After months of fighting among themselves and wrestling with the auto industry, Democrats in Congress seem to have finally won Detroit's support in drastically raising vehicle fuel economy standards.
Now all they have to do is get the buy-in of two of Washington's most powerful lobbies--the utility and oil industries--if they want to see an energy bill passed before the end of the year. And those groups are firmly holding out.
Late Friday, House Speaker Nancy Pelosi, D-Calif., announced that Democrats had reached a compromise to raise corporate average fuel economy, or CAFÉ, standards to a fleetwide average of 35 miles per gallon by 2020, a 40% hike above their current levels. The proposal is the cornerstone of a major energy bill that the House of Representatives is expected to take up next week.
In a statement Saturday, Alliance of Automobile Manufacturers chief Dave McCurdy said: "Upon adoption of this legislation, Congress will have established aggressive, nationwide fuel economy requirements, concluding a longstanding debate." The Alliance is the voice in Washington for 10 major automakers including Ford Motor, General Motors, Chrysler and Toyota.
But the final details of the proposed bill are still being worked out, and if there was ever evidence of the cliché about the devil and details, this is it. The measure is expected to include a provision that requires the country's major utilities to obtain at least 15% of their electricity from renewable sources like wind and solar power. But the Edison Electric Institute, the industry group for investor-owned utilities like Duke Energy and Southern Co. , has firmly opposed such a measure, saying that it will cause power prices in some areas of the country to rise dramatically.
It's also not clear what, if any, concessions in the final version of the energy bill will be made to oil and gas companies. The measure is reported to call for a massive increase in subsidized biofuel production, something the oil industry has opposed.
Separate energy bills passed by the Senate and House over the summer both included a "NON-OPEC" provision that allows member of OPEC to be sued for violating anti-trust laws. The House version would have stripped the oil and gas industries of $16 million in tax breaks.
A study released last month by the American Petroleum Institute, Big Oil's industry group, warns that the legislation now under consideration would slow economic output by 4% by 2030. Doesn't sound like they'll be coming around anytime soon on an energy bill.
The measure to be taken up by the House next week draws from elements of both the House and Senate bills. Notably, the compromise on CAFÉ standards struck by Pelosi and House Energy and Commerce Committee Chairman John Dingell, D-Mich., Detroit's staunchest ally in Washington, closely resembles the Senate's fuel economy proposal. (The House version did not include a fuel economy provision.)
But even if Congress is successful in passing energy legislation before the year's end, there's a final hurdle posed by President Bush's pen. White House advisers have recommended that he veto the earlier energy bills passed by lawmakers over the summer.
The Pelosi-Dingell agreement, and the auto industry's apparent concession, is an important milestone in their goal to pass an energy bill. But lawmakers will have to win concessions from other key industries if they want to pass truly comprehensive energy legislation. Otherwise, what's being touted as an energy bill might end up being simply a vehicle fuel economy bill.
Via: Forbes|by Brian Wingfield
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