Senate energy bill reaches big
Bill calls for big increases in fuel efficiency, purchases of renewable energy, but passage far from certain.
NEW YORK (CNNMoney.com) -- With gas prices near record highs and global warming making more headlines than ever, the Senate is getting close to a vote on one of the most ambitious pieces of energy legislation this country has seen in decades.
From an environmental perspective, analysts said it's the first time in a long time that lawmakers are considering meaningful legislation to reduce fossil fuel consumption and address global warming.
"All the right pieces are floating around," said Dave Hamilton, director for global warming and energy projects at the Sierra Club. "This Congress will be judged to a large extent on what happens at this moment."
Raising vehicle fuel efficiency standards is one of the most contentious provisions. Other measures include requiring the purchase of renewable electricity and shifting money from Big Oil to alternative energy research.
Meanwhile, the Senate rejected two separate amendments Tuesday afternoon that would have spurred production of gasoline and other fuels from liquid coal, but approved a plan to allow the Justice Department to sue the Organization of the Petroleum Exporting Countries for price manipulation. Reuters reported late in the day.
But it seems likely the Senate will pass some type of energy bill by the end of the week, although how much of an impact the bill has on U.S. energy policy largely depends on the final wording of the four contested big issues.
The bill calls for raising fuel efficiency, also known as Corporate Average Fuel Economy (CAFE) standards, to 35 miles per gallon for cars and light trucks by 2020 from the current 27.5 mpg for cars and 22.5 for light trucks and SUVs.
Furthermore, it calls for a 4 percent rise in fuel efficiency each year after 2020.
"It's probably the most important vote the Senate will cast in terms of reducing the nation's dependence on foreign oil and providing consumers with some relief at the pump," Philip Clapp, president of the National Environmental Trust, said on a conference call Tuesday.
Clapp was presumably using the logic that higher fuel standards will lead to a drop in gasoline demand, which several oil analysts have said would bring down the price of gasoline in a hurry.
But the auto industry says such a hike will cost too much money and could make trucks and SUV's too expensive to produce.
"We wouldn't know how to meet the standards and still protect consumer choice," said Wade Newton, spokesman for the Alliance of Automobile Manufacturers.
The auto industry instead supports a competing amendment, introduced by Republicans and Democrats mostly from auto-producing states, calling for a hike in auto efficiency standards to 36 miles per gallon, but only to 30 mpg for trucks and SUVs after 2025. It also does away with the incremental 4 percent yearly increase after the standards are met.
Environmentalists say the amendment contains too many loopholes, and could end up actually reducing fuel efficiency.
A vote on the measure is expected Wednesday. Staffers from both sides say the outcome is too close to call.
Another contentious item is a provision introduced by Sen. Jeff Bingaman (D-NM) requiring utilities nationwide to buy 15 percent of their energy from renewable sources by 2020.
Supporters say the plan, known as renewable portfolio standards (RPS), will encourage investment in renewables by providing a more stable market for renewable energy. They say it will also simplify the standards that are currently in effect in over half the states.
Opponents, which include the electric utility industry and several lawmakers from the nation's wind-deprived Southeast, say standards are better left up to the individual states.
"Every state is blessed with its own resources," said Jim Owen, spokesman for the Edison Electric Institute, an industry association. "The state policy makers are closer to the ground on that."
Republican's are threatening to kill the measure unless it gets 60 or more votes, which they said it does not have.
But Democrats appear undeterred.
"I don't believe Sen. Bingaman is in a trading mood in regards to RPS," said one Democrat staffer. "We're confident we're going to come up with a strategy to get across the 60 vote threshold."
A final vote on the measure is expected Wednesday or Thursday.
Another measure supported by environmentalists involves shifting money from the oil industry to alternative fuels.
The measure, expected to come out of committee either later Tuesday or Wednesday, would provide up to $15 billion over the next 10 years for research into renewables. The funds would largely come from exempting the oil and gas industry from a domestic tax break.
Supporters say the oil industry, currently reaping record profits, does not need a tax break. Opponents say high prices will not last forever, and that the measure could reduce domestic oil production.
One Senate staffer said the bill did not enjoy bipartisan support in committee, and expected a fight once it got to the floor.
The last major contested issue involved government support for liquid coal, a diesel fuel made from coal instead of oil.
But the lawmakers rejected separate amendments, one calling for up to $10 billion in government loans for liquid coal plants and another requiring liquid coal to comprise 6 billion gallons of the nation's fuel supply by 2022. The country currently consumes about 140 billion gallons of gasoline a year.
The expected rejection of those amendments was not troublesome for the Sierra Club's Hamilton.
"It is one of the most terrible ideas that has raised its head in a year that has seen huge desire by the public to do something about global warming," he said before the vote on the amendments.
Other, less contentious measures in the bill include a mandate to use 36 billion gallons of biofuel by 2022, requiring the federal government to reduce its oil consumption by 20 percent by the year 2015, research money for carbon capture and storage, and authorizing the federal government to investigate instances of price gouging by oil companies.