Senate moves toward passing energy bill | AspenTimes.com

Senate moves toward passing energy bill

H. Josef Hebert
The Associated Press
Aspen, CO Colorado

WASHINGTON ” The Senate was on the verge Thursday of approving the first increase in automobile gas mileage in three decades and huge increases in ethanol use.

Democrats were forced to strip away from the compromise energy bill a contentious $21.8 billion tax package, including billions of dollars in tax increases on the biggest oil companies, because of determined Republican opposition and a White House veto threat over the new taxes.

Democratic leaders fell one vote short, 59-40, in getting the 60 votes needed to overcome a GOP filibuster. Sen. Mary Landrieu, D-La., was the only Democrat to break ranks.

Majority Leader Harry Reid of Nevada said immediately after the vote that he would proceed without the tax provisions and hoped to finish the legislation later in the day. Later, he said that while disappointed at the loss of the tax measures, he viewed approval of the auto fuel economy increases ” the first in 32 years ” “a tremendous accomplishment.”

Republican leader Mitch McConnell of Kentucky predicted the bill would be approved with wide bipartisan support and be signed by President Bush.

It still would have to be passed by the House, which a week ago approved legislation that included the $21 billion new taxes with revenues marked for promoting renewable fuels and energy efficiency.

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House Speaker Nancy Pelosi, D-Calif., told reporters she looked forward to getting the bill and predicted its approval. “Now we will have legislation,” she said. She said she expects a vote next week.

McConnell chided Democrats for pushing a “massive tax increase” that he said “they knew would never be signed into law” because of the president’s opposition.

Shortly before the vote, the White House reiterated its opposition to the taxes which it said singled out the oil industry “for punitive treatment” and would raise energy costs.

Reid countered that the Senate shouldn’t back away from the needed tax measures “just because the president doesn’t like it.”

“We must begin to break our country’s addiction to oil…. We must reverse global warming,” Reid said, adding that the legislation would make strides toward both of those goals.

The bill’s centerpiece requires automakers to increase vehicle fuel economy to an industry average of 35 miles per gallon over the next 13 years ” a 40 percent increase and the first boost in the federal gas mileage requirement since 1975 when the rules were first enacted.

For years, auto companies have fought successfully any increase in the automobile mileage standard which now is 27.5 mpg for cars and 22.2 mpg for small trucks and SUVs. But an agreement forged with the help of Rep. John Dingell, D-Mich., the longtime protector of the auto industry in Congress, cleared the way for the new requirements which have bipartisan support.

It also would rapidly ramp up the required production of ethanol, eventually to 36 billion gallons a year by 2022, a sevenfold increase. At least 21 billion gallons must be from feedstock other than corn such as prairie grasses and wood chips.

And it would increase energy efficiency requirements for appliances and federal and commercial buildings and require faster approval of federal energy efficiency standards.

Tax breaks for a wide range of clean energy industries from wind and solar to development of biomass and carbon capture from coal plants were part of the tax package that was dropped.

Senate Democrats earlier abandoned a House-passed provision that would have required investor-owned utilities nationwide to generate 15 percent of their electricity from solar, wind and other renewable sources.

The mandate was fought by the electric utility industry and, especially the Atlanta-based Southern Co. They argued that the mandate would lead to higher electricity costs, especially in regions that do not have an abundance of wind or solar energy, such as the Southeast.

The oil companies had pressed lawmakers to oppose repeal of the $13.5 billion in tax breaks provided them by Congress in 2004 and 2005. They argued the tax relief was essential as an incentive for domestic oil and gas production and refinery expansion and that rolling back the tax breaks would lead to higher energy prices.

Democrats released a report by the Joint Economic Committee on Wednesday that concluded that rescinding the tax breaks would have no impact on production decisions or “have any effect on consumer prices for oil and gas.”

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