Bush signs energy bill

Raises fuel economy standards for the first time in 30 years and boosts biofuel use, but leaves out new taxes on Big Oil.

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By Steve Hargreaves, CNNMoney.com staff writer

President Bush signed the first major increase in fuel economy standards in over 30 years Wednesday as part of a broader energy bill.

NEW YORK (CNNMoney.com) -- Following weeks of negotiation, President Bush signed into law Wednesday the first major increase in vehicle fuel efficiency standards in over three decades.

The law also calls for greater use of biofuels like ethanol and more energy-efficient homes and appliances - but left out some provisions called for by Congressional Democrats.

Automakers will have to make sure the average fuel efficiency level for all vehicles they sell in the U.S. is 35 miles per gallon by 2020, up from 25 miles per gallon currently.

"We make a major step... toward reducing our dependence on oil, fighting global climate change, expanding the production of renewable fuels and giving future generations... a nation that is stronger, cleaner and more secure," said Bush at a signing ceremony at the Energy Department.

The current fuel-economy standards of 27.5 mpg for passenger cars and 22.2 for light trucks were established in 1975. The new bill sets a single average standard for manufacturers.

Automakers had long resisted raising fuel economy standards, saying it would be a costly change that customers didn't want.

But opposition melted away in the last year of so, as high gasoline prices drove sales of foreign cars at the expense of domestic manufactures.

Environmental groups seemed happy with the law.

"This is an extraordinary change from just a little while ago," the National Environmental Trust said in a statement. "Everyone from the auto lobby to one-time Congressional opponents have thrown their support behind it." (See correction at end of story.)

The law also requires refiners to replace 36 billion gallons of gasoline with biofuel by 2022. The U.S. currently consumes about 140 billion gallons of gas annually, and uses about 6 billion gallons of biofuel.

The mandate also says that no more than 15 billion gallons of biofuel can come from corn-based ethanol, in part due to concerns about food prices. The rest must come from "advanced biofuels," like ethanol made from switch grass or other biofuels.

But the bill left out two major provisions that Congressional Democrats had pushed for months - over $20 billion in funding for renewable energy, paid for largely by taxes on Big Oil, and a requirement that utilities buy 15 percent of their power from renewable sources.

Debate on the bill in both the House and Senate had been intense for the last few weeks. Ultimately, a likely filibuster from Senate Republicans and a veto threat from the White House left those measures out of the bill.

Critics of the tax provision said taxes on Big Oil would discourage domestic production, increasing costs for consumers.

Southeastern utilities said a federal law mandating the purchases of renewable energy would be an unfair burden on them, as their region has fewer renewable options like wind. About half the states have already passed such a requirement.

Senate Majority Leader Harry Reid, D-Nev., said the Democrats would continue fighting for those measures, presumably after the holiday recess.

Even the measures signed into law Wednesday - raising vehicle fuel economy standards, home and appliance efficiency standards, and using more biofuels - were not without critics.

House opponents such as Rep. Joe Barton, R-Texas, complained that the bill will undo many of the efforts made to foster increased production of fossil fuels in an energy bill passed in 2005.

"I understand the consequences of elections. I understand there's a new majority," said Barton, the ranking Republican on the House Energy and Commerce Committee. "I do not understand how what made sense two years ago doesn't make sense today."

Barton called the bill a "no-energy" bill and "a recipe for recession," arguing that the conservation measures mandated by the bill would raise prices for fuel, homes and appliances for consumers.

-CNN White House Correspondent Ed Henry contributed to this report

An earlier version of this story incorrectly attributed this quote to the Union of Concerned Scientists. To top of page

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