Details on the House Energy Bill

By Steven Mufson
Washington Post Staff Writer
Thursday, December 6, 2007; 7:34 PM

Components of the energy bill passed by the House:

1. Fuel efficiency: Fuel efficiency standards were last set by Congress in 1975 and signed into law by President Gerald Ford.

Under those standards, new passenger vehicles were required to achieve 27.5 miles a gallon by 1985. But the law set lower standards for light trucks, and automakers classified many vehicles -- including sports utility vehicles and minivans -- as light trucks. Light trucks' share of vehicles sales rose from 20 percent in 1975 to 50 percent today; the standard for light trucks is 22.2 miles a gallon today.

The new standard will be 35 miles a gallon to be met by 2020, a 40 percent increase over today's fleet-wide average of 25 miles a gallon. But automakers currently get credit of up to 1.2 miles a gallon for producing flexible fuel vehicles that can run on fuel with 85 percent ethanol. That credit has been extended in the House bill, but will be phased out by 2019.

Because it takes more than a decade for the entire automobile fleet to turn over, the nationwide mileage average won't reach the higher level until 2030 or so.

Democrats quote estimates by the Union of Concerned Scientists saying the measure will save 1.1 million barrels a day by 2020. While automakers say that will take tens of billions of dollars of investments, climatologists say that it will still fall short of measures needed to limit climate change. The House energy bill maintains separate standards for light trucks and other vehicles. But environmentalists say that as long as the overall average of 35 miles a gallon is met they are happy.

The 35-miles-a-gallon target by 2020 is tougher than alternative proposals. The House bill does not give the Transportation Department the ability to ease standards if they appear to be technologically too difficult to meet.

The bill also does nothing to limit the ability of the Environmental Protection Agency to issue regulations about carbon dioxide emissions that might effectively increase fuel efficiency standards.

2. Renewable electricity standards. The House bill includes a requirement that electric utilities use renewable energy sources for at least 15 percent of their power generation.

Lawmakers said that southeastern states would have trouble meeting the standard because wind power is less economic in that region. Renewable energy advocates say those states have plenty of solar power potential, but the Bush administration says "a one-size-fits-all" standard "would result in higher electricity costs for consumers in areas where renewable resources are less available."

The renewable electricity standards have drawn heavy fire from critics. But utilities could count energy efficiency to meet up to 4 percentage points of that target. In addition, municipal utilities, federal agencies and rural electricity cooperatives are all exempt. Rural electric coops alone provide about 12 percent of the nation's electricity and rely on traditional coal-fired plants for 80 percent of their power.

In addition, more than half of the states in the country already have their own renewable electricity standards and, for the most part, are more stringent that what the bill requires.

3. Renewable fuels standard. The energy bill requires the nation's motor fuel refiners to use 36 billion gallons of biofuels a year by 2022, five times current usage. It amounts to more than 20 percent of current gasoline consumption, the goal President Bush set in his State of the Union address this year. Since most vehicles can use motor fuel with no more than 10 percent ethanol, this will require the increased production of flex fuel vehicles capable of using E85 fuel with 85 percent ethanol.

The energy bill slightly reduces the 51-cent-per-gallon subsidy currently given for ethanol use by a nickel, but critics say it remains excessive.

Current ethanol production relies on corn, raising concerns about rising prices for food and animal feed. The energy bill would mandate that two-thirds of the 36 billion gallon target be met with "advanced" biofuels, including those using prairie grasses and wood chips. They will be phased in beginning in 2016. The bill creates a new production tax credit of up to $1.01 per gallon for the production of cellulosic fuel, but the credit would end in 2013, before most production is expected to begin.

4. Taxation. The bill includes $21 billion in tax increases over 10 years, with $13 billion coming from scaling back tax benefits for the five biggest oil companies. It reduces tax credits given for imported raw materials, eliminates scheduled manufacturing tax breaks that would effectively lower the corporate income tax rate by about a percentage point and reduces some tax breaks for geological work. The bill also extends tax credits for wind power through 2012 and for solar power through 2016. The raises the cap for tax credits for residential solar installations to $4,000 and extends it through the end of 2014.

5. Higher standards for appliance and building energy efficiency. Among the most far-reaching elements in the energy bill are higher energy efficiency standards. It would phase out the traditional incandescent light bulb by the middle of the next decade and substantially reduce the nation's greenhouse gas emissions.

The bill also would mandate higher standards for appliance efficiency and they would apply to clothes washers, dishwashers, residential boilers, and certain electric motors.

© 2007 The Washington Post Company