As Bush signs energy bill, new issues come to the fore

America is getting a green-energy law just in time for Christmas. It's not the great big one with a bow that environmentalists wanted, but, analysts say, it still represents nothing less than a new beginning on national energy policy.

After dodging White House veto threats and Senate filibusters, the slim-but-still-substantial energy bill was signed by President Bush Wednesday.

But the real gift to the nation may be the political breakthrough in Congress that produced the landmark first fuel-economy mandate in 32 years and a sevenfold increase in ethanol production by 2022, observers say.

"There's a fundamentally different dynamic in Congress now," says Bracken Hendricks, a senior fellow at the Center for American Progress, a progressive policy think tank in Washington. "The fact that an increase in fuel economy standards was able to pass by a 3-to-1 margin would have been unimaginable a year ago."

Despite all the rhetoric, until this month the US had not made much progress on either oil dependency or climate change – the two major structural challenges to the US energy system and economy, says Jason Grumet, executive director of the National Commission on Energy Policy. But the new energy bill brought energy hawks, environmental advocates, states, and consumers together into "a new political equation," he says.

That breakthrough sets wheels in motion for a series of shifts and battles in months that will reinvigorate national energy policy, observers say. Issues coming to the fore as a result of the new energy law include:

•Climate cap-and-trade: Because energy use and emissions go hand in hand, the new energy law accelerates debate over regulating carbon-dioxide emissions across the US economy. Key legislation, such as the Lieberman-Warner Climate Security Act, would require a cap-and-trade system to cut CO2 emissions 15 percent below current levels by 2020. The bill already has significant support and, despite White House opposition, debate over the measure is expected as soon as January.

•Climate tailpipe regulation: By year end, Environmental Protection Agency chief Stephen Johnson is expected to respond to an April Supreme Court ruling that the EPA has authority to regulate greenhouse gases. If the EPA grants California a waiver, the Golden State and 16 others could crack down on carbon-dioxide emissions from passenger vehicles – putting more pressure on automakers.

•Renewable electric power: At least 23 states are already demanding greenhouse-gas reductions through renewable portfolio standards that require utilities to get a portion of their energy mix from renewable sources. Although a national renewable standard for utilities was dropped from the energy bill, congressional leaders say it will be raised again next year.

•Wind and solar tax credits: Wind and solar industries are fighting to see vital tax credits, which were dropped from the energy bill, get tucked into other legislation. Without them, US production is likely to sag and big Japanese and German companies will grab a huge lead in renewable energy technology. Congressional leaders have promised action early next year.

•Critical technology acceleration: Given a boost by the energy bill, research funding for battery technology for plug-in hybrids will accelerate along with research into cellulosic ethanol from noncorn sources.

These are among the key issues that will emerge within a new political dynamic on Capitol Hill, observers say. Now that the contentious fuel economy issue has been put to rest, legislators will seek to act on other energy matters, observers say.

"We're now in a transitional period in which biofuels and fuel economy is just a first step," says Reid Detchon, executive director of the Energy Future Coalition, a nonprofit bipartisan public policy initiative. "The stage is set now for plug-in hybrid vehicles with biofuels as a primary fuel. In that scenario, petroleum plays only a very small part."

Instead of considering energy once every seven years, Congress can also be expected to more regularly, if not continually, pass energy bills that "tweak" America's push toward energy self-sufficiency and away from global-warming emissions. "The US has shifted into a chronic state of action on energy," Mr. Grumet says.

Even if the Bush administration remains opposed, the new political alliance that broke the deadlock on auto mileage will be a new political fulcrum on a range of energy-related issues, including climate-change regulation, observers predict.

"We've had a breakthrough not just on the substance of the energy issue," Grumet says. "Now there appears to be a political pathway forward."