H.R. 6, the Energy Independence and Security Act, and the D.C. Struggle for an Energy Bill

Compiled by Ted Glick, USCEC (www.climateemergency.org)

(The information below will hopefully be helpful for those seeking to understand what is happening in the U.S. Congress right now as far as an energy bill.)

GENERAL

On Thursday, Dec. 6th the House of Representatives passed an energy bill that would reduce carbon emissions and begin to move our country in the right direction on energy policy. On Friday, Dec. 7th the Senate voted down the House version of the bill; a majority supported it but not the 60 needed to prevent a Republican filibuster.

“Senate Republicans have drawn the line on two provisions: the Renewable Electricity Standard and the $21 billion tax package that will fund the bill, especially the $13.5 billion in higher taxes on oil companies. Republican Sen. Kay Bailey Hutchison, of Texas, was the one who put a hold on the bill back in October, preventing the appointment of a conference committee. She called the tax increase ‘discrimination against one industry.’ Hutchison received $2,028,825 in contributions from the oil and gas industries in 2006.” Kelpie Wilson, Greens Take Heart at Final Energy Bill, Truthout.org, Dec. 7

RENEWABLES/EFFICIENCY

Renewable Electricity Standard (also known as a Renewable Portfolio Standard): “An RPS is a flexible, market-driven policy that can ensure that the public benefits of renewable energy, such as wind, continue to be recognized as electricity markets become more competitive. The legislation would require utilities to generate or purchase 15% of electricity from renewable energy sources by the year 2020 and would allow up to 4% of the 15% requirement to be met through energy efficiency measures.” American Wind Energy Association alert, December 7

Production Tax Credit: “The PTC is an income tax credit of 2.0 cents per kilowatt hour of electricity produced from qualified win energy facilities and other sources of renewable energy. The legislation would provide a 4-year extension of the PTC through December 31, 2012 [it currently is slated to expire at the end of 2008]. The legislation maintains the inflation adjustment provision of existing law, but would cap the value of the PTC at the lesser of 2.0 cents per kilowatt-hour (plus inflation) or the equivalent of a 35% investment tax credit, based on project costs. The wind energy industry supports a full value, long-term PTC.” AWEA alert, Dec. 7

“The idea of forcing electric utilities to add renewable energy to their mix of power generation is not unusual. More than half the states in the nation have renewable-electricity mandates, many of them tougher than the House version of the bill. The House bill excluded rural electric cooperatives and government utilities [and municipal utilities, according to a 12/6 Wash Post article], and it allowed energy-efficiency gains to count toward four percentage points of the 15 percent standard.” Wash Post, Senate to Rework Ambitious Energy Bill, Dec. 8

“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% of the nation’s electricity and rely on traditional coal-fired plants for 80% of their power.” Wash Post, Details on the House Energy Bill, Dec. 6

“The bill also includes appliance and light-bulb standards that would effectively phase out, by the middle of next decade, the incandescent bulb invented by Thomas Edison.” Wash Post, Broad Energy Bill Passed by House, Dec. 7

“When asked how he would rate the final version of the energy bill, [Tyler] Slocum [of Public Citizen] said he would give it a seven out of ten. One of the things keeping it from being a ten was ‘inadequate money for household support to move to greater energy efficiency.’ For instance, although the bill doubles the solar energy tax credit from $2000 to $4000, since the cost of a complete solar electric system is upwards of $20,000, only the affluent will be able to take advantage of it.” Kelpie Wilson, Greens Take Heart at Energy Bill, Truthout.org, Dec. 7

ETHANOL

“The measure would provide tax incentives to bring about a sevenfold increase in the use of ethanol as a motor fuel by 2022, when a required 36 billion gallons of it would be on the market each year. Two-thirds of those gallons would have to be ‘cellulosic’—derived from feedstock such as prairie grass and wood chips, or other non-corn-based biofuels.” Wash Post, Broad Energy Bill Passed by House, Dec. 7

“The Renewable Fuels Standard mandates a massive, five-fold increase of biofuels use over previous legislation. We are pleased that mandatory reductions of greenhouse gas emissions over a gasoline baseline have been included in the RFS, including a 20% reduction for conventional biofuels, 50% reductions for ‘advanced’ biofuels and 60% reduction for cellulosic biofuels. It is also reassuring that the calculation of greenhouse gas emissions will quantify both direct and and indirect emissions from land use conversion. However, we are very concerned that the most basic environmental safeguards and a strong anti-backsliding mandate to protect air quality have been removed from the final version of the bill. The renewable fuels standard’s massive ramp-up in biofuels production may very well cause immense environmental damage without these minimal environmental safeguards, and the weak anti-backsliding mandate will do little to curb these problems.” Greenpeace and Friends of the Earth statement, Dec. 6

“Senate Republicans have complained that the House-passed bill places an unrealistic goal for meeting greenhouse gas reduction targets on ethanol use and gives U.S. EPA too much authority to modify or waive the standard.” E&E News PM, Dec. 8

TAX PROVISIONS

“Among other things, the 21 billion dollars will fund production tax credits for solar and wind power over a four-year period; it will fund research and development programs for renewable energy and job training programs for solar power installers; and it will fund individual tax credits for solar energy, home weatherization and purchase of fuel efficient vehicles like plug-in hybrid cars.” Kelpie Wilson, Greens Take Heart at Final Energy Bill, Truthout.org, Dec. 7

“The bill’s $21 billion energy tax package includes expanded tax credits for renewable energy, conservation and coal projects that control carbon dioxide emissions. A key sticking point is the repeal of more than $13 billion in oil industry tax breaks to help offset the costs. . . Senate Finance Committee ranking member Charles Grassley (R-Iowa) predicted a tax section would remain, ‘but it will have to be modified considerably.’” E&E News PM, Dec. 8

“The failure to close debate was a victory for the major oil companies, Southeastern utilities and coal-mining firms that had opposed the legislation. . . One of the companies most opposed to the [RES] measure was Southern Co., the holding company for Georgia, Alabama and Mississippi utilities. The firm spent $7.1 million on in-house lobbying efforts and an additional $1.1 million for outside lobbying firms on energy and environmental issues in the first half of this year.” Wash Post, Senate to Rework Ambitious Energy Bill, Dec. 8

“One change would exclude oil companies from a tax deduction for manufacturers the Congress adopted in 2004 after international trade negotiators rejected a tax incentive that had been targeted at exporting manufacturers alone. ‘They go a free ride,’ said one congressional aide. Another part of the House package reduces tax credits for imported raw materials; the United States imports 60 percent of its crude oil. “This is a $13 billion Christmas gift to Big Oil,” said Daniel J. Weiss, senior fellow and director of climate strategy at the Center for American Progress. “The size of the tax breaks are a drop in the Big Oil bucket.” Washington Post, Senate to Rework Ambitious Energy Bill, 12/8/07

“The biggest tax break for the oil industry, about 10 billion dollars, came in 2004 when the World Trade Organization found Boeing had been receiving tax breaks for airplanes it manufactured for export. As a result, the US government rewrote its tax rules and created an economy-wide tax break for US manufacturers. The oil lobby made sure that, in that process, oil and gas exploration got defined as ‘manufacturing.’ [Tyler] Slocum [of Public Citizen] said, ‘We are not talking about a manufacturing tax break for processing oil in a refinery, just for finding and pulling a barrel of oil out of the earth.’”