In Congress, a boost for alternative energy

\Congress is a big step closer to its goal of tipping national energy policy away from oil and gas development and toward alternative energy sources such as wind, geothermal, and biomass.

With the Senate's passage of an energy bill June 21, action this week shifts to the House, where Democrats will be rolling out their own plan for America's energy future.

Rifts within their ranks, however, are forcing House Democrats to postpone some tough issues until fall – a move that could complicate coming to terms with the Senate once an energy bill clears the House.

At the heart of the House struggle over energy policy is a standoff between Speaker Nancy Pelosi and Rep. John Dingell (D) of Michigan, a powerful committee chairman with long-standing ties to the auto industry.

Speaker Pelosi wants this year's energy bill to mark a clean break with energy policy of the past, when Republicans controlled the Congress and enacted financial breaks for oil and gas producers. Representative Dingell worries that new regulations could sink already-battered US automakers and cost more industry jobs.

Lobbyists hard at work

Few issues are as intensely lobbied on Capitol Hill as energy policy, where a shift in the tax code or a new regulation can mean billions gained or lost for energy-related industries. Automakers hope to derail higher standards on fuel economy, especially for SUVs and minivans. Electricity producers want to squelch a mandate to use more renewable fuels. Oil and gas producers risk losing the tax breaks they won in the 2005 energy bill.

The Senate bill (see list below), which passed 65 to 27 Thursday, was crafted in part by Sen. Jeff Bingaman (D) of New Mexico, a longtime advocate of alternative energy. "There has been enormous movement [in recent months] in public understanding of the need to diversify energy sources, deal with the problem of greenhouse-gas emissions, and increase our energy independence," said Senator Bingaman after the vote.

Two provisions that failed were a $32.1 billion tax package to fund alternative technologies and a "portfolio standard" requirement that electric power producers generate 15 percent of their electricity from renewable fuels by 2020. Both could be reconsidered in the Senate or be taken up in negotiations with the House over a final bill, he adds.

What House Democrats are planning

On the House side, 11 committees are developing aspects of an energy bill to be drafted by House leadership. The bill is expected to help boost the production and use of renewable vehicle fuels via $16.1 billion in tax breaks. It is likely to set new standards for appliances and give incentives for "green" buildings, smart-grid technology, renewable fuels, and plug-in hybrid technologies. The final package will probably also include a mandate for utilities to use more renewable energy sources.

A key difference will be how each chamber deals with fuel-economy standards for cars and light trucks. While the Senate has voted to impose higher fuel-economy standards on the US auto industry for the first time in 22 years, the House won't take up the issue until it crafts global-warming legislation in the fall.

For that delay, credit the clout of Michigan's Dingell, chairman of the Energy and Commerce Committee. A strong backer of US auto manufacturers, he says any fuel-efficiency standards must "note the competitive realities of what is a brutal global automotive market," especially the impact on American jobs.

After a bitter intracommittee fight, the panel opted to proceed only with the issues on which there is consensus, Dingell said.

Rep. Edward Markey (D) of Massachusetts, the No. 3 ranked Democrat on the energy panel, says Democrats aren't taking on the tough energy issues fast enough, including fuel-economy standards for cars and SUVs. Pelosi has tapped Representative Markey to chair a House Select Committee on Energy Independence and Global Warming – an indicator of her rift with Dingell over energy policy.

Credits for energy savers

The House Ways and Means Committee, meanwhile, is proposing $16.1 billion in tax incentives. These include a $4,000 tax credit for people who drive hybrid cars and a $20-a-month credit for people who bike to work, as well as incentives for producers of alternative energy. As did the Senate, the House would pay for the package by raising taxes on oil companies.

With the most controversial issues off the table for now, the energy legislation is shaping up to be "extremely modest," says Tyson Slocum, director of Public Citizen's energy program. "Oil companies aren't getting grandiose subsidies, which is a break from recent history. But it's other industries [that are] hogging the benefits, such as the biofuels industry and coal, with little trickling down to consumers and families."