KIPLINGER: EXPECT LITTLE FROM ENERGY BILL

Nobody is yet talking about ways to fashion effective coalitions against the special interests opposing better fuel efficiency standards and a national renewable mandate. (Rahm Emanuel! Call for Rahm Emanuel!)

Energy Bill Watered Down; Lawmakers are opting for evolution, not revolution, in the drive for greater energy independence. Here’s what to expect from coming legislation.
Jim Ostroff, August 16, 2007 (Kiplinger Forecasts/The kiplinger Letter)

WHO
US Senate and House of Representatives

But should we believe?

WHAT
Reknowned forecaster Kiplinger predicts the result of conferences in the fall will be weak legislation with the weak version of improved fuel standards (aka, Corporate Average Fuel Efficiency, or C.A.F.E., standards) now in the Senate bill and no national requirement for renewable electricity (aka, Renewable Portfolio Standard, R.P.S., or Renewable Electricity Standard, R.E.S.) output.

WHEN
The assumption is that a compromise energy bill will emerge from conferences between House and Senate leaders this fall and be sent to President Bush for approval before the legislators become paralyzed by the polemics of the primary elections.

WHERE
There is a broad set of contentions. Senators and representatives from auto industry states like Michigan and Illinois seek to protect that set of interests. Leaders from states dependent on cheap fossil fuels like the southeast oppose initiatives from westerners and New Englanders boosting renewable energy. Midwesterners seek support for ethanol.

WHY
- Senator Feinstein (D-Calif) spearheaded a desperate effort and won a weak improvement in CAFÉ standards, from the present 27.5 mpg to 35 mpg by 2022 (22.2 mpg for light trucks, SUVs and minivans). Opposition from auto industry and auto-worker union states was so strong the House wouldn’t touch the issue.
- Representatives Udall (D-NM) and Platts (R-PA), with behind the scenes maneuvering by Democratic leaders, pushed through a House RES requiring US utilities to obtain 15% of their electricity from renewable sources by 2020. Though the idea had a majority behind it in the Senate, Senator Bingaman (D-NM) could not get enough backing to break a filibuster or beat a threatened presidential veto.

Once the fight over the energy bill is finished, the fight over the global warming bill begins. Or will the deal-making on the first settle both?

- The strength of the oil-and-gas industries was revealed by the Senate defeat of a measure that would have taken production tax credits away from fossil fuel industries.
- Southern and southeastern conservatives insist their states lack enough renewable energy sources to meet any national RES and that even if they did such a measure would drive electricity costs too high despite numerous studies contradicting both assertions.
- Texas, the national leader in wind energy development and a state with its own RES, opposes the House measure as too demanding.
- Kiplinger predicts a compromise requirement for ethanol/biofuel use (down from 36 billion gallons by 2022 to something like 18 billion gallons) will likely find a coalition to approve it, especially because President Bush favors the idea. Kiplinger also forecasts passage of a 50 cent/gal credit on cellulosic ethanol production and a measure requiring half of all new vehicles to run on E-85 (an ethanol blend) by 2015 because it has the necessary compromise backing of Midwestern farm and auto industry states.

QUOTES
- Kiplinger: “Congress will pass a scaled-down energy bill this year. More-ambitious proposals from earlier versions of the pending legislation are crumbling under opposition from regional and business interests…Lawmakers are taking a reality check on an ethanol fuel mandate…”
- Kiplinger: “A two-year extension of tax credits for producers of renewable energy is on the way, benefiting wind, solar and other green power sources. And for the first time, electricity producers that harness the power of waves and water currents will be eligible for this credit.”