Senate passes energy bill

WASHINGTON -- The Senate passed an energy bill Thursday that features tax breaks to conserve and produce energy and directs more use of ethanol, but rejects the Bush administration proposal to develop oil in an Arctic wildlife refuge.

After sometimes bitter deliberations, the Senate approved the energy package 88-11. The vote sets up a showdown with the House, which last year passed an energy bill that focuses more on helping energy companies boost production, including drilling in the refuge in Alaska.

Oil dependence

Much of the Senate debate, which stretched over six weeks, centered on America's dependence on foreign oil and the security concerns over relying on the volatile Middle East for much of its energy. Republicans argued for more domestic production, while most Democrats maintained the answer was in conservation.

Still, the Senate twice rejected proposals that were aimed at reducing the growing demand for fuel by automobiles and other passenger vehicles, which guzzle the equivalent of nearly 8 million barrels of oil a day.

Democrats said the bill, which at times had appeared to be in danger of falling apart over a tax dispute as well as Arctic drilling, provides a broad balance between energy production and conservation, including help for consumers to better insulate their homes and buy more fuel-efficient windows.

Republicans said it still does too little to increase domestic oil production and reduce America's reliance on imports.

Nevertheless, Republican leader Trent Lott, R-Miss., said the Senate bill marks "a major achievement" and praised Sen. Frank Murkowski, R-Alaska -- the chamber's most ardent supporter of oil drilling in the Arctic National Wildlife Refuge -- for not trying to obstruct the legislation.

"We need more production across the board," said Lott, indicating that he expects the fight over Arctic drilling to be resumed as the Senate and House work out a compromise bill to send to the White House.

Lott lauded what he called "very significant tax incentives" contained in the Senate legislation. But the House-passed bill, which was ignored in the Senate, would funnel more tax breaks to energy production and open the Arctic refuge to drilling.

The Senate bill would provide $14 billion worth of tax breaks over 10 years, divided about evenly between help for renewable energy and conservation programs and the traditional fossil fuel energy producers. The House bill calls for $33 billion in tax incentives focused more heavily toward the oil, gas, coal and nuclear industries.

Other provisions in the Senate legislation, covering more than 580 pages, include:

A requirement to use more ethanol in gasoline that will result in a tripling of ethanol production to 5 billion gallons a year.

A ban on use of the gasoline additive MTBE, found to contaminate waterways in many states.

Consumer tax credits for people who install solar panels in their homes, add insulation, or buy more energy-efficient windows, doors, air conditioners and heat pumps.

Federal loan guarantees to spur private interest in building a $20 billion pipeline to haul natural gas from Alaska's North Slope.

Requiring utilities by 2019 to produce 10 percent of their electricity from renewable fuels such as wind, solar and burning forest and agricultural wastes.

Repeal of a Depression-era law that limits operations of electricity holding companies; wider authority for federal energy regulators to regulate wholesale electricity markets and transmission lines.

While environmentalists won a major victory in beating back Republican attempts to drill for oil in the Arctic refuge, they failed to get the Senate to do anything substantive to rein in fuel use by the nation's motorists.

An attempt by Sen. John Kerry, D-Mass., to address fuel economy was blocked as opponents of tougher federal auto fuel economy rules argued that automakers would be forced to close plants, lay off workers and deprive drivers of larger cars, including SUVs.