August 5, 2007 – WASHINGTON (Reuters) – The U.S. House of Representatives on Saturday passed a Democratic rewrite of U.S. energy policy that strips $16 billion in tax incentives away from Big Oil and puts it toward renewable energy sources like wind and solar power.
The 786-page bill, passed in a rare Saturday vote, was a top priority for House Speaker Nancy Pelosi, and is an amalgam of bills assembled by about a dozen of the chamber’s committees in recent months.
Republicans called it a “no-energy bill” because it lacks new drilling incentives, and they derided the new emphasis on renewables as “green pork.” The White House threatened to veto the bill on concerns that it could boost energy prices.
House Republican leader John Boehner said the bill “cuts the lifeblood of our economy off at the knees by increasing taxes to pay for green pork projects,” referring to billions of dollars of “energy conservation bonds” that would finance renewable projects.
The bill, the New Direction for Energy Independence, National Security, and Consumer Protection Act and the related tax title would spur a massive redistribution of federal incentives to wind, solar, geothermal and away from producing energy from oil, natural gas and coal.
“It’s an historic turn away from a fossil fuel agenda and toward a renewable energy agenda for America,” said Rep. Ed Markey, Massachusetts Democrat. “It has been a long time coming.”
The bill sets new standards for appliances and building efficiency codes, and spurs possible renegotiation of faulty Gulf of Mexico drilling leases signed by the Clinton administration that left about $2 billion on the table.
UTILITIES FACE PENALTIES
The House voted 220-190 to add a controversial amendment that would require U.S. utilities to generate 15 percent of their electricity from renewable sources like wind and solar by 2020. Utilities in Southeast and Midwest states that lack wind currents needed to justify new wind turbines would have to pay billions of dollars in penalties to comply with the rules.
“It’s a giant tax,” said Rep. Cliff Stearns, Florida Republican, noting that 24 states have already adopted similar standards. “Let each state work this out for themselves.”
Notably absent from the bill is a hike in automobile fuel efficiency standards, which Pelosi put off until the fall to avoid a bruising fight with fellow Democrats including Energy and Commerce Committee Chairman John Dingell of Michigan, the staunch auto industry ally who says he wants to deal with fuel standards in global warming legislation later this year.
The Senate in June approved a bill that hikes auto fuel standards to 35 miles per gallon by 2020, a standard that U.S. automobile executives say could devastate struggling Detroit automakers like General Motors Corp. (NYSE:GM – News) and Ford Motor Co (NYSE:F – News).
The House bill must be reconciled with the Senate version, which is markedly different.
Republicans and oil-state Democrats criticized provisions in the tax portion of the House bill that would repeal reduced tax rates for major integrated oil companies, and drop foreign income tax deductions for companies that produce oil and natural gas overseas.
Those two measures alone would impose about $16 billion in new industry taxes from 2007-2017 on big U.S oil companies like Exxon Mobil Corp. (NYSE:XOM – News), ConocoPhillips (NYSE:COP – News) and Chevron Corp. (NYSE:CVX – News), according to the Congressional Budget Office.