Senate Passes Energy Bill: CAFE Yes; Taxes No; RPS No

By a vote of 65-27 (7 not voting) the U.S. Senate passed the Senate version of H.R. 6, the National Energy and Environmental Security Act of 2007. On its passage, Senate Majority Leader Harry Reid (R-NV) issued a statement saying, “Tonight’s vote was a victory for the American people. This bill starts America on a path toward reducing our reliance on oil by increasing the nation’s use of renewable fuels and, for the first time in decades, significantly improving the fuel efficiency of cars and trucks. We are saving consumers money, protecting them from gas price-gouging, creating new jobs and making our country safer -- all while taking steps to reduce global warming. It is unfortunate that in passing this bill the Administration and most Senate Republicans blocked an effort to require more of our nation’s electricity to come from renewable sources as well as incentives to spur the production of more renewable fuels right here in America."

The Democrats major accomplishment was the inclusion of a last minute compromise on CAFE standards that will require an increase from 25-35 mpg by 2020. While the bill contains many other items of importance including a requirement for 36 billion gallons of biofuels by 2022, gasoline price-gouging provisions, various grant and loan programs, carbon dioxide sequestration testing; the hotly debated Renewable Portfolio Standard (RPS) was not included and the major $32 billion tax package for energy investment was defeated by three votes.

The big win for Democrats was the compromise on corporate average fuel economy (CAFE) gas mileage standards. The Senate approved, by voice vote, the bipartisan compromise to increase fuel economy standards from 25 to 35 miles per gallon by model year 2020. The compromise legislation, offered by Senators Ted Stevens (R-AK) and Thomas Carper (D-DL), was endorsed by Senators Dianne Feinstein (D-CA), Olympia Snowe (R-ME), Daniel Inouye (D-HI), Byron Dorgan (D-ND), John Kerry (D-MA), Maria Cantwell (D-WA), Bill Nelson (D-FL), Barbara Boxer (D-CA), Amy Klobuchar (D-MN), and Larry Craig (R-ID). According to a release from Senator Feinstein the measure will save between 2.0 and 2.5 million barrels of oil saved per day by 2025 -- nearly the amount of oil imported today from the Persian Gulf.

According to a summary from Feinstein, the compromise gives automakers the time and flexibility needed to meet these new fuel economy standards. It would requires the National Highway and Transportation Safety Administration (NHTSA) to determine vehicle fuel economy based on their attributes, such as size or weight. Each class of vehicles – as determined by NHTSA – would be required to meet the new fuel economy standard for that particular class to achieve the fleetwide average of 35 miles per gallon by 2020. This means that each automaker will no longer be required to average the fuel economy for the entire fleet of cars they produce. This creates a level playing field for all automakers. From 2011 to 2019, NHTSA must set fuel economy standards that are the maximum feasible, and ratchet these standards up, making steady progress, to meet the 2020 target of 35 miles per gallon. In 2020, the total average must meet 35 miles per gallon, unless NHTSA determines -- based on clear and convincing evidence -- that the achievement of the 35 miles per gallon standard would not be cost-effective for the nation. From 2021 to 2030, NHTSA must set fuel economy standards that are the maximum feasible, and ratchet these standards up at a "reasonable rate."

The national Renewable Portfolio Standard (RPS) as advocated by Senate Energy and Natural Resources Chairman Jeff Bingaman (D-NM) [See WIMS 6/14/07], that would have required utilities to produce 15 percent of their electricity from clean, renewable sources such as wind, solar and biomass by 2022, was defeated in a procedural slight of hand. As reported by insiders, because the Senate invoked cloture on the Energy Bill, lawmakers could not introduce an amendment to create a renewable electricity standard because it would not be germane to the base bill.

According to Marchant Wentworth, Washington representative for the Clean Energy Program at the Union of Concerned Scientists (UCS), "Despite majority support in the Senate, a small group of senators mugged the latest effort to pass a national renewable electricity standard. They didn't take a vote, there's no record of who actually killed the initiative, so there is no accountability to the American people - who overwhelmingly support a strong standard.

On the defeat of the $32 billion tax investment package (Baucus Amdt. No. 1704), Senator Reid said, "...Republicans continue to pander to the big oil and energy companies. In voting against tax incentives that would spur investment in renewable fuels, clean-coal technology and energy-efficient vehicles, not to mention consumer incentives for buying green products and cars, the Grand Oil Party has sided yet again with the industry that fills Republican campaign coffers as those same oil companies drill deeper into Americas’ pockets." The amendment was defeated when it failed by three votes to gain the necessary 60 votes in a cloture vote.

U.S. Senator Max Baucus (D-MT), Chairman of the Senate Finance Committee unveiled his tax incentive package for developing clean energy on June 15, which he indicated would provide various tax incentives for developing clean and green power, alternative vehicles and biofuels, and clean coal technologies. The $32.1 billion cost was to be "fully offset, in part by changes to tax laws concerning major oil and gas companies."

The National Association of Manufacturers (NAM) sent a letter to all members of the U.S. Senate prior to the final vote, urging them to vote against the Reid substitute to H.R. 6, the Clean Energy Act of 2007, to oppose all procedural motions to end debate on the bill and specifically to oppose the Baucus amendment (#1704) that would hike taxes on the oil and gas industry. Jay Timmons, NAM Senior Vice President for Policy said, “Adequate, affordable and reliable energy supplies are essential to the growth of the U.S. economy and especially vital to U.S. manufacturers who use one-third of our energy. Unfortunately, we believe this legislation has progressively worsened and is now beyond repair.”

The Alliance of Automobile Manufacturers (AAM), the trade association representing BMW Group, DaimlerChrysler, Ford Motor Company, General Motors, Mazda, Mitsubishi Motors, Porsche, Toyota and Volkswagen; did not comment directly on the CAFE compromise, but had supported an alternative proposal advanced by Senators Pryon-Bond-Levin-Voinovich and others that would have required a 36 mpg requirement for "passenger cars". They said, "manufacturers understand the need for CAFE reform, and want to be part of the solution to meeting our energy needs. A 36 mpg passenger car standard is a tough standard. This is a floor with no loopholes. While tough on the industry, this bipartisan bill protects consumer choice by maintaining the distinction between passenger cars and light trucks, and acknowledging the key attributes that separate these two types of vehicles." They said the original H.R. 6 proposal was a "wildly extreme measure" and would have required all passenger cars and light trucks to ultimately average "an unattainable 52 mpg."

Access releases from Senator Reid on overall passage (click here); and the tax-cut package (click here). Access the vote details on final passage (click here). Access legislative voting details on all amendments (click here). Access legislative details for H.R. 6 (click here). Access a detailed release from Senator Feinstein on the CAFE compromise (click here). Access a release from the UCS on the defeat of the RPS standard (click here). Access a summary of the Baucus tax package (click here). Access a release from NAM (click here). Access a release from AAM on the alternative CAFE proposal (click here). [*Energy]