12/12/07
Energy Bill altered for Senate consideration
On Friday December 7, 2007 the Senate attempted to stop a filibuster on H.R. 6, an amended version of a previous energy bill passed out of the Senate June 21, 2007, that was passed out of the lower chamber. The House had passed the bill that week by a vote of 235-181. The Senate measure failed by a vote of 53-42, seven votes short of the number necessary to invoke cloture and end debate. Sensing defeat, Senate Democratic leadership has begun to alter the bill to gain more votes. Thursday December 13, 2007 the Senate will attempt once more to pass the energy bill.
RPS removed from the Senate version of the bill
Members of the minority party opposed a renewable portfolio standard (RPS) that would have required utility companies to generate a percentage (15 percent in H.R. 3221) of their electricity from renewable sources. Currently 28 states and the District of Columbia have already adopted RPS standards as law. Lawmakers in states such as Tennessee, Kentucky and Georgia were concerned about a federal RPS because they believed that it would inevitably lead to them having to import a significant amount of electricity. They readily pointed out that the state with the most aggressive RPS, California, still only has 11 percent of their utility energy coming from renewables. Other Senators were concerned that technologies like Coals-to-Liquids (CTL) and nuclear power were not included among the RPS standard. In an effort to add votes for the energy bill, the Senate Leadership has decided to remove the RPS from the bill.
12/11/07
Renewable fuel standard offered as an amendment to the Farm Bill, will be added
Sen. Domenici (R-NM), Ranking member of the Senate Committee on Energy and Natural Resources, offered the RFS standard increase as an amendment to the 2007 Farm Bill as a safety provision, indicating his lack of confidence that an energy bill would be adopted. He also harbors some concerns about the renewable fuel mandate in the House energy bill because he feels that certain provisions could allow for the EPA to scale back the mandate after a decade and thus stifle biofuels production. The Senate bill would give the president the discretion to allow the Energy Department to implement the mandate instead of EPA.
Initially, Senate Majority Leader Harry Reid (D-NV) was concerned that attaching the amendment could have made the Farm Bill all the more difficult to pass. Sen. Reid maintained that his preference was for the RFS to remain with the energy bill but he appeared to change his tune in order to get the Farm Bill passed. The Senate did end up passing the Farm bill shortly before Christmas.
Tax package from House Energy bill was altered in the Senate but left off final energy bill
The Ways and Means Committee emerged with an Energy tax package that is 40 percent more than the last package at $21 billion and contained just over $13.5 billion in tax increases for oil and gas companies. As expected, the oil and gas industry opposed this tax increase.
The tax breaks to encourage renewable were accomplished, in part, by revoking tax breaks for oil and gas companies that were implemented in the 1990’s to encourage companies to identify more areas for extracting energy. The law waived royalty fees for oil and gas companies who conducted energy exploration. They were also done in part to address potential losses of gasoline
Some interesting provisions contained in the tax package are a decrease on the $0.51 tax credit for the ethanol tax credit by $0.05 beginning in the first calendar year after ethanol production hits 7.5 billion gallons, the target laid out in the Energy Policy Act of 2005. Additionally, the package includes a $1.01 cellulosic ethanol tax credit that would expire in December 2013.
There is also about $2 billion for clean coal projects, provided that they meet specific emissions sequestration targets.
Initially there remained about $1 billion in short falls that was keeping this provision of the bill from being adopted because of pay-go rules that require that the bill be revenue neutral. This was finally settled this morning.
The Administration opposes these tax breaks at the expense of oil and gas contending that this will hinder domestic production at a time when energy bills are rising, particularly heating costs and gasoline prices. The Administration has assured that they will veto the bill if this tax plan is adopted.
The Senate modified the tax package to gain votes for an energy bill passage but still fell short and the provision was removed.
Energy Bill altered for Senate consideration
On Friday December 7, 2007 the Senate attempted to stop a filibuster on H.R. 6, an amended version of a previous energy bill passed out of the Senate June 21, 2007, that was passed out of the lower chamber. The House had passed the bill that week by a vote of 235-181. The Senate measure failed by a vote of 53-42, seven votes short of the number necessary to invoke cloture and end debate. Sensing defeat, Senate Democratic leadership has begun to alter the bill to gain more votes. Thursday December 13, 2007 the Senate will attempt once more to pass the energy bill.
