New U.S. Energy Bill Increases Fuel Economy Standards, Expands Renewable Fuel Production

Today, President Bush signed into law the much-followed Energy Bill (H.R. 6). Key provisions in the bill are an increase in fuel economy (CAFE) standards to a 35 mpg fleet-wide standard by 2020, and an increase to 36 billion gallons by 2022 of the Renewable Fuels Standard, utilizing a combination of corn-based ethanol and advanced biofuels. The bill also contains lesser-emphasized energy efficiency and conservation provisions, such as increased lighting and building efficiency requirements. But what is perhaps most interesting about H.R. 6 are the items Congress left out of the bill.

Because the Senate could not muster the 60 votes need to overcome Republican filibusters on the issues, Congress excluded from H.R. 6 a $21 billion energy tax package and a national Renewable Electricity Standard (RES). The tax package would have eliminated certain tax incentives for the major oil and gas companies to offset a range of tax credits and extensions for energy efficiency and renewable energy initiatives, such plug-in hybrids, wind power facilities, solar power production and many other clean energy projects.

The RES would have obligated electric utilities nationwide to generate 15% of their electricity from renewable resources by 2020. The RES met stiff resistance from southern Senators who suggested their states lack the renewable resources needed to meet the standard.

Democratic leaders have pledged to take up the energy tax and RES provisions next year, though it remains unclear whether the Senate will be able to muster the 60 votes needed to move those provisions to enactment.

For further information about this topic, please contact Akin Gump.



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