US Senate starts to debate controversial energy bill, and could promote efficiency

The US Senate has begun to debate its response to the SAFE (Securing America’s Future Energy) Act produced by the House of Representatives last year (see related story). Senators are looking to promote renewable energy and fuel economy instead of SAFE’s reliance on drilling for extra oil in the Alaskan National Wildlife Refuge and sizeable energy tax breaks.

The Senate’s bill, which is likely to be debated through March, aims to increase the mileage per gallon for so-called ‘light trucks’ such as SUVs (sports utility vehicles) and mini-vans from 20.7mpg to a minimum of 26.3mpg by 2010, and raise the mpg for passenger cars to 33.2mpg from 27.5mpg. Last year, fuel efficiency in the US was reported to have reached a 21 year low (see related story).

The Senate’s proposals would revoke the 1975 Corporate Average Fuel Economy (CAFE) Program, part of the Energy Policy and Conservation Act, which set the original standards. This faces vehement opposition from Republicans, who claim that the move will force manufacturers to make lighter cars that will be less safe. Advocates of low-economy cars claim that some 46,000 people have died in crashes that they would have survived if they had been travelling in bigger, heavier cars since the introduction of the CAFE proposals.

Other provisions would include fuel efficiency credits for manufacturers and the creation of ‘green’ labels, which would provide consumers with details of cars’ fuel consumption and greenhouse gas emissions, as well as a US$10million fund to drive improvements in SUV fuel consumption.

The Senate bill would also contain aid for oil and gas producers in the form of a new natural gas pipeline from Alaska, mainly covered by Government loans, and fast-tracked approval for other natural gas pipeline projects, as well as targeted aid during periods of price instability.

The bill also provides the US Government with stronger powers to deal with situations like last year’s Californian power crisis – the possible legislation would give the Federal Energy Regulatory Commission the right to revoke utility wholesale licences if they were wielding unfair market power, and give federal power authorities the right to market wholesale electricity.

Other electricity sector moves would include a new electronic market monitoring system to ensure transparency, the creation of a task force to look into market competition, and a requirement for government to buy more renewable energy, with a target of 7.5% by 2010.

The bill also calls for funding for low-income home energy assistance, as does SAFE. Unlike SAFE, it calls for a target of 25% reduction in energy use for a number of industries including chemical, mining and wood and the creation of a US climate change strategy board. Government would also have to police its own greenhouse gas emissions and those of large (over 10,000 tonnes per annum) emitters.

The measures are in strong contrast to the SAFE Act, which passed through the Republican-majority House of Representatives last year, inspiring fierce debate with Democrats strongly opposed to a number of its measures. A flavour of the opposition can be seen in a comment at the time by Congressman Bernie Sanders, who called the Republican energy bill a “disaster”. Sanders said: “At a time when this country is wasting a huge amount of fuel and electricity, the Republican energy bill provides US$34 billion dollars in subsidies and tax breaks for the big oil, coal, gas and nuclear companies.”

“These companies are making record-breaking profits by gouging consumers, destroying our environment and threatening our health,” said Sanders. “It is outrageous that this bill would give more corporate welfare to Exxon-Mobil, the most profitable company in the history of the world, while providing little more than lip service to energy efficiency and renewable energy and absolutely no relief to middle income Americans struggling to pay their energy bills. There is no question that the United States has the technology and the resources to move us away from our reliance on fossil fuels and towards renewable, non-polluting sources of energy. Unfortunately, this bill does not get the job done.”

SAFE was an omnibus package of energy proposals passed out of four House committees, providing for major subsidies for oil, coal, gas and nuclear companies to enable them to produce more energy. Its goal is to reduce America’s dependence on imported oil by 50% by 2010, and it also aims to streamline permits for new transmission lines and generation facilities so they can be approved more quickly. Also in the package were proposals more in tune with the Senate’s bill, such as furtherance of renewable energy sources and alternative fuels, streamlining of procedures for hydro-electric projects, and support for emissions-free electricity projects.

Some of the SAFE provisions, such as the energy tax credits and watered-down fuel economy measures, directly contradict measures in the Democrat-majority Senate’s own bill, with which it must be reconciled to create the final Act. There are likely to be strong calls from Republicans for the inclusion of “environmentally-gentle” oil drilling in the 19 million acre Alaskan National Wildlife Refuge, led by Alaskan Senator Frank Murkowski, who proposed the original legislation.

Senator Murkowski’s view is that “facts and experience gained from a quarter century of exploration and oil production in Alaska – not unproven emotional fears – prove that responsible development can go hand in hand with a clean environment”. Some 1.5 million acres of the total area is under consideration for exploration, with Republicans arguing that alternatives must be found to oil imports from potentially hostile states such as Iraq. The US imports 700,000 barrels of oil per day from the state, out of its total of nearly 20 million barrels per day. Arctic National Wildlife Refuge (ANWR) leasing revenues would be used to fund an expanded tax credit for the purchase of hybrid petrol/electric vehicles. Opponents point out that it would take ten years for ANWR oil to come on stream, which will do nothing to solve the US’s current energy crisis.

It is anticipated that the Senate will not finish debating its bill until late March, after which the reconciliation procedure must begin.

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