Energy bills heating up in Congress

Laws setting offshore drilling parameters and the extension of tax credits for renewable energy are expected to be introduced on Capitol Hill this week.

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NEW YORK (CNNMoney.com) -- Congress will attempt to pass a key energy bill this week, testing its ability to deliver on a promise of action on oil as the Sept. 26 deadline edges closer.

Democrats and Republicans are both eager to pass a bill in an election year and in the wake of two major hurricanes that raised gas prices after shuttering production in the Gulf of Mexico. But with plans to go back to the campaign trail in two weeks, lawmakers will have to act fast to get a meaningful piece of legislation to the president's desk.

"It won't be easy, but it no longer seems impossible to move energy legislation," said Christine Tezak, senior vice president of energy policy research at the Stanford Group. "Action will yield better election results for both parties."

House plan

No formal schedule for votes in both chambers exists as of yet, but analysts believe the House could vote on a proposal as early as Tuesday.

In the House, a move to repeal the bans on offshore drilling off the Atlantic and Pacific coasts has gained steam. Speaker Nancy Pelosi, D-Calif., last week cautioned Democrats still on the sidelines on a drilling bill that they must support a compromise legislation.

She said she lacks the votes to extend the current 200-mile bans on offshore drilling leases when they come up for renewal at the end of the year. As a result, unless a compromise bill that allows drilling and reduces the bans to 50-miles offshore is reached, Pelosi said the bans would not be renewed, and areas as close as three miles off shore would be open to drillers.

Pelosi's bill, which has not yet been formally introduced, would allow drilling 100 miles off the Atlantic and Pacific coasts. Companies could drill as close as 50 miles off the shore if the states agree to it, though the ban on leasing 125 miles off of Florida's western coast would remain.

But House Republicans say states have no incentive to allow drilling closer to their shores under Pelosi's plan. They also say that Eastern Gulf of Mexico off of Florida's coast is of key importance, since many energy analysts believe that area would be faster to develop than other areas.

Senate compromise bill

A House Republican alternative bill sponsored by Rep. John Boehner, R-Ohio, would allow drilling more than three miles offshore with options for states to withdraw areas for leasing for five years. The bill would authorize leasing in the Alaskan National Wildlife Reserve, and states would receive the majority of royalty revenues within 12 miles from their shores, and half of the royalties outside 12 miles.

The Senate may vote on as many as three energy bills this week, according to some analysts, but the one that has been getting the most attention is the the New Energy Reform Act of 2008, supported by the so-called "Gang of 20."

The legislation has gained traction in Senate, growing from a list of 10 co-sponsors when it was first introduced in August, to 20 as of Monday.

The bi-partisan group's bill, which has not yet been formally introduced, calls for increased tax credits for renewable and clean energy production, as well as consumer tax credits for purchasing energy-efficient vehicles and business tax credits for investing in clean energy like solar power. The cost of the tax credits to the government would be offset by repealing tax credits to major oil and gas companies.

The compromise bill would also transition 85% of the nation's cars and trucks away from gasoline and diesel to renewable fuels by 2028. In the meantime, the New ERA bill would increase domestic production by expanding drilling leases to 100 miles offshore like in Pelosi's bill. The Senate bill would also permit Virginia, Georgia and the Carolinas to petition for leasing as close as 50 miles offshore, and some analysts believe Alaska could be added to the fray as well. In return, the states would receive some royalty sharing from the drilling companies.

The bill would also increase energy conservation and ban exports on domestic oil, in addition to the consumer and corporate tax credits for renewables.

Another bipartisan bill co-sponsored by Sens. Max Baucus, D-Mont. and Charles Grassley, R-Iowa, does not include drilling provisions but includes similar tax credits and offsets. Tezak believes the Senate could vote on that bill as early as Tuesday.

Though Senate Minority leader Mitch McConnell, R-Ky., has said he will try to filibuster any bill that includes raising taxes on oil and natural gas companies to offset the costs of renewable energy tax credits, compromises between lawmakers on both sides of the aisle seem to be gaining. To top of page

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