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House Sends Energy Bill To Senate, White House Promises Veto

The U.S. House of Representatives passed a comprehensive energy bill on Thursday on a 235 to 181 vote.

The Energy Independence and Security Act would raise fuel economy standards for the first time in three decades to 35 miles per gallon by 2020; establish a nationwide renewable energy mandate; and boost biofuel production to 36 billion gallons a year by 2022. Under a $21 billion tax provision, more than $13 billion in tax breaks to oil companies would be repealed to help fund renewable energy, biofuels and energy efficiency, Dow Jones reports. The bill now moves to the Senate.

A major provision of the bill, calling for a fleet-wide increase of the CAFE standards by around 40 percent by 2020 from around 27 miles per gallon currently, has broad support in both the House and Senate, as does the Renewable Fuels Standard, which sets annual requirements for the amount of renewable fuels produced and used in motor vehicles. Under the bill, the expanded renewable fuels standard requires 9 billion gallons of renewable fuels in 2008 and progressively increases to a 36 billion gallon requirement by 2022. But the renewable mandate and tax titles in the bill face Senate opposition.

The Renewable Electricity Standard would establish a mandate for utilities to increase power from renewable energy sources to 15 percent by 2022. Utilities that can’t meet their mandated levels will have to purchase credits. The tax provision would repeal the domestic manufacturing credit for ExxonMobil, Chevron, ConocoPhillips, Royal Dutch Shell, and BP while freezing the deduction at six percent for other oil companies.

Reuters has an article that details the major provisions of the bill.

The Senate is expected to take up the bill as early as this weekend, with prospects for the renewable electricity standard and the oil industry tax package highly uncertain, The NY Times reports.

Reactions:

After the vote, the White House issued a statement saying “Unfortunately, Democratic leaders in the House today pushed a partisan bill, that members had very little opportunity to study before the vote, which they knew was unacceptable to the President and had no chance being signed into law. Their proposal would raise taxes and increase energy prices for Americans. That is a misguided approach and if it made it to the President’s desk, he would veto it….We hope the Senate will take a more cooperative approach and put forth a bill the President can sign.”

Ford Motor Company Said that “The House energy bill is an important step towards increasing the national fuel economy standard. It accomplishes our shared goal of reducing the nation’s dependence on foreign oil and emissions of greenhouse gases….It is a substantial improvement over the Senate energy bill passed in June, because it maintains the separation of cars and trucks, provides flexibility to manufacturers and encourages the production of flex fuel vehicles.”

Alcoa applauded the House for passing the new vehicle fuel efficiency standards. “Lightweight materials, such as aluminum, play a critical role in making vehicles safer, cleaner and more fuel efficient,” said Kevin Kramer, president, Alcoa Wheel Products, who oversees Alcoa’s Automotive Market Sector Team. “Light weighting represents one of the most viable options available to carmakers worldwide as they seek to improve the fuel efficiency and environmental performance of their products.”

“We look forward to the Senate’s action on CAFE legislation,”said Jim Lentz, president, Toyota Motor Sales, USA. “Automakers, including Toyota, need the certainty of one national plan to be able to make the additional investment necessary to move forward.”

“NGVAmerica believes that oil displacement is too important a national goal to allow lowering it to be an option,” said Richard Kolodziej, president of NGVAmerica. “Rather, the House could have – and should have – increased the likelihood that the goal could be achieved by allowing natural gas and other low-carbon fuels to qualify under the RFS program. This year, natural gas-powered vehicles will displace 250 million gallons of oil in the U.S. alone – much of that in heavy-duty vehicles (like transit buses, school buses, trash trucks and urban delivery vehicles), where ethanol cannot be used. A growing natural gas vehicle market would also help stimulate the use of biomethane – a renewable natural gas produced from landfill gas, sewage, animal and crop waste or cellulosic crops. The U.S. Department of Energy estimates that the U.S. could realistically power 10 million cars with biomethane. “With proper policy support from the federal government, natural gas and other low-carbon fuels could play a significant role in making America less dependent on foreign oil while reducing the level of greenhouse gases,” Kolodziej said.  “Meanwhile natural gas vehicles are available and are making an oil-displacement impact right now. It makes no sense to establish oil displacement goals for 2017 and 2022, and then not extend tax incentives to help America reach those goals,” said Kolodziej.

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