Senate pushes US energy policy in new direction

An 11th-hour Senate compromise over fuel-economy standards has paved the way for comprehensive legislation that pushes US energy policy in a new direction.

Unlike two years ago, when Congress passed incentives to increase production of oil and gas in its energy bill, this time it is emphasizing renewable fuels and conservation.

After the Senate's 65-27 vote approving the bill Thursday night, the House of Representatives is developing its own energy strategy including elements that fell out of the Senate bill such as tax incentives for renewable fuels and a renewable electricity mandate.

The Senate bill includes a number of "green" proposals:

• The first rise in corporate average fuel economy (CAFE) standards in two decades. Automakers would have to produce passenger vehicles, including light trucks and SUVs, that would get an average of 35 miles per gallon by 2020, a rise of about 10 m.p.g. from today.

• A requirement to boost the use of ethanol in motor fuel to at least 36 billion gallons annually by 2022 – seven times what the industry produced last year.

• Antigouging provisions that would make it a crime to charge "unconscionably excessive" prices for gasoline and other oil-based fuels.

• New energy-efficiency standards for appliances and lighting.

• Grants and other incentives for research on fuel-efficient vehicles.

Senate Democrats describe the bill as a breakthrough for energy conservation and say they are confident that the House will build on the momentum and push for more renewable-energy and conservation measures.

"Democrats want to change the direction of energy policy in America, and we took good a great step toward that goal last night," says Sen. Maria Cantwell (D) of Washington.

The Senate passed the measure despite intense lobbying from Ford, GM, and DaimlerChrysler. But the bill leaves out a $28.5 billion tax package that would have taxed oil companies to fund $32 billion in incentives for wind power, ethanol, and other renewable fuels. That provision fell three votes short. (Two Democrats who would have voted for the bill were absent.)

The bill also does not include the requirement that power plants produce 15 percent of electricity from cleaner energy sources.

Despite their disappointment over the missing tax package, renewable-energy groups praised the Senate bill for tipping the debate toward conservation and renewables.

"The US Senate has taken yet another big step toward a more sustainable and stable energy future," says Bob Dinneen, president of the Renewable Fuels Association. "This forward-looking bill capitalizes on the progress the US ethanol industry has made since enactment of the 2005 energy bill, namely the unprecedented growth in grain-based ethanol production."

Some environmental groups say the bill did not go far enough to address climate change or high energy prices.

"While the bill provides marginal improvement in some energy-efficiency standards for appliances, it fails to make the comprehensive reforms needed to shift subsidies away from the coal, oil and nuclear industries to investments in home renewable energy and energy efficiency initiatives," said Tyson Slocum, director of Public Citizen's energy program, in a statement.

Meanwhile, Republicans opposing the bill say that it ignores the energy issue of greatest concern to the American people: high gas prices.

Senate Republican leader Mitch McConnell calls the bill a missed opportunity. "This is really an anti-energy bill. It does nothing to bring down high gas prices; in fact, it would actually increase prices at the pump. It does nothing to increase domestic oil and gas production to make us less dependent on foreign oil," he says. But it did not "make the bill worse by approving the massive tax increases proposed earlier in the week," he adds.

The votes on the energy bill did not break out along party lines: 20 Republicans joined 43 Democrats and two independents in the final vote on the bill; 4 Democrats and 23 Republicans opposed it.

"Last night's vote in the Senate is an important step forward for our country on the path to energy independence," said Sen. John Thune (R) of South Dakota, whose state has been rapidly expanding its production of ethanol and wind energy. "America's vulnerable energy supply, which comes largely from unstable regions like the Middle East and Venezuela, poses not only a dangerous threat to our national security, but is driving gas prices to record [levels] across the country," he added in a statement after the vote.