US House bill taking shape with CAFE, renewables focus

Nick Snow
Washington Editor

WASHINGTON, DC, Nov. 30 -- US House Democrats are moving toward energy legislation containing stiffer automotive fuel efficiency requirements and a higher renewable fuel standard. The bill would not include language imposing new taxes on oil and gas producers or rolling back incentives in the 2005 Energy Policy Act, at least initially, industry lobbyists said Nov. 29.

Lobbyists emphasized that details still need to be finalized and remain sketchy. But they also told OGJ that there is a better-than-even chance the full House will consider the bill next week and the Senate will take it up before adjourning in mid-December.

"This process is so closely held that it's very hard to know what [House Democrats] are doing until they release some kind of document," one lobbyist admitted. He said agreement looks closer on new Corporate Average Fuel Efficiency (CAFE) requirements than on renewable fuels and ethanol.

Another said House Speaker Nancy Pelosi (D-Calif.) wants to see an energy bill with an environmental component such as higher CAFE standards before the 2007 session ends. "Some people have told me, including a member yesterday, that she has quit talking about the killer provisions" that the Natural Resources Committee passed, he said.

"So the question is whether they have been dropped, or if they simply will be tucked into the bill later. Our best hope is for the first bill to go through without the unfavorable provisions so we can be ready to fight them in a second bill," the lobbyist said, adding that lawmakers will be under heavy pressure to find revenue sources for new programs.

Dingell on CAFE
The only official word came from Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), who issued a Nov. 29 statement that said he remained committed to working with Pelosi and congressional leaders on legislation to increase automotive fuel efficiency standards. "We have made much progress and I am optimistic we will reach agreement soon. It is my sincere hope that we pass an energy bill that includes a CAFE provision before the end of the year," he said.

A renewable fuels component could be more elusive, particularly since federal lawmakers seem significantly less intoxicated with ethanol made from corn in 2007 than they were in 2005 and 2006.

"You have the 'food and fodder' guys saying it's making their corn flakes and cattle feed more expensive. Meanwhile, the environmental people are concerned about emissions and about land going into corn production. It's not surprising that the enthusiasm for moving forward on it has slowed down," one oil and gas industry lobbyist said.

Still, a discussion draft of a new House energy bill contained provisions that the National Petrochemical & Refiners Association opposes. "It completely disregards the findings of virtually every study that has been released, from the National Academy of Science to the Organization for Economic Cooperation and Development to the Chesapeake Bay Commission. It also ignores every concern raised by a wide variety of other important organizations, including food producers, environmentalists, and economists," NPRA Executive Vice-Pres. Charles T. Drevna said on Nov. 27.

The new language also puts the cart before the horse by requiring a new study of impacts from increasing the renewable fuels mandate after it has been implemented, and by establishing mandates for cellulosic ethanol, biodiesel, and other fuels that aren't yet commercial, Drevna said.

"The proposed legislation also includes a new feature not included in previous drafts that sets a level for biodiesel, which has proven to be problematic at low temperatures. It also unfairly exempts existing ethanol facilities from a newly prescribed 20% reduction in greenhouse gas emissions," Drevna said.

Contact Nick Snow at nicks@pennwell.com.

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