U.S. House and Senate negotiators spent the August recess preparing to hammer out differences in their respective energy bills while President George W. Bush threatened to veto the legislation.
Key to Bush’s stance appeared to be a proposed requirement that U.S. consumers purchase renewable energy and a proposed restriction on consumer choice regarding automotive fuel efficiency.
The presence of one or both provisions in the final legislation will significantly increase the odds of a veto, analysts say.
The main point of contention is Congress’s provisions making fuel and automobiles more expensive and automobiles less safe.
The renewable power mandate, present in the House legislation but not in the Senate bill, would require consumers to purchase 15 percent of their power from renewable sources by 2020.
“In the House bill, the definition of renewable power excludes many renewable power sources and fails to account for regional differences in renewable capacity,” said Rosario Palmieri, director of energy and resources policy at the National Association of Manufacturers. “For example, the Southeast has few wind sources, few geothermal resources, and few solar sources due to regional weather patterns. The House bill really sticks it to the Southeast, which will be clobbered by higher electricity prices.”
The automotive fuel economy mandate, present in the Senate legislation but not in the House bill, would require automobiles to average 35 miles per gallon by 2020. Automobile experts report the only feasible way to meet the mandate is to shrink the size and reduce the weight and crashworthiness of current vehicles.
“We are on board with a CAFE increase, but it must be reasonable,” Palmieri said. “The Senate timeline is simply undoable. Automobile manufacturers need more time to come up with the technological innovations necessary for substantial mileage gains.”
New Taxes, Subsidies
Other controversial provisions of the legislation would sock oil companies with $16 billion in new taxes each year, with the money being diverted to subsidize expensive renewable power that cannot compete with traditional power sources on a level economic playing field.
“Because H.R. 2776 and H.R. 3221 fail to deliver American consumers or businesses more energy security, but rather would lead to higher energy costs and higher taxes, the president’s senior advisors would recommend that he veto these bills,” U.S. Department of Energy Secretary Samuel Bodman said in an August 4 press statement.
“There is very little energy in these energy bills, and they do nothing to increase access to our natural resources,” said Palmieri. “Already, a lack of access to our abundant natural resources is hurting our economy and putting American manufacturers at a competitive disadvantage. We pay as much as five times what our competitors pay for natural gas in the Middle East, and as much as two times more than what the Chinese pay for natural gas.”
James Hoare ([email protected]) is an attorney practicing in Rochester, New York.