RPS removed from the Senate version of the bill
Members of the minority party opposed a renewable portfolio standard (RPS) that would have required utility companies to generate a percentage (15 percent in H.R. 3221) of their electricity from renewable sources. Currently 28 states and the District of Columbia have already adopted RPS standards as law. Lawmakers in states such as Tennessee, Kentucky and Georgia were concerned about a federal RPS because they believed that it would inevitably lead to them having to import a significant amount of electricity. They readily pointed out that the state with the most aggressive RPS, California, still only has 11 percent of their utility energy coming from renewables. Other Senators were concerned that technologies like Coals-to-Liquids (CTL) and nuclear power were not included among the RPS standard. In an effort to add votes for the energy bill, the Senate Leadership has decided to remove the RPS from the bill.
Tax package from House Energy bill being altered in the Senate
Last week, the Ways and Means Committee emerged with an Energy tax package that is 40 percent more than the last package at $21 billion and contains just over $13.5 billion in tax increases for oil and gas companies. As expected, the oil and gas industry opposed this tax increase.
The tax breaks to encourage renewable are accomplished, in part, by revoking tax breaks for oil and gas companies that were implemented in the 1990’s to encourage companies to identify more areas for extracting energy. The law waived royalty fees for oil and gas companies who conducted energy exploration. They were also done in part to address potential losses of gasoline
Some interesting provisions contained in the tax package are a decrease on the $0.51 tax credit for the ethanol tax credit by $0.05 beginning in the first calendar year after ethanol production hits 7.5 billion gallons, the target laid out in the Energy Policy Act of 2005. Additionally, the package includes a $1.01 cellulosic ethanol tax credit that would expire in December 2013.
There is also about $2 billion for clean coal projects, provided that they meet specific emissions sequestration targets.
Initially there remained about $1 billion in short falls that was keeping this provision of the bill from being adopted because of pay-go rules that require that the bill be revenue neutral. This was finally settled this morning.
The Administration opposes these tax breaks at the expense of oil and gas contending that this will hinder domestic production at a time when energy bills are rising, particularly heating costs and gasoline prices. The Administration has assured that they will veto the bill if this tax plan is adopted.
Currently the Senate is modifying the tax package to gain votes for an energy bill passage. The size of the tax package will remain about the same, but the tax increases will be modified to try to reach the sixty vote threshold.
CAFÉ Standards remains, considered signature portion of the bill
One provision that still remains in the bill are the increases for the Corporate Average Fuel Economy standards (CAFÉ). This raises fuel economy standards by 40 percent to 35 MPG by 2020. This is considered the most important provision to many lawmakers.
The Administration
The Administration’s two major issues with the energy bill were the RPS and the tax increases for oil and gas that they said hurt domestic production at a critical time. With the RPS removed and the tax package being altered, there is a chance that the bill could be successfully negotiated into law.
Speaker says Energy bill will not go to conference
Although both chambers of Congress were successful in passing energy legislation this past summer some formidable obstacles remain before something can be sent to the Administration to accept or to reject.
Shortly after the 110th Session of Congress convened, H.R. 6 was passed as part of the “100 Hours” agenda by the new Democratic Majority in the House of Representatives. H.R. 6 was then sent over to the Senate chamber where it was fundamentally altered and subsequently passed on June 21st, 2007. A tax package, passed out of the Senate Finance Committee, failed to garner enough support in the form of votes to be adopted to the bill.
On Saturday August 4th, 2007, Congress convened a special session to vote on H.R. 3221 that was crafted in multiple committees and brought to the floor by the Speaker. Both chambers passed different bills, with different bill numbers, therefore going to a formal conference could technically violate procedural rules. As a result, lawmakers have been stuck in a stalemate for months regarding the bills (see chart above for major differences between the two bills).
Congress has a lot on its plate right now. They must decide on “bridge” funding for Iraq, which is sure to be a difficult fight, and attempt to pass a Farm Bill while still appropriating funds for the fiscal year that began October 1st (the Farm Bill has stalled out twice in the Senate and its passage is in jeopardy).
Speaker Pelosi has tagged passage of an Energy Bill as her highest priority. The current time frame is to pass a “streamlined” bill (that could exceed 900 pages) either the first or second week of December. This bill could have most of what was included in the initial bills with significant provisions being up in the air for now.
