Maureen Lorenzetti
Washington Editor
WASHINGTON, DC, Jan. 29 -- Keeping the air clean and promoting energy security are two key priorities for policymakers this year, President George W. Bush and congressional leaders said Tuesday.
In his State of the Union speech, President Bush called on Congress to act on an energy policy blueprint he unveiled in May 2001. He also called on lawmakers to pass his "Clear Skies" proposal that gives power plants and refineries more flexibility in meeting air pollution standards.
Bush said an important domestic goal is to" promote energy independence for our country, while dramatically improving the environment."
He also unveiled a $1.2 billion research program, called "Freedom Fuel" and designed to encourage hydrogen-powered vehicle use. About $720 million would be new money, congressional sources said.
Industry reaction
The American Gas Association praised Bush's remarks, saying the "linkage between energy independence and national security is especially relevant to the natural gas industry, since nearly all of the natural gas used in the United States is produced here in North America.
"We hope the president's message will encourage Congress to move forward quickly on comprehensive national energy policy legislation that will include access to natural gas supplies, expansion of local natural gas pipeline distribution systems to meet increasing customer demand, and stronger research into technologies designed to use natural gas and other forms of energy even more efficiently," the group said.
Legislative outlook; ethanol ahead
Part of the president's alternative fuels plan could find its way into a new comprehensive energy bill, which congressional leaders say they hope to resurrect this spring.
Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) praised the agenda outlined by Bush and announced plans to move a "substantive" energy bill that reflects the administration's agenda through committee this spring.
"As chairman of the Energy Committee, I am committed to move a substantive energy bill through committee early this year," Domenici said in a statement issued late Tuesday.
"I look forward to an aggressive schedule of committee hearings and meetings this spring to craft an energy bill as broad and diverse as America itself."
Anticipating Bush's remarks, Senate Democrats also pledged to seek legislation that dramatically expands alternative fuel use.
Sen. Byron Dorgan, (D-ND), ranking member of the Energy and Natural Resources Energy Subcommittee, called for a $6.5 billion, 10-year federal plan to expand hydrogen-powered vehicles.
"We need a new, bold initiative � in the spirit of the Apollo moon-landing project � this time focused on breaking our country's dependence on Middle East oil," Dorgan said shortly before the president's speech. "We need to make the commitment to do this and then focus the resources to get the job done. Moving to a hydrogen based future for transportation will be good for our economy, our energy future, and our environment."
Dorgan, along with Senate Minority Leader Tom Daschle (D-SD) and other key members of the Democratic caucus, are also expected this week to reintroduce a portion of last year's failed energy bill that retooled the federal reformulated gasoline (RFG) program and added an ethanol mandate. The Senate version included a plan brokered by integrated oil companies, Northeast states, some environmental groups, and agricultural interests to update clean-fuel rules.
Industry groups, including the American Petroleum Institute, say clean fuel rules need to be updated before spring; otherwise, fuel supplies in some areas, especially in California, could be impacted.
Last year's Senate bill included a flexible MTBE (methyl tertiary butyl ether) phase-out plan to address concerns over groundwater contamination. In addition, the current 2 wt % oxygen requirement in federal RFG was eliminated. And in a nod to the politically protected fuel ethanol industry, a renewable fuels mandate was created. That mandate would triple the ethanol market to 5 billion gal by 2012 and included a bank-and-trade credits program. Ethanol producers also negotiated a "safe harbor" provision designed to shield them from the kind of lawsuits MTBE producers are facing. A House version extended that protection to MTBE producers.
In the Republican-led House, Energy and Commerce Chairman Billy Tauzin (R-La.) also has indicated interest in revisiting sweeping energy legislation.
But congressional sources and lobbyists say it is very possible that the ethanol portion of the bill will be implemented separately. They are privately skeptical that a large bill will gain any momentum before summer.
"Barring any kind of Iraq-inspired event, there is just too much else going on with the budget, " said one congressional source.
It's also unclear whether the White House would support a comprehensive energy bill that includes the kind of large tax incentives the House and Senate were originally seeking ($33 billion and $16 billion, respectively). Negotiations last year were moving toward a $20 billion compromise for energy-related tax incentives, with $4-6 billion of that amount aimed at increasing domestic oil and gas production.
Growing budget pressures and the president's new tax plan may limit the White House's enthusiasm for other tax credits. And without the tax portion of the bill, there may not be interest in moving a package forward.
Alternatively, Congress may choose to separately address portions of the bill that already have bipartisan support, such as the RFG plan, lobbyists and congressional sources said.
