Pelosi Cobbles Together Strong Energy Bill - Heading for Showdown in Senate

After long hours of negotiations that have stretched long into the night for the past week, House Speaker Nancy Pelosi seems to have cobbled together a deal that will send a strong energy bill out of the House, likely Thursday.

Rumors last month that essentially every major provision but increased fuel economy standards might get stripped from the bill followed by long weeks of speculation have given way today to confirmation that the energy package heading for a House floor vote tomorrow will include some version of every major clean energy provision under consideration: a 35 mpg CAFE standard, a biofuels standard, and in a surprise turn, both a 15% by 2020 national renewable electricity standard and a $21 billion tax package for clean energy sources.

The passage of the bill, expected tomorrow in the House, will be a major victory for Speaker Pelosi, who has fought hard to advance a strong energy bill to the floor over opposition from Republicans, industry and even influential members of her own party - namely influential Michigan Congressman John Dingell.

Even after securing passage in the House, the bill will be heading towards a tough vote in the Senate where opposition from ranking member of the Senate Energy Committee, Pete Domenici (R-NM) will mean the bill will require a filibuster-proof 60 votes to secure passage. And it won't end there: President Bush has re-iterated threats to veto the bill if it includes certain provisions, including a renewable electricity standard and tax provisions financed by ending subsidies for the oil and gas industry.

Details on the components of the energy package below. But first, a look at the tumultuous - and still-unfolding - saga of the 2007 Congressional Energy Bill.

The Energy Bill's Saga

After some Senate Republicans blocked a formal conference committee to reconcile the two version of the energy bill passed by the Senate and House this summer (see previous posts here and here), Democratic leaders opted to move forward without a formal conference. They have instead been meeting in closed sessions to hammer out details on what provisions are in and what are left on the cutting-room floor. They concluded those negotiations late last night and have referred a full bill to the House floor for a vote sometime Thursday.

While the hundreds-of-pages long bill includes scores of smaller provisions, including some excellent new energy efficiency provisions, four major provisions were at the center negotiations - and speculations - this past week:

A 35 mile-per gallon fuel economy standard (35 mpg CAFE) for cars and light trucks, the first increase in fuel economy standards in 30 years. The energy bill passed by the Senate included a 35 mpg CAFE provision while the House version did not. Senior Michigan Democrat and House Energy Committee Chairman, John Dingell had opposed the Senate version of the CAFE provision, pushing for a weaker update to CAFE standards.

A large biofuels requirements (a renewable fuels standard or RFS) that mandates billions of gallons of ethanol, biodiesel and other biofuels for use in U.S. cars and trucks. The Senate bill included a 36 billion gallon by 2022 biofuels standard, including 21 billion gallons from "advanced" biofuels like cellulosic ethanol. The House version had no renewable fuels title.

A 15% by 2020 renewable electricity standard (RES) requiring large electric utilities to acquire 15% of their electricity from renewable sources like wind, solar and geothermal energy by 2020. The Senate narrowly failed to pass a RES this summer, while the House succeeded in passing a standard for the first time in history.

Finally, a multi-billion dollar package of tax incentives for clean energy funded by ending subsidies and closing royalty loopholes enjoyed by the oil and gas industries. During the first "100 days" push, House Democrats passed a $32 billion tax package while the Senate again narrowly failed to pass a tax package; the House energy bill passed this summer did include a $16 billion tax package.

The fuel economy provisions were the source of contention between Speaker Pelosi and Energy Chairman Dingell, who has been a key advocate for the auto industry and fought the 35 mpg CAFE standards.

The latter two provisions were the source of the most conflict between Democrats and Republicans, and between the House and the Senate, and have drawn veto threats from President Bush.

Although of questionable environmental character, the biofuels package, in contrast, is widely seen as the political "glue" that holds the bill together, drawing in "farm state" Republican moderates.

All this led to much speculation and anticipation over the course of what was a very secretive negotiation process, as small bits of information leaked of closed negotiation chambers and rumors spread.

Veil of Secrecy Parted To Reveal Strong Energy Bill

In the end, the bill heading to the House floor will be stronger than many - perhaps most - speculated, including some version of all four major provisions:

The bill includes a 35 MPG fleetwide CAFE standard, although it retains the "flex fuel vehicle loophole" that Detroit automakers exploit to help turn gas guzzling SUVs into 35 mpg machines on paper. The loophole is decreased in later years though. The CAFE standard also keeps separate standards for cars and light trucks/SUVs, potentially leaving the SUV loophole intact. Pelosi has issued assurances though that the seperate standards will still amount to a 35 mpg fleetwide average across all cars, light trucks and SUVs.

Also in the bill is a large biofuels standard, although details are still emerging on the renewable fuels title.

The bill includes the 15% by 2020 renewable electricity standard passed by the House earlier this year, although there have been some small modifications made (a lower price cap on the costs of compliance for example). Like the version passed by the House, utilities can meet up to 4% of the standard with energy efficiency (which I suppose makes it a 11% RES and 4% efficiency standard, although some utilities may opt for more than 11% renewables). The bill does not conflict with the 25 renewables standards already enacted by states.

Finally, in a surprise to many, the bill will include a $21 billion tax package which will be financed in part by ending $13 billion in subsidies for the oil industry. A provision in the original House bill to close unintended loopholes in offshore oil and gas royalty agreements was not included in the new bill.

The bill also includes a number of other provisions intended to advance America towards a clean energy future, including strong new energy efficiency standards and a "Green Jobs" provision intended to create 3 million new skilled jobs in the clean energy economy.

Speaker Pelosi's summary of the bill can be found here.

The Saga Continues... Showdown Looms in the Senate

While the energy bill is expected to pass the House, where simply majority rules, it's fate in the Senate is still unclear. A "supermajority" of 60 votes will be required to move the bill in the Senate past Republican opposition in the form of a filibuster threat, and Senate Majority Leader Harry Reid has said he is unsure whether or not he has the needed 60 votes.

If the bill cannot secure passage in the Senate in it's current form, speculation is that Democrats will begin stripping provisions from the bill until 60 votes can be earned. What the bill looks like at the end of that process is still unclear, and the possibility of a presidential veto looms over the whole thing (sounds pretty familiar...).

Stay tuned (and call your Senators!).