Others are claiming that Congress will pass a huge Omnibus package that could contain everything, Appropriations bills, the State Children’s Health Insurance Program (S-CHIP), the Farm Bill and Energy legislation. Such a large bill would serve the dual purpose of making a veto all the more difficult by the Administration and of allowing for lawmakers to enter the National Election with some accomplishments to brag about to constituents.
This could be particularly important to Senators currently running for President, as the closer they come to the Iowa caucus the less likely they will be present around late December, which could throw a huge monkey wrench in plans by Leadership to get past the sixty-vote threshold required to invoke cloture and end debate. Despite this, do not be at all surprised if Congress, stays in Washington, D.C. until Dec. 22nd or Dec. 23rd, primaries or not, Sen. Reid has taken a hard line with the Senate’s work.
Obstacles to passage of an Energy bill
1. Corporate Average Fuel Economy Standards (CAFÉ)
Originally adopted during the oil embargo in the 1970’s this program establishes mandatory gas mileage for both passenger vehicles and light trucks. Currently, the law states that passenger vehicles must be able to get 27.5 miles per gallon (MPG) while light trucks must get 22.5. Some vehicles, such as trucks over a certain weight, are still exempt from CAFÉ standards for several more years. The Senate energy bill calls for increases in CAFÉ standards to 35 mpg by 2020. No such provision exists in the House version. Part of this is because of the successful efforts of the most distinguished lawmaker of the chamber, Rep. John Dingell (D-MI).
Over his five decades in the House, Rep. Dingell has long opposed increases in CAFÉ standards on the grounds that it could harm the automotive makers that pepper his district and state. Recently, however, he appears to have become more pragmatic, as he has signed onto a proposal by Rep. Baron Hill (D-IN) and Rep. Lee Terry (R-NE) that calls for lighter CAFÉ increases than proposed by the Senate (32 MPG by 2020). This legislation, H.R. 2927, has 173 cosponsors and enjoys bipartisan support and could be the standard adopted in the house if a bill can be compromised.
2. Renewable Portfolio Standard (RPS)
Members of the minority party oppose a renewable portfolio standard (RPS) that would require utility companies to generate a percentage (15 percent in H.R. 3221) of their electricity from renewable sources. Currently 23 states and the District of Columbia have already adopted RPS standards as law. The Senate version of the RPS, offered by Sen. Jeff Bingaman (D-NM) was not adopted.
3. Renewable Fuel Standard (RFS)
Additionally, the renewable fuel standard (RFS) expansion provision contained in the Senate version calls for a steep increase in the output of biofuels from a mandatory 7.5 billion gallons by 2012 to 36 billion gallons by 2036. The RFS was originally established in the Energy Policy Act of 2005 (EPACT 2005) and is credited with the explosion in ethanol production that has occurred over the last several years. The House version does not contain any language on an RFS standard.
Recently, Sen. Domenici (R-NM), Ranking member of the Senate Committee on Energy and Natural Resources, has indicated that he intends to offer the RFS standard increase as an amendment to the 2007 Farm Bill today as a safety provision should the energy bill not be adopted. While Sen. Domenici has the support of five other Western U.S. Senators he does not have the support of Senate Majority Leader Harry Reid (D-NV) who is concerned that attaching this amendment could make it all the more difficult to pass. Sen. Reid has stated that his preference is for the RFS to remain with the energy bill.
4. Tax provisions
The house version of the energy bill contains a $15 billion tax package (H.R. 2776). These are in the form of mostly tax breaks for the development of alternative energy sources and renewable sources. Because of an institutional provision called “pay-go” all increases in funding must be offset by either cuts in spending or tax increases. Everything has to be “revenue neutral.” The tax package for H.R. 3221 is accomplished by revoking tax breaks for oil and gas companies that were implemented in the 1990’s to encourage companies to identify more areas for extracting energy. The law waived royalty fees for oil and gas companies who conducted energy exploration.
5. The Administration
The administration opposes both energy bills on the grounds that they raise taxes on oil and gas companies and insufficiently address domestic oil and gas production. The President has promised to veto this legislation should it reach his desk.
