Democrats struggle to resolve impasse over energy proposal

WASHINGTON -- Senate Democrats, eager for a vote on energy legislation, ran into staunch Republican resistance Thursday to requiring that utilities use more wind, solar and other renewable sources to produce electricity.

The impasse over renewable fuels came as Democrats said they would seek nearly $13.7 billion in tax breaks to promote clean energy, biofuels, more fuel efficient vehicles and conservation.

The Senate Finance Committee intends to discuss the tax plan Tuesday, according to the committee chairman, Sen. Max Baucus, D-Mont. The proposal would extend dozens of tax breaks, such the one for building wind turbines. It also would create incentives such as tax credits for technology to capture carbon dioxide -- the leading greenhouse gas -- from power plants.

Senators late Thursday rejected a proposal to allow limited natural gas development in waters off the mid-Atlantic coast despite a long-standing drilling moratorium.

A proposal to let Virginia seek a waiver to the drilling ban for a large portion of federal waters off its coast was defeated 43-44.

Democrats were forced to set aside -- at least until next week -- their renewable fuels proposal after it became clear they lacked the 60 votes to proceed.

The bill would require power companies to increase use of wind turbines, solar panels, biomass, geothermal energy or other renewable sources to produce at least 15 percent of their electricity by 2020. Only about 2.4 percent of the country's electricity is produced that way now.

Sen. Jeff Bingaman, D-N.M., the measure's chief sponsor, said the mandate is needed to stimulate expansion of fuel sources other than coal and natural gas. He said if his plan is enacted, greenhouse gas emissions from power plants will fall by nearly 7 percent from levels projected for 2020.

Opponents argued that some regions of the country couldn't meet the requirement and that it would cause electricity prices to increase in those areas, especially across the South.

By a 56-39 vote, senators rejected a GOP alternative that would have allowed utilities to meet the requirement by also building more nuclear power plants and taking conservation measures.

Republicans balked and refused to allow a vote on Bingaman's measure.

If the early going is any indicator, it looks like a bumpy path toward final approval for the energy bill before the Fourth of July recess as Senate Majority Leader Harry Reid of Nevada has promised.

It also was evident that there will be a tough fight over increasing automobile mileage standards. Senators close to the auto industry released their proposal, which they say automakers can achieve, unlike a plan already in the overall energy bill.

The substitute calls for increasing auto fuel economy by 30 percent to 36 miles per gallon by 2022 and for sport utility vehicles and small trucks to reach 30 mpg by 2025.

"It will force industry to bend and not break," said Sen. Kit Bond, R-Mo.

The energy bill now has an increase to 35 mpg for both cars, SUVs and trucks by 2020 and 4 percent higher each year after that.

Sen. John Warner, R-Va., prompted a sharp floor debate Thursday when he proposed allowing natural gas development in waters along the Atlantic coast where a drilling freeze has been in place for a quarter-century.

Warner, R-Va., wanted the Senate to let his state seek a waiver from the Interior Department to the freeze. The plan brought a quick responses from senators from other coastal states.

Sen. Robert Menendez, D-N.J., said such drilling off Virginia "could cause a ripple effect ... and the consequences can be very significant." He added, "This would leave other states helpless.

The debate on the renewable fuels proposal was equally divisive.

Senators from the South said utilities in their states could not meet the 15 percent requirement because they lack the wind power and other renewable resources prominent elsewhere, especially the West.

"I'm not impressed with wind being the national energy source for America," said Sen. Pete Domenici, R-N.M., who led the opposition to the renewable fuels standard.

Twenty-three states have renewable fuels requirements; nine of them are equal or more aggressive than the proposal federal requirements.

But Bingaman said, "You don't drive development of these technologies if it's up to each state to decide whether to participate."

He rejected claims that some regions could not meet the mandate. The senator noted, for example, that much of the South has an abundance of trees and other plants to make biofuels as well as other renewables aside from wind.

The measure also would permit utilities that cannot find enough renewable sources to buy credits from other utilities that have exceeded the 15 percent or from the Energy Department, Bingaman said.

That did not sway Sen. Jeff Sessions, R-Ala.

He said that in his region, utilities would have no choice but to buy credits at 2 cents per kilowatt-hour and "the cost is going to be very significant ... with nothing to show for it."

The renewable fuels proposal has been the subject of intense lobbying by utilities. The Georgia-based Southern Co. has made killing the measure its legislative priority.

Sessions said the Tennessee Valley Authority, which like Southern is a leading electricity provider in the South, estimated it would cost $410 million a year by 2020 for it to meet the 15 percent renewables.

Bingaman questioned those costs. He cited a report from the federal Energy Information Administration that said the renewable fuels requirement would add less than 1 percent to the cost of electricity in 2020 and cause natural gas costs to decline. The report also said the requirement would triple the use of biomass and increase the use of wind by 50 percent and solar cells by 500 percent.

Critics of the bill disputed the agency's cost findings, saying it did not examine regional price increases.