Senate Hits Impasse on Renewable Energy

Senate Majority Leader Harry Reid of Nev., center, accompanied by Sen. Charles Schumer, D-N.Y., right, Sen. Robert Casey, D-Pa., discusses energy legislation during a news conference on Capitol Hill in Washington, Thursday, June 14, 2007. (AP Photo/Dennis Cook) (Dennis Cook - AP)

"It will force industry to bend and not break," said Sen. Kit Bond, D-Mo.

The energy bill now has an increase to 35 mpg for both cars, SUVs and trucks by 2020 and 4 percent higher each year after that.

Sen. John Warner, R-Va., prompted a sharp floor debate Thursday when he proposed allowing natural gas development in waters along the Atlantic coast where a drilling freeze has been in place for a quarter-century.

Warner, R-Va., wanted the Senate to let his state seek a waiver from the Interior Department to the freeze. The plan brought a quick responses from senators from other coastal states.

Sen. Robert Menendez, D-N.J., said such drilling off Virginia "could cause a ripple effect ... and the consequences can be very significant." He added, "This would leave other states helpless.

The debate on the renewable fuels proposal was equally divisive.

Senators from the South said utilities in their states could not meet the 15 percent requirement because they lack the wind power and other renewable resources prominent elsewhere, especially the West.

"I'm not impressed with wind being the national energy source for America," said Sen. Pete Domenici, R-N.M., who led the opposition to the renewable fuels standard.

Twenty-three states have renewable fuels requirements; nine of them are equal or more aggressive than the proposal federal requirements.

But Bingaman said, "You don't drive development of these technologies if it's up to each state to decide whether to participate."

He rejected claims that some regions could not meet the mandate. The senator noted, for example, that much of the South has an abundance of trees and other plants to make biofuels as well as other renewables aside from wind.

The measure also would permit utilities that cannot find enough renewable sources to buy credits from other utilities that have exceeded the 15 percent or from the Energy Department, Bingaman said.

That did not sway Sen. Jeff Sessions, R-Ala.

He said that in his region, utilities would have no choice but to buy credits at 2 cents per kilowatt-hour and "the cost is going to be very significant ... with nothing to show for it."

The renewable fuels proposal has been the subject of intense lobbying by utilities. The Georgia-based Southern Co. has made killing the measure its legislative priority.

Sessions said the Tennessee Valley Authority, which like Southern is a leading electricity provider in the South, estimated it would cost $410 million a year by 2020 for it to meet the 15 percent renewables.

Bingaman questioned those costs. He cited a report from the federal Energy Information Administration that said the renewable fuels requirement would add less than 1 percent to the cost of electricity in 2020 and cause natural gas costs to decline. The report also said the requirement would triple the use of biomass and increase the use of wind by 50 percent and solar cells by 500 percent.

Critics of the bill disputed the agency's cost findings, saying it did not examine regional price increases.