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U.S. Senate Approves Scaled Back Energy Bill

Rush hour in Denver, Colorado. Increasing traffic, air pollution and fuel consumption, are becoming major problems. (Photo by Warren Gretz courtesy NREL)

WASHINGTON, DC, December 14, 2007 (ENS) – The U.S. Senate approved a landmark energy bill Thursday night that requires the first increase in vehicle fuel economy standards in more than 30 years. But the bill is far less ambitious than Democrats wanted, as they bowed to pressure from Republicans and the Bush administration and removed a $22 billion tax package that would have cut tax breaks for oil companies and boosted support for renewable energy.

The removal of the tax package was a second blow to the renewable energy industry – earlier in the week Democrats had ceded to Republican demands to remove a renewable electricity mandate from the bill. The provision, approved last week by the House, would have required investor-owned utilities get 15 percent of their electricity from renewable sources.

The scaled-back measure passed 86-8 and the House is expected to approve the bill next week. The Bush administration has indicated the president will sign the legislation into law.

Democrats noted disappointment at the demise of the tax package and the removal of a renewable electricity standard but said the final bill is still a historic achievement.

“Compromise can be frustrating, it can be exasperating, and it can be maddening,” said Senate Majority Leader Harry Reid, a Nevada Democrat. “But at the end of the day, compromise can lead to progress, and that is exactly what we have today.”

Reid said the measure will “save consumers money, it will begin to reverse our addiction to oil and it takes a small first step in our fight to turn the tide of global warming.”

The centerpiece of the final bill is language requiring a 40 percent increase in vehicle fuel economy standards, raising the average fleet standard to 35 miles a gallon by 2020.

“The last time America raised fuel economy standards was 30 years ago,” Reid said. “We didn’t have air bags, the Internet was a science fiction fantasy and the closest thing to GPS [global positioning system] was a map.”

The provision, which drew reluctant support from the U.S. auto industry, is expected to save 1.1 million barrels of oil a day and save consumers some $22 billion in 2020. Proponents say it will also make a significant dent in U.S. emissions of greenhouse gases, equivalent to taking some 60 million cars off the road.

“It demonstrates to the world that America is a leader in fighting global warming,” said Senator Daniel Inouye, a Hawaii Democrat and coauthor of the fuel economy language.

The bill also includes a five-fold increase in domestic production of biofuels – requiring the use of 36 billion gallons of biofuels by 2022- and tightens energy efficiency standards for government buildings as well as for consumer appliances and products.

“People underestimate efficiency, but today household appliances, lighting and electronics use up to two-thirds of energy in households,” said Senator Maria Cantwell, a Washington Democrat. “By requiring these new standards for manufacture of these products, we will save over 40,000 megawatts of energy. That is the same amount of electricity used in 19 states today.”

Approval of the final legislation came after Senate Democrats had attempted to preserve the tax package by trying to end a Republican filibuster of the bill.

The $22 billion tax package would have extended tax credits for wind, solar and other renewable energy sources, with support also earmarked for fuel cell development, clean coal. Much of the tax package would have been paid for by the repeal of several oil industry tax breaks, potentially costing the industry more than $13.5 billion.

Oil industry lobbyists had generated opposition to the tax package from Republican senators, who said it was unfair and unwise to raise taxes on oil companies.

“What this will do is decrease supply and increase price,” said Senator Kay Bailey Hutchinson, a Texas Republican.

Other Republicans stressed President Bush’s threat to veto the bill over the tax package.

“He has said: ‘If the taxes are in, the bill is gone,’” said Senator Pete Domenici, a New Mexico Republican. “So it looks to me as if those who want a winner ought to vote to take the taxes.”

Ahead of that vote, Reid urged colleagues “not to be stampeded” by pressure from the White House.

“We have to flex our legislative muscle and do the right thing,” said Reid.

The 59-40 vote fell one short of the number needed to end debate, effectively forcing Reid to strip the tax package from the bill.

Louisiana Senator Mary Landrieu was the lone Democrat to oppose ending debate. Arizona Republican John McCain, who is running for president, was the lone senator not to vote.

“The future just failed by one vote,” said Senator Richard Durbin, an Illinois Democrat in the wake of the cloture vote. “The past was preserved … the oil companies are now celebrating in their boardrooms. Not only do they have the highest profits in history, they continue to have a death grip on this Senate.”

Senate Minority Leader Mitch McConnell said the final bill reflected political reality.

“The final product is not perfect but it is vastly better than the version that was sent to us by the House of Representatives,” said McConnell, a Kentucky Republican. “We in the Senate recognized that the House bill couldn’t pass the Senate and wouldn’t be signed into law so we fixed it and now it will.

Many national environmental groups praised passage of the measure, highlighting the increase in fuel economy standards, but others were less congratulatory

Senate Democrats “should show some backbone,” said Friends of the Earth President Brent Blackwelder, who criticizing them for bowing to Republican pressure by removing the “two most positive provisions in the bill.”

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