The House and Senate expected to vote on identical energy legislation this week after negotiations reached an agreement on key measures late Friday.
The central point of the agreement concerns new fuel efficiency standards for vehicles sold in the U.S. Under the agreement, hammered out between Speaker of the House Nancy Pelosi and Representative John D. Dingell (D-Mich.), the new Corporate Average Fuel Economy (CAFE) standard will mandate a fleetwide target of 35 miles per gallon (mpg) by 2020–a 40% increase over current standards.
Many lawmakers and environmental advocates are heralding the success of the agreement, which they believe will ensure enough support for an energy bill to overcome a GOP filibuster and make its way to the president by the end of the year.
However, Dingell, a longtime defender of the automotive industry won several concessions for the industry, which has lobbied relentlessly against significant CAFE increases for years.
The bill will maintain separate designations for cars and light trucks, preserving the chance for different efficiency standards in the future, though each will be required to reach 35 mpg by 2020. In addition, automakers will receive an extension of the 1.2 mpg credit for vehicles that can run on a mixture of gasoline and ethanol, which was set to expire in 2008.
Environmental groups, including the Union of Concerned Scientists have criticized the credit–a loophole they say could increase gasoline use by as much 10 billion gallons by 2015.
Peolosi reportedly compromised on the credit to keep the agreement alive after rejecting a proposal by Dingell to grant the National Highway Traffic Safety Administration sole authority over mileage standards. The move would have weakened the power of the Environmental Protection Agency to regulate auto emissions of carbon dioxide, and simultaneously undermined efforts by California and other states to impose their own fuel efficiency standards on automobile makers.
What other measures will make the final bill are still unclear. Reuters reported that a draft requires 20.5 billion gallons of renewable fuels to complement motor fuel supplies by 2015–5.5 billion gallons of which would have to come from non-food sources like cellulosic ethanol.
In addition the draft set short term targets of 9.5 billion gallons in 2008 and 11.6 billion gallons in 2009.
While any type of cap-and-trade or carbon tax measures have apparently been dropped from the bill, Pelosi said in a statement announcing the deal that she still wants the final version to contain a Renewable Portfolio Standard requiring utilities to produce 15% of their electricity from wind, solar and other renewable sources.
It also appears that new taxes on the oil industry and tax incentives for renewable energy production may not make the final draft, which is expected to be completed in the next two days. The tax incentives could be taken up in an extensions bill before the end of 2008 when current incentives are due to expire.
It is unclear whether the bill would have enough support to overcome a potential veto by President Bush.
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