December 10, 2007

U.S. House of Representatives passes Energy Bill, but White House threatens veto

Washington, D.C. – The U.S. House of Representatives has passed an energy bill that includes an increase in corporate average fuel economy (CAFE) and a renewable electricity standard, but the White House warns it will veto the bill in its current form. Experts say that the bill, passed by a vote of 235 to 181, will save about 1.1 million barrels of oil per day by 2020 if fully implemented, or about half of what the U.S. currently imports from the entire Persian Gulf, but critics say it will lead to increased energy costs.

The bill includes tax incentives for consumers to purchase hybrid, clean diesel or fuel-cell vehicles; requires a new, multi-year rulemaking by the Department of Transportation to increase fuel economy standards for passenger cars, light trucks and SUVs; and establishes a new Renewable Fuel Standard that requires the annual use of 7.5 billion gallons of ethanol and biodiesel in the nation’s fuel supply by 2012. It also eliminates a two per cent “oxygenate requirement” for reformulated gasoline, to improve fuel supply flexibility and reduce the number of “boutique fuels”, which are formulated to accommodate overlapping federal, state and local fuel regulations and which lead to inefficient supply and distribution systems.

The bill also includes new energy efficiency standards for a wide variety of consumer products and commercial appliances, along with tax incentives to encourage their purchase; extends the existing tax credit for production of electricity from renewable resources such as wind, biomass and landfill gas; creates a tax credit for residential solar energy systems; and encourages improved efficiency in homes and buildings, including a program to conserve more energy at federal facilities.

Automakers including Ford and Toyota issued statements in favour of the bill, but critics say it does not remove political barriers to increased production of U.S. oil and natural gas, among other criticisms. A statement issued by the White House said that while both parties should be able to find common ground when reducing dependence on foreign oil, “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.” The statement said the proposal “would raise taxes and increase energy prices for Americans,” and that it is a “misguided approach and if it made it to the President’s desk, he would veto it.”

In January, George Bush presented his “Twenty in Ten” proposal to reduce U.S. consumption of gasoline by 20 per cent in 10 years by expanding the use of alternative fuels and modernizing fuel economy standards. The White House statement said that “we can achieve much of his ‘Twenty in Ten’ initiative without legislation, but we prefer a bipartisan approach in Congress that will improve our economic and energy security while protecting the environment. We hope the Senate will take a more cooperative approach and put forth a bill the President can sign.”

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