Bush Plan Leaves Alternative Energy Out in Cold : Policy: Oil and nuclear industries embrace measures aimed at boosting domestic production. Few incentives support solar technology and conservation.

President Bush’s proposed National Energy Strategy, released Wednesday, warms the hearts of the oil, nuclear and auto industries.

But the plan is cold comfort to companies that install conservation equipment and firms that generate solar or other alternative forms of energy.

“There seems to be an emphasis on conventional fossil fuels as the future energy supply,” said Kathleen Flanagan, director of government relations at Luz International, a Westwood-based solar energy company. “Like most people in the renewable community, we were hoping to see more in the way of conservation and renewable energies as part of the mix.”

The proposed strategy--already drawing fire in Congress--would open up the Arctic National Wildlife Refuge to oil drilling, streamline the licensing of new nuclear plants, ease regulation of natural gas pipelines and modify laws governing the electrical utility industry to encourage competition, lower costs and spur efficiency.

Because they stress new domestic energy generation, the proposed policies were received enthusiastically by the energy production business.

“The Administration’s new proposal appropriately encourages domestic oil and natural gas exploration and production and oil leasing,” said a statement from the American Petroleum Institute, the oil industry’s main trade group.

But while they encourage conservation and the use of alternative-fuel cars and trucks, the proposed policies contain few concrete incentives or standards to promote either, which drew criticism from officials in related companies.

“The effect is neutral on our industry. There are already tremendous economic forces that are encouraging conservation,” said Terry Singer, executive director of the National Assn. of Energy Service Companies, whose members install energy-saving systems in businesses. “But it’s unfortunate that where there was an opportunity to make a meaningful contribution, (the Administration) failed to do so.”

Among the major oil companies, San Francisco-based Chevron Corp. stands to gain the most if Congress goes along with the proposed opening of the Alaskan wildlife refuge--a step it has yet to take. Chevron, the sole leaseholder in the reserve, has already drilled one exploration well.

The company won’t reveal the results of that well, but industry officials have estimated that there is a 46% chance of finding a 3.6-billion- to 15-billion-barrel reserve of oil in the Alaskan field. With its leases, Chevron would have access to a sizable portion of that reserve.

“When a company has a consistent supply of crude oil of that magnitude . . . it provides benefits throughout the company,” said Richard Hughes, land attorney with Chevron U.S.A. in Houston.

Some small, independent oil producers--the so-called “wildcatters”--complained that the strategy does not propose modifications of the tax code that would make it more attractive for investors to put money into exploratory drilling.

But the moribund nuclear industry praised the proposed easing of the licensing process for nuclear plants.

“It would go a long way toward removing the uncertainty that has surrounded the construction of nuclear plants,” said Steve Unglesbee, a spokesman for the U.S. Council for Energy Awareness, a trade group representing the commercial nuclear energy industry.

Runaway costs, overcapacity, high interest rates, strong public opposition and concerns about safety and the environment have all but buried the nuclear industry. While eight plants are now in various stages of development, no new nuclear plants have been proposed in the United States since 1978. Between 1974 and 1989, 111 were canceled.

Officials in the natural gas pipeline industry also welcomed the proposed streamlining of the regulatory process for new pipeline construction.

Auto makers, too, applauded the strategy, because it refrained from proposing tougher fuel-economy standards. “We are glad to see that the proposal doesn’t mandate a particular level of corporate average fuel-efficiency,” said a spokesperson for Japanese car maker Honda of America.

The Bush plan does encourage certain fleets--such as those in use by governments--to operate on alternative fuels. Chrysler Corp. said earlier this month it would be prepared to sell 100,000 such cars annually by the 1993 model year.

But by not mandating the use of non-gasoline fuels, the Administration plan apparently adopted the prevailing view in the auto industry.

“We support alternative-fuels initiatives, but we oppose requiring them by law or directive that fails to take into consideration the forces of the marketplace,” Ford Motor Co. said in a prepared statement. “Long experience has shown that government can’t require the sale of products that people won’t buy.”

Utility analysts and executives said the proposed changes in the regulation of utilities could make it less costly to generate new electricity.

John E. Bryson, chairman and chief executive of Southern California Edison Co., had not seen the proposed policy and declined to comment directly on it Wednesday. But in the past, the company has supported changes to federal laws similar to those in the new policy statement. Such changes, Bryson said, would “enhance what we think would be a more efficient total electric supply system.”

The proposed policy would provide little new help to companies that generate renewable energy for sale to utilities such as Edison.

It would extend existing tax credits for such companies and lift certain restrictions on their ability to generate power. That’s “the good news,” said Scott Sklar, executive director of the Solar Industries Assn., a trade group.

“The bad news is, it didn’t provide the kind of financing mechanism to . . . lower the risk of solar or renewable energy plants nationwide,” Sklar said. “What our industries were looking for was . . . access (to) capital. . . . While we’re marginally competitive now, by attracting federal funds to lower the risk, we could be more competitive.”

Luz, for instance, estimates that it can now generate solar electricity at a cost of 8 cents per kilowatt hour. Geothermal producer California Energy Co. estimates its cost at 6.5 cents per kilowatt hour.

By contrast, generating electricity by burning fossil fuels costs 3 to 6 cents per kilowatt hour.

Without federal help, renewable energy “will be a growing market, but I don’t think it will be big enough to make a significant impact on the overall energy situation,” said Scott Fenn, director of environmental energy information for Investor Responsibility Research Center, a research group for institutional investors.

The proposed energy strategy has no provisions to finance research or stimulate markets for conservation technology companies that produce items such as energy-saving window film, low-electricity compact fluorescent light bulbs and continuously variable auto transmissions.

Those companies also are unlikely to find a role in the marketplace without federal support, said Deborah Bleviss, executive director of the International Institute for Energy Conservation in Washington.

“In Washington, D.C., if I tried to go out and find a compact fluorescent, it would be virtually impossible,” she said.

HIGHLIGHTS OF THE NATIONAL ENERGY POLICY President Bush’s plans calls for:

Increased domestic oil production, including drilling in the Arctic National Wildlife Refuge in northern Alaska.

Looser regulation of nuclear power plant construction and waste disposal to revive the nuclear power industry.

Streamlined controls over construction of natural gas pipelines, along with other actions intended to make natural gas more competitive.

An overhaul of utility industry rules to increase competition and promote the use of renewable energy sources such as solar and wind power.

Increased use of alternative motor fuels, including ethanol.

The plan rejects:

Sharply higher fuel economy standards for automobiles.

Higher gasoline taxes to discourage consumption.

BUSH ENERGY PLAN

The Administration unveils its national energy strategy making increased domestic oil production the first weapon in a long-range quest for energy security and stability. A19

Times staff writer Amy Harmon in Detroit contributed to this story.