Senate Approves Energy Bill,Including Fuel-Efficiency Plan (Wall Street Journal)

By JOHN J. FIALKA and MIKE SPECTOR

The Senate, voting 65-27, approved sweeping energy legislation that would increase fuel-efficiency standards for automobiles, provide tax incentives for development of alternative fuels and require far greater use of ethanol and other so-called renewable automotive fuels.

The measure now faces a number of hurdles in the House, and the White House has raised the possibility of a veto over provisions that would outlaw gasoline price gouging and would subject OPEC to U.S. antitrust laws.

The measure was on hold for hours last night as supporters rounded up senators, many of whom had already left their Capitol offices for the day. Early in the evening, senators on a quick voice vote approved higher automobile fuel-economy standards, an important step toward the first increases in more than two decades and a major defeat for Detroit's Big Three auto makers.

Auto makers aren't backing off their fight against the provision, which would require that their fleets of cars and trucks reach a standard of 35 miles a gallon by 2020, up from the current 25 miles a gallon. As one company representative put it last night: "This is like the second inning of nine."

The vote on the amendment followed backroom dickering involving Sens. Ted Stevens (R., Alaska), Thomas Carper (D., Del.) and a number of other lawmakers and lobbyists. The negotiations continued afterwards as lawmakers tried to reach agreement on how to move the bill forward.

One bone of contention involved cutting energy companies tax breaks to pay for developing alternative forms of energy. Oil companies and their allies yesterday helped Republicans defeat a proposal to cut energy companies' tax breaks by $28 billion over 10 years, but Democrats were trying to leave open the possibility it could be revived later. The rest of the energy bill -- including a package of incentives for clean energy and energy-saving appliances -- remained intact.

Among the most politically popular features is a federal mandate to raise the use of ethanol and other so-called renewable automotive fuels from the currently required 7.5 billion gallons in 2012 to 36 billion gallons by 2022. It would require that more than 20 million gallons of that come from cellulosic ethanol, a fuel that still requires a technological breakthrough before it becomes commercially available.

Other major provisions would require that half of new cars be able to run on an 85% ethanol blend by 2015, set new efficiency standards for appliances and lighting, outlaw "unconscionably excessive" prices for gasoline, and subject Saudi Arabia and other OPEC members to U.S. antitrust laws.

Discord remains over the tougher Corporate Average Fuel Economy, or CAFE, standard. Rep. John D. Dingell of Michigan, the chairman of the House Energy and Commerce Committee and long-time foe of the fuel-efficiency provision, has ruled out action until the fall, though other House Democrats are poised to push for action as early as next week. "I intend to proceed with a strategy to ensure that the House matches the Senate's action and includes a strong fuel economy provision in our summer energy package," said Rep. Edward Markey (D., Mass.), chairman of the new House Committee on Energy Independence and Global Warming.

"This is not your grandfather's CAFE," said Delaware Sen. Carper, who has two auto plants in his state and helped to push through the amendment. Earlier, he said, "Our message to the domestic auto industry is: 'You can do this...and we can help." The measure would provide money for technologies such as batteries for electric plug-ins. But that did little to appease some opponents. Sen. Debbie Stabenow (D., Mich.) said that she and others representing auto states aren't giving up. "We need a plan that pushes the industry, not breaks it, and the current bill misses that mark," she said. "We are going to continue working with our colleagues in the House."

Jason Grumet, staff director for the bipartisan National Commission on Energy Policy, called the Senate's action "one of the most significant steps to improve oil dependence in two decades" along with the introduction of ethanol and other nonoil based fuels.


Mark Cooper, director of research for the Consumer Federation of America, estimated the change would cut the consumption of gasoline by 100 billion gallons in the next decade. He said it would "pay for itself from the consumer point of view, cut our oil imports by 15% and reduce greenhouse gas emissions by one billion tons."

The United Auto Workers opposed the measure, saying it would encourage small-car production to move offshore and doesn't set specific targets for auto makers to add flex-fuel vehicles to their fleets.

Detroit's auto makers fear strict mileage rules could cost billions of dollars amid continued losses in their core North American operations. General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group earn more money on their less-efficient, light-duty trucks. Toyota Motor Corp. had joined Detroit in opposing the standard, but officials at the Japanese company have indicated they could live with it.