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US: June 19, 2007
WASHINGTON - The Senate Monday pressed ahead with a Democrat-driven rewrite of American energy policy that would strip nearly US$15 billion in tax breaks from large companies and put the money toward making energy from clean, renewable sources like wind, solar and soybeans.
With US pump prices above US$3 a gallon and crude oil near US$70 a barrel, US lawmakers are keen to show that they are acting to take pressure off consumers and get tough on Big Oil.
The Senate bill would take tax incentives away from oil companies over a decade and dole them out as incentives to turn corn, soybeans and "cellulosic" sources like switchgrass and woodchips into gasoline.
It would also sharply raise US vehicle mileage standards for the first time in 30 years and require US utilities to get 15 percent of their electricity from renewable sources like wind and solar by 2020.
Both provisions have elicited howls of protest from industry and Republican lawmakers are likely to try to weaken or strip them out in debate this week.
Harry Reid, the Senate's majority leader, on Monday said the measures are "two of the most crucial parts of this legislation," and called for the chamber to pass the bill by Thursday so it can move to a debate on immigration policy.
To help reduce America's reliance on foreign oil, the bill would increase the amount of ethanol and other renewable fuels used in motor vehicles to 8.5 billion gallons in 2008, then steadily boost it annually to 36 billion gallons by 2022.
Lawmakers from coal states like Kentucky are fighting for equal treatment for liquid fuel derived from coal. Many Democrats have objected to coal incentives, warning that increased use will increase US emissions of heat-trapping greenhouse gases.
But Sen. Jon Tester, Montana Democrat, is pushing an amendment that would give US$10 billion in federal loan guarantees to build "coal-to-liquid" facilities and sock away carbon dioxide emissions in underground reservoirs.
The centerpiece of the energy bill is a package of tax incentives that the Senate Finance Committee is expected to approve on Tuesday, setting the stage for full Senate debate this week.
The package extends for two years - until the end of 2010 - tax credits to produce electricity from windmills as well as geothermal facilities that use steam from deep inside the earth to produce power.
That alone is estimated to cost the US Treasury US$5.6 billion over 10 years, according to the Joint Committee on Taxation, and renewable energy developers say it is essential to assure that new projects get built.
Other big ticket items in the package are tax credits for utilities to build new "clean coal" plants, valued at US$1.3 billion over a decade, and incentives for homeowners to make energy efficiency overhauls valued at US$1.1 billion.
In order to keep the energy bill "revenue neutral," Senate tax writers have proposed stripping an equal amount of tax incentives from big oil companies like Exxon Mobil Corp. , ConocoPhillips and Chevron Corp.
The tax portion of the bill as written would repeal reduced tax rates for companies defined as major integrated oil companies, which could raise US$9.4 billion in extra revenue over a decade.
It would also drop foreign income tax deductions for companies that produce oil and natural gas overseas - worth US$3.2 billion over 10 years.
Story by Chris Baltimore
REUTERS NEWS SERVICE