House version Senate version
| H.R. 3221 |
H.R. 6 |
| RPS (renewable portfolio standard) for utilities that would peak at 15 percent by 2020. |
No RPS exists in the Senate version of the bill. |
| No CAFÉ provision exists in the House version of the bill. |
Raises CAFÉ (Corporate Fuel Economy Fuel Economy) Standard fuel economy for automobiles in all fleets to 35 mpg by model year 2020. |
| H.R. 2776 tax provisions total $15 billion |
No tax package in Senate version of the bill. A $29 billion package that was passed out of the Senate Finance Committee failed to get approval. |
| Reduces oil and gas subsidies. |
No such provision in Senate version. |
| Make the federal government “Carbon neutral” by 2050 |
No such provision in the Senate version of the bill. |
| No RFS provision exists in the House version. |
Renewable fuels standard (RFS) to mandate for 36 billion gallons of renewable fuel by 2022. |
09/05/2007
Senate holds hearing on ‘coals-to-liquids’ technologies
The House Committee on Science and Technology, Subcommittee on Energy and Environment convened a hearing on “The Benefits and Challenges of Producing Liquid Fuel from Coal: The Role for Federal Research.” The hearing examined the existing technologies as well as developmental technologies for coals-to-liquids (CTL), the possibility of using CTL in the transportation sector and for electricity generation and the long-term feasibility for the technology.
Witnesses for the hearing were Dr. Richard Boardman, head of The Secure Energy Initiative, Dr. Joseph Romm, former Acting Assistant Secretary at the Office of Energy Efficiency and Renewable Energy (EERE) in the Department of Energy (DOE), Dr. James Bartis from RAND Corp and David Dawkins, Director Climate Center at Natural Resources Defense Council. From the industry, Mr. John Ward, vice president of marketing and government affairs Headwaters Inc. and Dr. Robert Freerks, Director of Product Development at Rentech Corp.
Chairman Nick Lampson (D-TX) began the hearing by restating the urgency for energy independence. “I recognize there may be economic and strategic benefits of advancing coal-to-liquid technologies from both the regional and global perspectives. We need to have a comprehensive strategy to build an energy future that is sustainable,” said Lampson.
Several members of the committee expressed concern regarding the ability of emissions generated from the coal to be sequestered through the process known as carbon capture and storage (CCS). The panel also concluded that the transportation infrastructure, including airplanes, locomotives and road building equipment, all rely heavily upon liquid fuel to operate, would be difficult to convert to plug-in electric vehicles or CTL. Mr. Ward testified that he saw CTL as a “bridge to other solutions.” This comment drew some ire from members who were concerned about investing public money in a technology that, in their eyes, may not have longevity.
“I am aware that there are significant environmental challenges associated with using coal to produce liquid fuels. I believe it is essential that we continue to examine our energy strategies with attention to the issue of global warming and other environmental concerns such as management of our water resources,” said Lampson.
America COMPETES Act (H.R. 2272)
The America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (COMPETES) was passed by a House vote of 367-57 and by voice vote in the Senate. This legislation was signed into law by the President on August, 9th, 2007.
The bill deals mainly with issuing more funding for programs such as the National Science Foundation (NSF), the National Oceanic and Atmospheric Administration (NOAA), the National Institute of Standards and Technology (NIST) and the Department of Energy Office of Science (DOE). The bill seeks to, through the issuance of competitiveness grants to states, entice more teachers as well as students to study in the fields of Mathematics, Science and Engineering. The bill would also expand Advanced Placement (AP) programs as well as baccalaureate programs. The total amount of funding for the bill is $33.6 billion through FY2010.
Title V of the bill deals specifically with the Department of Energy. The legislation calls for almost $17 billion for the Department of Energy Office of Science from FY2008-FY2010.
In addition to these funds, the legislation establishes an independent branch of the DOE called the Advanced Research Projects Agency for Energy (ARPA-E) following a recommendation made several years ago by the National Academy of Sciences (NAS) called Rising Above the Gathering Storm. The purpose of this program is to address short and long term research goals for America’s energy policy that extend into both the private and public sectors and that are precluding the nation’s energy independence. Other stated goals for ARPA-E include, decreasing foreign energy dependency, reducing energy emissions as well as improving energy efficiency. A director will be appointed by the President in order to oversee ARPA-E with full autonomy over personnel decisions. The program was appropriated $300 million for FY2008. ARPA-E is modeled after the Defense Advanced Research Program Agency (DARP-A) credited with some of the research that led to the creation of the internet.
Both bills are available to view at http://thomas.loc.gov
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