

Darren Samuelsohn: Yeah.

John Shimkus: And a lot of good Republicans, their bases were all on the list. So if they do it by a factual analysis based upon the Department of Energy like the Department of Defense did, then I don't fear the political involvement.

Darren Samuelsohn: Do you think it could be a tourist attraction as well, you know, near zero pollution emissions?

John Shimkus: Well, I think coal, everybody's really been against coal for many, many years, but we've got as much coal as Saudi Arabia has oil.

Darren Samuelsohn: OK.

John Shimkus: I mean it's going to be a source of fuel for generations to come. We just need to make sure it's environmentally sound and we can use it and the world around us is going to be using coal. So if we can be the lead in developing clean coal technology then we'll have the technology to sell around the world.

Darren Samuelsohn: Let's turn to the president's air pollution proposal to amend the Clean Air Act and this is something he brought out in 2002, 2001, so right after he won his first term. The Senate deadlocked 9-9 a couple of months ago on the bill and your committee, the House Energy and Commerce Committee, has twice postponed hearings on Clear Skies. When are you going to hold a hearing and how much interest does the House right now have in Clear Skies? Is this interest --

John Shimkus: You know, going back through a year or two, we were going to plan it to pass the energy bill, get it signed into law and then this year would be Clear Skies year. And then we kind of delayed moving the energy bill, now the energy bill is done. Now I think we're going to start doing Clear Skies hearings and the like. It's just a very simple premise, is choosing the Clean Act Air provisions that have been successful and that's the cap-and-trade system under NOx and moving that to other emissions. It's a great system. I'm fully in support of it and like the Clean Air Act, especially on the cap-and-trade system with NOx, has been very, very successful. We believe it will be successful for the other emitants.

Darren Samuelsohn: In the time between President Bush proposing his bill and today, I mean Congress hasn't been able to put this into law. And in the meantime EPA has finalized regulations to control NOx and nitrogen oxide and sulfur dioxide and also for mercury. Is there a role for Congress at this point, when EPA has already finalized regulations that are already now going into the implementation stages?

John Shimkus: Well, I mean that's the cliff that we're coming upon. Fifty different states are going to have to comply with the Clean Air Act and the state implementation plan. They're all going to do it numerous different ways. If we can bring some certainty through Clear Skies it will help mitigate this crisis that's going to befall the states sooner rather than later.

Darren Samuelsohn: So you think that Congress could still try and act and maybe get into this?

John Shimkus: The administration would like us to and I think on the House side we could do it. I'm not sure on the Senate side.

Darren Samuelsohn: Do you have any sort of timetable? I mean you want to hold a hearing, but what about markups and actually trying to move this to the floor?

John Shimkus: I'd have to talk to Chairman Hall, I would believe that's something that we'd start hearings in the summer and maybe can move to a mark up in the fall. But I mean that deals with where is the energy conference committee gone and when have we passed a full bill and has the president signed it, because that takes a way a lot of our staff and our leadership focus. I mean we've got to get that energy bill passed and signed into law.

Darren Samuelsohn: Do you think that 9-9 tie in the Senate really hurt this bill's chances, because now you know that the Senate really needs to make some sort of a deal to get this thing through and to get it to a conference?

John Shimkus: Yeah, I mean I don't really watch how the Senate does their work or as we like to say doesn't do their work, but it would've been better if they could have moved it out of committee and there were some folks, especially from my home state, that we were disappointed that Senator Obama, I think the facts are clear on Clear Skies, especially for the state of Illinois.

Darren Samuelsohn: It's difficult for an Illinois representative from the entire state because he dealing with people from Chicago --

John Shimkus: That's correct.

Darren Samuelsohn: And downstate. So he's pulled both ways.

John Shimkus: He's very pulled. I mean the editorials from the downstate papers are scathing, but of course you've got Chicago and the suburbs that were in support. So yeah, he was torn between two lovers and eventually had to make a decision and hopefully we can work with him and I think the facts support the fact that this is good for Illinois and it's good for the country.

Darren Samuelsohn: One of the points that you were raising about a year ago this time, EPA at that point, a year ago, had proposed a mercury regulation, cap-and-trade system, but it also had proposed mandatory limits on power plants across the country. At that point EPA hadn't made a determination which way it was going to go, though they certainly were leaning, at that point we did know, toward the trading program. And you expressed your concerns to President Bush and you put out a press release at the time saying, "We're concerned that this might affect bituminous coal in Illinois," and then you put out another release. I guess you got a commitment from President Bush that he was going to take your interest into account. We have a final rule now. Are you happy with what EPA did?

John Shimkus: Well, no, I mean, I think it's, we're trying to figure out what they said.

Darren Samuelsohn: Yeah.

John Shimkus: I think our biggest concern was that as the Clean Air Act was implemented, you know it really, it was a disincentive to Illinois coal, high sulfur coal, and it empowered Western coal.

Darren Samuelsohn: In 1990 when they passed it.

John Shimkus: Right. We want to make sure that the same standard used then is the standard used for mercury because the mercury issue is actually going to be an incentive for Illinois coal. But we want to make sure that there's no additional benefits given to Western coal. We just want, as everybody wants here in Washington, a level playing field and what's good for the goose is good for the gander and if we got disenfranchised last time between air regulations, that's the way the playing field should be set for mercury. And I think we are incentivized by that.

Darren Samuelsohn: So you think that the mercury rule is probably going to benefit Illinois coal?

John Shimkus: We think so.

Darren Samuelsohn: OK. It's being litigated and that just started, I think, in the last couple of --

John Shimkus: I'm shocked! I'm shocked!

