energy bills 2005

Bill in Brief

In July, 2005 Congress passed an energy bill with the aim of raising energy supplies at home, lowering energy costs, improving electricity grid reliability and encouraging fuel efficiency. The president signed the bill into law in August.

After Katrina, Congress went through another round of energy hand wringing and sent a second energy bill through the House. That bill is now stopped in the Senate.

The Final Bill

As the energy bill rolled off the Senate and House floors for final passage, it was unclear exactly what was in the bill. Piecing together snippets from the Washington Post, NYTimes and Congress Daily, this is what we can tell you...

What's in it

Tax incentives - $14.5 billions worth. The bill contains tax incentives for both traditional (oil, gas, etc.) and alternative energy development as well as for hybrid and other alternative power cars. Because of "offsets" - that is, other money savings and revenue - the bill will only cost $11.5 billion over the five years of the bill's life.

Electricity grid: The bill tightens rules to insure better reliability for the electricity grid.

Bio-diesel: The bill requires that refineries use at least 7.5 billion gallons of bio-fuel (mostly ethanol) in gasoline products - up from the 3.7 billion they use now.

Extra daylight. The bill tacked on an extra week of Daylight Savings Time in the fall and three weeks in the spring, starting 2007. (WP)

Scoping out off-shore oil. The bill okays a study of oil and natural gas reserves off of states where inventories are now banned. Although the bill doesn't okay any drilling, a study is seen as a step in that direction.

Nuclear risk insurance - and other nuclear incentives: The bill gives nuclear energy investors up to $2 billion in risk insurance, as well as loan guarantees and tax credits. (WP)

Placing liquified natural gas plants: The bill gives the feds the ability to trump states when it comes to placing liquified natural gas plants.

What's not in it

MTBE lawsuit protection: MTBE, a fuel additive that's eco-friendly when it comes to emissions but possibly cancer-causing when it leaks into drinking water, tripped up passage of the energy bill last time around. The House wanted to protect makers of MTBE from lawsuits over contaminated water supplies - a plan that the Senate couldn't quite swallow. This year, lawmakers tried to work out a compromise that would give the additive makers protection from lawsuits while also requiring they ante up to a fund to clean up contaminated sites. In the end, however, the entire idea of MTBE lawsuit protection was dropped from the bill.

ANWR: The energy bill also dropped a House plan to open up drilling in the Arctic National Wildlife Refuge (ANWR) - but that doesn't mean ANWR is safe. Congress will likely approve opening up ANWR as part of the budget reconciliation process.

Requirements to switch to renewable fuel - and away from oil. The Senate provision that required the U.S. to up its use of renewable fuels for electricity got dropped from the final bill.

Higher fuel efficiency standards. Although advocated by environmentalists, the bill doesn't raise fuel efficiency standards for cars. (But right after the bill passed, the administration proposed new regulations to raise efficiency for lighter SUV's - although the standards for the heaviest trucks would actually go down, putting the average increase at 1.8 gph by 2011. WP & WP)

The earlier bills

Before the House and Senate cooked up a final bill, each chamber came to the negotiating table with their own versions. Here's a mini archive of cJ's coverage of those earlier bills...

The House Bill

The House passed its version of the energy bill in April. Like most congressional bills, it's an unwieldy document - touching on everything from tax incentives for the energy industry to adding extra months of daylight savings.

The controversies: The bill had no shortage of critics. By far the highest profile ones are environmentalists who dislike the bill's measures to open up drilling in the Arctic National Wildlife Refuge and to give liability protection to makers of MTBE. Some fiscal conservatives and many liberals also object to tax incentives for the energy industry - each for their own, sometimes different, reasons. Finally, some conservative hawks and many environmentalists say the bill does too little to wean the U.S. off of its dependence on foreign oil.

What's in the bill: We don't recommend reading the entire bill, HR 1541, yourself, but the House Energy and Commerce Committee's five page breakdown (pdf) of the bill is readable, if sometimes vague. We do our best to pull together bits and pieces from mainstream media to give you an overview of the bill below (most of the information came from an April 14, Associated Press article, which now has a dead link).

Encouraging fuel production and energy efficiency: The heart of the bill would encourage energy production and efficiency with $8 billion in tax incentives over ten years (a big drop from the bill's 2003 version which had $23 billion in tax incentives). Most tax breaks would go to coal, oil and gas development, with under $500 million going to encourage renewable energy and energy efficiency. (AP) Another $2 billion would be used to support possible oil exploration in the Gulf of Mexico (NYT). The bill would also ease up regulations on building new refineries and let the federal government trump states and localities in placing new liquified natural gas plants. (CSMonitor)

But not all fuel efficency: Although there was an effort to increase auto fuel efficiency, the current bill doesn't do so.

