Stripped Down Energy Bill Passes Senate

The Senate passed a stripped down version of the Energy Bill on Thursday night, but the highly anticipated CAFE increases will remain part of the bill. Instead, the Senate pulled out tax hikes and provisions to require utilities to use more renewable fuels.

Senators cut requirements for publicly held utilities to get 15 percent of their electricity from renewable energy sources and heavily taxed the five biggest oil companies. The added revenue would have permitted the government to issue strong financial incentives for wind, solar and biomass energy.

The House had passed the bill with the tax provisions included, but the Bush administration had threatened to veto the bill if those provisions were passed.

The Energy Bill will most likely be re-passed by the House and signed by the President.

As it stands now, the new CAFE standard will raise average fuel economy standards to 35 mpg by 2020. Automakers had opposed the increase, but once it was clear they were going to lose, moved instead to support the measure.

Sen. Carl Levin, D-Mich., got sponsors of the energy bill to state publicly that it was their intention that greenhouse gas rules be "consistent" with fuel economy standards.

The exchange -- known as a colloquy - could be used by the industry in future legal battles over greenhouse gas rules, both proponents and opponents said. (Source: Senate OKs CAFE hike - Automotive News

The bill also includes a provision to increase biofuel production to 36 billion gallons per year by 2022. Of this amount, 21 billion gallons must come from biofuels other than corn-based ethanol. Last year, total ethanol production in the United States was about 5 billion gallons, according to the Renewable Fuels Association, an industry group.

The fuel economy and biofuel boosts are designed to weaken the country's exposure to volatile oil prices. The bill also includes energy efficiency requirements for appliances and buildings. (Source: Forbes)