A final vote on comprehensive energy legislation (H.R. 6) is expected the morning of June 28. The massive bill includes provisions that would increase domestic energy production, reduce U.S. dependence on foreign oil, promote development of new technology and alternative energy sources, and improve the country’s electric grid. It also would provide $18 billion in energy tax incentives, largely to encourage the use of alternative fuels and hybrid vehicles.
Below is a summary of energy bill provisions and amendments of particular interest to the automotive supplier industry:
Corporate Average Fuel Economy (CAFE): On June 23, Senators voted against attempts to increase Corporate Average Fuel Efficiency standards (CAFE) for cars and light trucks. Senate Minority Whip Dick Durbin (D-Ill.) proposed an amendment that aimed to raise CAFE standard for automobiles from the current level of 27.5 miles per gallon to 40 miles per gallon over the next 10 years.
In response to the Durbin amendment, Sens. Kit Bond (R-Mo.) and Carl Levin (D-Mich.) proposed an amendment to retain the current "scientific" approach to gradually raise NHTSA fuel efficiency standards and calls for the Secretary of Transportation to consider technological feasibility, environmental impact and the effect of increased fuel efficiency standards on jobs and manufacturing competitiveness before raising fuel economy standards. The Bond-Levin amendment was favorably approved by a vote of 64-31.
MEMA believes that regulation of fuel economy standards properly resides with the National Highway Traffic Safety Administration (NHTSA). MEMA outlined its position on CAFE to the Senate Energy Committee in a letter sent to committee members on June 22.
Climate Change/ Greenhouse Gas: The Senate rejected an amendment proposed by Sens. John Lieberman (D-CT) and John McCain (R-Ariz.) which called for reducing greenhouse gas emissions to 2000 levels by 2010 and sought to establish a system in which emissions allowances could be bought and sold. Opponents of the amendment argued that the expense of compliance would put U.S. businesses at a competitive disadvantage with nations lacking stringent emission restrictions and would cost American jobs. The amendment was defeated by a vote of 38-60.
The rejection of the McCain-Lieberman emissions amendment will likely mean that the energy bill will not include any new mandatory reductions in greenhouse gases produced by industry.
However, a climate change amendment proposed by Sen. Chuck Hagel, (R-Neb.), which would use tax incentives to encourage, but not require industry to curb carbon dioxide emission, was approved. In addition, the Senate also adopted a non-binding amendment expressing the “sense of the Senate” that climate change is a problem and endorsing mandatory, market-based measures to “slow, stop and reverse” emissions.
Diesel: By a 92-1 vote, the Senate overwhelming supported an amendment proposed by Sen. George Voinovich (R-Ohio) that would set aside $1 billion over five years for national grant and loan programs to provide retrofits for heavy duty diesel vehicles, making EPA the lead administrative agency over the retrofit program.
The measure was introduced on June 16, gaining the support of several prominent senators, including Sens. James Inhofe (R-Okla.), Jim Jeffords (I-Vt.), Thomas Carper (D-Del.), Johnny Isakson (R-Ga.), Hillary Clinton (D-N.Y.), Kay Bailey Hutchison (R-Texas), and Diane Feinstein (D-Calif.).
A tax incentive for the purchase of 2007-equipped heavy duty trucks was not included in the tax package approved by the Senate Finance Committee. Attempts were be made on the Senate floor during the week of June 20 to offer an amendment, however, it was not approved.
As approved by the Senate Finance Committee, the tax package would:- Expand and extend the so-called Section 45 credit for production of electricity through renewable fuels, except for solar facilities;
- Create a tax credit for the purchase of hybrid cars, alternative fuel vehicles and fuel cell vehicles.
- Create a tax credit for the purchase of certain energy-efficient consumer appliances, such as dishwashers and air conditioners;
- Create a tax credit for investment in coke/cogeneration manufacturing facilities.
The House of Representatives approved its version of the energy bill in April. Following Senate approval, the measure will go to conference committee where differences in the House and Senate bills will be ironed out.