Corn ethanol: The bill would require refiners to use 5 billion gallons of corn ethanol a year, up from the 3.7 billion they use now. (AP)

Energy efficient homes: Homeowners would get a 20% tax credit (up to $2000) to put in more energy efficient windows and insulation. (AP)

Natural gas: Part of the tax incentives would be used to encourage building more natural gas pipelines. (AP)

The grid: There would also be tax incentives to improve the electricity grid and regulations to improve grid reliability. (AP)

Other bits in the bill: The bill also includes provisions to expand the Strategic Petroleum Reserve, $5 billion to promote clean coal technologies, and $2 billion to promote hydrogen-powered cars.

Parts the environmentalists aren't happy with

ANWR: The bill would open up the Arctic National Wildlife Refuge (ANWR) for oil exploration and drilling. A hot button issue with environmentalists, ANWR could be a sticking point when the House and Senate work on creating a compromise bill.

Downwind states and pollution: The energy bill would ease up clean air regulations for states that are on the receiving end of pollution drifting from "upwind" states. The "downwind" states say the new rules are more fair and realistic; environmentalists say the change would slow up efforts to reduce smog. (NYT)

Hydraulic fracturing: Another possible environmental sticking point in the bill is that it does not include tighter regulations for hydraulic fracturing - the practice of breaking up underground rock to get at more fuel. Environmentalists say fracturing runs risks of contaminating water supplies if not closely regulated; energy advocates say that more regulation will just slow down access to oil supplies at home. (Washington Times)

MTBE: The bill would protect makers of MTBE from lawsuits (except those already in court). MTBE, a gasoline additive, is both a friend and foe in enviromentalist eyes: it helps bring down fuel emissions and clean up the air, but when it seeps into drinking water in heavy doses it could cause cancer. (NYT) Use of MTBE is, at the same time, being phased out and the current bill would give industry $1.75 billion to help them make the transition to MTBE-free fuel. (AP)

Not in the bill: The House bill does not include regulations on carbon dioxide emissions or fuel efficiency standards for cars.

The Senate bill

The Senate's version was passed on June 28th. You can see the Senate's summary of the bill on line. Below are some of the newsier tidbits being reported on by the Associated Press, CongressDaily and Washington Post.

What's in the bill already:

Ethanol: The Senate bill would require refiners use 8 billion gallons of ethanol a year, up from the 3.7 billion that is now used. (WP)

Electricity grid: The bill tightens rules to insure better reliability for the electricity grid. (AP)

New energy technologies: The bill would give loan guarantees to encourage the development of energy technologies, including cleaner coal plants and nuclear plants. (AP)

Greenhouse gases: Senators debated three competing plans to rein in carbon dioxide emissions - going in the end with a plan to give voluntary incentives to industry to cut back their emissions. Senators also added a "sense of the Senate" comment, saying they should work on a policy to "slow, stop, and reverse" the growth of greenhouse gases.

Tax incentives: The Senate bill adds $18 billion in energy tax incentives - over 10 years - (but with $4 billion made up for from "offsets" the actual pricetag is really $14 billion). $8 billion would go toward promoting improvements in the electricity grid and nuclear power, $3 billion for oil and gas development, $4 billion toward energy conservation and efficiency and $2.6 billion to alternative energy.

Down with fossil fuels - up with alternatives: An amendment that made it on to the bill would require 10% of electricity to come from renewable energies by 2020.

Placing liquified natural gas (lng) plants: Like the House bill, the Senate bill says says the feds can trump states on placing plants.

What's not in the Senate bill:

MTBE: Unlike in the House version, the Senate bill does not put in protections for corporations from MTBE lawsuits (MTBE is a gasoline additive that has positive environmental effects, but is also thought to cause cancer if it contaminates drinking water.)

Fuel efficiency: The Senate rejected an attempt to add a strict goal for auto fuel efficiency, instead choosing to leave efficiency standards to the judgment of the National Highway Traffic Safety Administration.

ANWR: Although the Senate's energy bill leaves out the question of drilling for oil in the Arctic National Wildlife Reserve, the Senate already set the stage for approving ANWR drilling in its budget bill, so it's likely the Senate will - in the end - give the thumbs up to drilling this year.

Some of the critics:

  • In his budget plan, President Bush proposed fewer tax breaks for the energy industry ($6.7 billion) and proposed that most (72%) go toward renewable and alternative energy. (WP)
  • The New York Times and Washington Post say the bill does little to lower U.S. dependence on foreign oil. The editor of Newsweek International explains how greater fuel efficiency and energy independence is good for national security.
  • The conservative Heritage Foundation applauds the moves toward deregulation but says the tax incentives for alternative energy are a waste of time and won't help bring down energy prices.
  • The libertarian Cato Institute also thinks incentives are nonsense (their word, not ours).
  • They haven't commented directly on the energy bill, but Set America Free advocates stronger steps toward energy independence.
  • The liberal Center for American Progress also doesn't have a written response to the energy bill, but their energy policy statement lays out where they stand.
  • The National Resources Defense Council give the environmentalist perspective on energy policy.

Updated July 31, 2005

Did we miss something, let some slant slip in, lose a link - or do you just have something to say? Drop a line below! In the spirit of open dialogue, cJ asks you keep it civil, keep it real and keep it focused on the message, not the messenger. See our policy page for more on what that all means.