Darren Samuelsohn: Do you think that the litigation slows the whole process down? I mean environmental groups, you've got state attorneys general from the Northeast, California, Wisconsin, I think are all involved in this lawsuit now, challenging EPA, saying EPA illegally interpreted the Clean Air Act and they should have required power plants around the country to install pollution controls.

John Shimkus: Courts always take time. Litigation, I mean, but that's our system and we have to live with it. Disputes eventually get resolved through the courts and as long as the courts make their rulings based upon law and they don't create law, I mean, that's kind of the whole other debate that we're dealing with here in Washington.

Darren Samuelsohn: Sure. Let's move on to your home state of Illinois has 12 proposed new coal-fired power plants. It's part of this whole new trend. We've seen about 120 new coal-fired power plants being proposed across the country. Natural gas prices being where they are --

John Shimkus: Right.

Darren Samuelsohn: That's where this is coming from. But Illinois is No. 1 with 12 and I think your district, the way my count was, I think I counted five coal fire power plants in your district alone. Why is your district in southern Illinois pulling this interest right now?

John Shimkus: Well again, Illinois coal basin geographically is the largest, one of the largest reservoirs of coal. It's still reachable. It's still very cost effective. Even with the new technology, both in recovering the coal and also in essence, if you want to use the term, burning the coal. But it's really a lot different today. A lot of these coal plants are made gasified, which is a lot cleaner than just burning it and they may turn it into petroleum because of our dependence on foreign oil. They may be working with ethanol refiners in doing joint projects. So it's a very exciting time and the issue is, why are we in this position? Because the Clean Air Act of '90 incentivized one fuel which was natural gas. And then our whole country turned to natural gas for all its problems and now, supply and demand, natural gas prices are high. We can't sustain that and we can't sustain it from the manufacturing end which is natural gas. We can't sustain it from the plastics company and my farmers, fertilizer comes out of natural gas. So that's why now the price so high that coal is now an electricity commodity of choice.

Darren Samuelsohn: Two of the plants I think are over $2 billion in investment. So this is a big economic incentive for your communities as well isn't it?

John Shimkus: Yeah, the folks from southern Illinois think there we're going to return to the heydays when you had thousands of people, we will have new jobs. We'll have good paying jobs, but we're not going to have the numbers of the past because everything's improved, efficiency has improved from digging the coal out of the ground to actually using it in the refinery. I mean we're looking forward to it. It's going to help the tax base and really it helps on the manufacturing end. If we can continue to be a net exporter of power then you have competitive power, that's the whole competitive power debate. Then hopefully you get low cost power, which is one of the few variables we can control in the manufacturing debate. Then we can maybe trump our competitors worldwide because we have cheap power.

Darren Samuelsohn: One of the power plants, of the five I think, is the gasification that you described. It could be one of the cleanest power plants built today. Some of the other ones though aren't the gasification and there's a debate, I think environmental groups are trying to pressure EPA and the state of Illinois to actually mandate that they require these new power plants to be gasification power plants. Do you think that the governments, the states and the federal government should be saying if we have this very clean technology, absolutely, that that's what should be built?

John Shimkus: I think what we should expect the industry to do is comply with laws that are on the books. So if you've got clean air standards and you've got a way to generate electricity and you meet the standards set forth by law then they should be fine. I mean we'd like to see them all go to almost zero emissions. What we could do is then start a debate about do we change the air standards? And then that's fine. And then force that change, but anytime you put new facilities or new cars on the road you have cleaner, you know you have a cleaner system, so new plants, almost by definition, are going to be a lot cleaner than decades-old plants.

Darren Samuelsohn: If those decades-old plants though do shut down or improve their technologies, and I don't know if southern Illinois has any of those old power plants that are part of those lawsuits that were brought in the current administration.

John Shimkus: And you know that under the Clean Air Act of the '90s there were some grandfathered plants --

Darren Samuelsohn: Sure.

John Shimkus: That really had no emission requirements. They were just grandfathered in. So I think that some of the focus ought to be interesting that issue, bringing on new plants and decommissioning those other ones.

Darren Samuelsohn: What do you say to your colleagues who are representatives from the Northeast who complain that the emissions from southern Illinois and from your neighbors in Ohio and Indiana are causing the asthma problems and the soot problems in the Northeast?

John Shimkus: Yeah, I mean, if you want to use electricity you have to generate it and that's the debate because those same people who complain about coal complain about nuclear power. And they actually complain about the high price of natural gas and they want to move all to renewable green energy. Of all of our electricity energy generation only 3 percent is renewable. We could triple renewable green power and not really do a debt into the electricity demands of this country.

Darren Samuelsohn: Do you think that these new coal fire power plants that are coming online if, you know, say 50 of them or 20 of them get built of the 120, because it's a long process. If they get built though, the CO2 emissions that come from them, if they're not gasification, could they leave the United States and I guess the world over that precipice of when are CO2 emissions in the atmosphere too much? And that's certainly one of the debates that's being raised.

John Shimkus: It is the debate that's being raised and that's, some of our complaints about emissions is actually who's building the most power plants in the world? China.

Darren Samuelsohn: India and China, sure.

John Shimkus: And so, what regulations do they have on them? Zero, so maybe that will cause us to all get to the table as a world and say, hey, if we're going to impose these standards, let's impose them upon everybody.

Darren Samuelsohn: OK. Congressman Shimkus, thanks very much for being here.

John Shimkus: My pleasure, thank you.

Darren Samuelsohn: This is Darren Samuelsohn. We'll see you again next time for another edition of OnPoint.

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