Washington (Platts)--6Dec2007
Senior advisers to President Bush are recommending that he veto a
comprehensive energy bill Democratic leaders in the House and the Senate
plan to pass by the end of the year, singling out for criticism provisions
that would raise federal standards for vehicle fuel efficiency and alternative
fuel production and establish a new federal requirement for electricity
produced from renewable energy, according to a statement issued by the White
House Thursday.
They also object to a $21-billion tax provision that would curtail
incentives available to oil and natural gas companies and transfer some of the
proceeds to alternative energy development, the statement said.
"Unfortunately, the bill contains several highly objectionable provisions
that would impose higher costs on American taxpayers, electricity consumers
and businesses," the Statement of Administration Policy said of the bill (H.R.
6).
"If H.R. 6 were presented to the president in its current form, his
senior advisers would recommend that he veto the bill," the statement added.
The statement acknowledged that the Bush administration has also proposed
increases in Corporate Average Fuel Economy standards and a federal
alternative fuel standard, but maintained the president's plans would be more
flexible and effective than those contained in the bill.
The statement also said the bill does not address the potential for
conflicts between the Environmental Protection Agency and the Department of
Transportation over vehicle fuel economy.
"The double regulation that would result from this failure to clearly
identify the relative roles of EPA and DOT in national fuel economy
regulations could greatly undermine our shared objective of rapidly reducing
gasoline consumption," the statement said of the bill's proposal to require a
CAFE standard of 35 miles per gallon by 2020. "The bill needs to clarify one
agency as the sole entity, after consultation with other affected agencies, to
be responsible for a single national regulatory standard for both fuel economy
and tailpipe greenhouse gas emissions from vehicles."
The statement said the bill's requirement for 36 billion gallons of
renewable-fuel production by 2022 is not sufficiently flexible because of
prescriptions regarding greenhouse gas content. The administration has
proposed an alternative that would result in 35 billion gallons of renewable,
or alternative, fuels by 2017.
"The bill would fragment the market by picking and choosing among fuel
types instead of relying on market forces to develop new, more advanced
technologies and the next generation of fuels with lower greenhouse gas
emissions," the statement said. "Additionally, a new alternative fuel standard
should include an effective safety valve, should be technology neutral, and
should rely on market innovation instead of excessive statutory prescription."
The statement said a "safety valve" included in the bill is "too limited
to function effectively."
The renewable electricity standard, which would require utilities to use
renewable energy for 15% of their generation by 2020, would disrupt markets
where such alternatives are not widely available, the statement said.
"A one-size-fits-all federal RES would result in higher electricity costs
for consumers in areas where renewable resources are less available and could
place new strains on electricity reliability," it said. "Such a federal RES
mandate ignores the specific energy and economic needs of individual states."
Likewise, the statement criticizes the planned bill's tax provisions, saying
they would "single out specific industries for punitive treatment.
"For example, repealing the manufacturing deduction for certain oil and
gas companies is a targeted tax increase that puts US firms at a disadvantage
relative to their foreign competitors," the statement said.
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