Federal Energy Bill: A Lot Of Sludge

It looks as if there will be a new federal energy bill after the Thanksgiving recess, but it's a half-measure.

Congressional negotiators are nearing agreement on the components of an energy bill that would boost fuel efficiency standards for vehicles and require vast increases in the use of biofuels, according to congressional aides and lobbyists.

The auto industry and its champion, House Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), have accepted the target of achieving an average of 35 miles a gallon for each carmaker's fleet of new U.S. vehicles by 2020, set in the version of the bill passed by the Senate in June. However, Dingell and the automakers appeared to have won concessions extending fuel efficiency credits for flexible-fuel vehicles and creating separate mileage standards for cars and light trucks.

The two main and most likely features of the final bill are variations of what the Senate adopted. In addition to the 35 mile-per-gallon target for 2020, the Senate bill ramped up the requirement for gasoline makers to use ethanol and other biofuels, to at least 13 billion gallons by 2012 and 36 billion gallons by 2022.

There has been one change in the biofuels measure. While the Senate bill required that at least 3 billion gallons of "advanced biofuels" derived from sources other than corn be used starting in 2016, escalating to 21 billion gallons by 2022, new language would require that the first advanced biofuels be used in 2013. That might ease demand for corn, which has soared in price, and recognize that companies are making progress in using new feedstocks in pilot projects.

Many elements that were in the version of the energy bill passed in August by the House -- such as a requirement for utilities to use minimum amounts of renewable fuels and a rollback of the oil industry's share of a tax break for manufacturers -- seemed unlikely to be included, congressional sources said.

I'm all for compromise, but these seem to be compromises in the wrong places. The President signed bills in Texas mandating a renewable energy portfolio for utilities. Federally, that gets shunted aside. It's completely unclear that the President would sign a fuel efficiency increase, he's been very resistant to it in the past. Further, there are plenty of loopholes crammed into the bill, particularly regarding light trucks, that would incentivize American car companies against innovation and toward more of the same. (What will eventually push them is the market, as they've become almost irrelevant in the global auto economy.) Plus, there appear to be loan guarantees for nuclear power plants in the bill.

I believe the renewable energy standard would provide a more immediate impact to reducing fossil fuels. In fact, the new bill would ELIMINATE tax breaks for wind and solar, in the hopes that they would be reinserted in a later tax proposal. About the only positive I see from this bill is this:

Dingell is also pressing for a provision that would take the responsibility for regulating tailpipe emissions of carbon dioxide away from the Environmental Protection Agency and give it to the Transportation Department's National Highway Traffic Safety Administration.

Last week, Chrysler circulated a paper arguing that tailpipe emissions were linked to fuel efficiency standards NHTSA oversees. But earlier this year, the Supreme Court said the EPA has the power to regulate carbon dioxide emissions under the Clean Air Act, and congressional sources said it was unlikely that the auto companies would prevail.

Because energy legislation is a difficult issue with all kinds of regional biases toward certain policies, you typically only get a shot at it every decade or so. It seems to me that the Congress is missing an opportunity, albeit in troubled circumstances