Tighter fuel standards clear Senate

WASHINGTON —  The Senate on Thursday overwhelmingly passed a broad energy bill that would impose the most significant increase in vehicle fuel-economy standards in three decades, and the White House said President Bush would sign it.

The measure cleared the Senate, 86 to 8, after Democratic leaders gave in to the president’s demands that they preserve oil industry tax breaks and drop a requirement that utilities generate more electricity from cleaner sources. The bill now heads to the House, which is expected to approve it next week before Congress leaves for the holidays.

“Thirty years ago, we didn’t have airbags, the Internet was a science-fiction fantasy and the closest thing to a GPS system came from Rand McNally, and you had to fold it six or eight times,” Senate Majority Leader Harry Reid (D-Nev.) said. “Today we have hybrid cars, hydrogen cars, ethanol cars and fully electric cars. And now, after 30 years, we are on the brink of passing new fuel-economy standards.”

Even scaled back in its ambitions, the legislation marks an important achievement for Democrats, who are eager to showcase the ways they have reset congressional priorities as they wrap up their first year in charge.

But it also underscored the difficulties they face -- with their narrow majority in the Senate and the president’s veto power -- as they prepare to undertake their next major environmental initiative in January: a bill that would cap greenhouse gas emissions from power plants, oil refineries and other sources.

The bill passed Thursday contains scores of initiatives designed to save energy and promote less-polluting technologies, from requirements for more efficient appliances to loans that would help small businesses use cleaner energy sources.

But it has two major requirements that will cut the nation’s oil use: a 40% increase in fuel efficiency for new cars and light trucks by 2020, for a fleet-wide average of 35 miles per gallon, and a fivefold increase -- to 36 billion gallons -- in the amount of alternative home-grown fuels, such as ethanol, that must be added to the nation’s gasoline supply by 2022.

“There is no act that the Congress could take that will do more to cut our dependence upon foreign oil than this measure,” said New Mexico Sen. Pete V. Domenici, the top Republican on the Senate Energy and Natural Resources Committee.

The White House, in a statement from spokeswoman Dana Perino, said the bill meshes with the goal Bush outlined in his State of the Union address in January to cut gasoline consumption by 20% within 10 years. “By addressing the concerns of the administration and moving forward with a bipartisan approach, senators have taken steps to improve our economic and energy security,” her statement said.

The change in the fuel efficiency rules came when Detroit and its congressional allies relented after years of resistance.

The increase in miles-per-gallon requirements is the largest since the fuel-economy program was established in 1975. It is the most consequential environmental initiative in this Congress and is widely viewed as an important step toward reducing U.S. dependence on foreign oil and curtailing global warming.

Currently, each automaker’s fleet of cars must average 27.5 mpg and its light trucks, including SUVs, pickups and minivans, 22.2 mpg. The tougher miles-per-gallon rules are projected to save 1.1 million barrels of oil a day by 2020. The U.S. consumes about 20 million barrels a day, an amount that is expected to rise to about 24 million by 2020.

The last energy bill, passed in 2005 by the Republican-controlled Congress, was tilted toward increasing domestic energy production. Sen. Maria Cantwell (D-Wash.) said that this new bill was a “much greener energy bill than we’ve seen in the past.”

California Atty. Gen. Jerry Brown said he was relieved the bill did not include language that could have undercut the state’s plan to enact tailpipe standards. California has been waiting nearly two years for an Environmental Protection Agency waiver for its standards.

“The Bush administration doesn’t want California setting emissions standards,” he said. “But under this bill, the Clean Air Act has been preserved, and that’s extremely important, because it gives the EPA the authority to let California set its own standards.”

Sen. Dianne Feinstein (D-Calif.), a lead sponsor of the tougher fuel-economy rules, also inserted into the Congressional Record a statement that “there was no intent in any way, shape, or form, to negatively affect, or otherwise restrain California or any other state’s existing or future tailpipe emissions law, or any future EPA authority on tailpipe emissions.”

The pared-down energy bill is far less ambitious than the bill approved by the House last week and was a bittersweet victory for environmental groups.

Environmentalists were disappointed that one of their priorities -- a requirement that by 2020 utilities generate 15% of their electricity from cleaner sources, such as the sun and wind -- was stripped from the bill, even though it enjoys majority support in the House and Senate.

Bush threatened to veto the measure over the provision, and a number of Republican senators threatened to mount a bill-killing filibuster. They contended the provision would increase utility bills in regions not blessed with strong wind or plentiful sunshine.

About half of the states now require utilities to invest in green power. California has required utilities to generate 20% of their power from renewable sources by 2010.

Democratic leaders also stripped the bill of a provision that would have repealed $13 billion in tax breaks for the oil and gas industries. The White House and most Senate Republicans, calling it a tax increase, opposed the provision.

Earlier in the day, Democratic leaders made a bid to keep the repeal of the tax breaks part of the measure. The four Democratic senators running for president were called from the campaign trail to vote on the issue, but it still lost, 59 to 40, falling one short of the 60 required to overcome a filibuster.

Nine Republicans joined the two independents and all but one of the chamber’s Democrats in voting to consider the bill with the tax measure. Sen. John McCain (R-Ariz.), campaigning for the presidency in Iowa, missed the vote but would have joined the majority of his GOP colleagues in voting against taking up the bill with the tax measure, his spokeswoman said.

Sen. Mary L. Landrieu, who is in a tight race for reelection next year in energy-producing Louisiana, was the one Democrat who opposed the tax measure.

Democrats sought the repeal to raise money to pay for the development of cleaner energy sources and to promote energy efficiency.

Opponents said that ending the tax breaks would discourage energy exploration and lead to tighter supplies and higher gasoline prices.

Karen Matusic, with the American Petroleum Institute, defended the tax incentives. “To single out one industry at a time that our nation needs greater investment in all forms of energy is wrong and would run counter to a goal of increased energy security,” she said.

Some environmental groups were furious that Democrats bowed to GOP threats.

Brent Blackwelder, president of Friends of the Earth, said Democratic leaders should have dared Republicans to filibuster the bill and, if necessary, made their opposition to clean-energy measures an issue in the 2008 campaign.

“It’s clear that Democratic capitulation isn’t limited to Iraq,” he said.

Joan Claybrook, president of the watchdog group Public Citizen, noted that the oil industry has donated $7 million since 2001 to the senators who voted against the tax measure. “Apparently, lawmakers didn’t want to bite the oil-industry hand that feeds them,” she said.

Democrats are expected to use the vote in next year’s campaign to portray Republicans as tools of Big Oil, while Republicans are expected to use it to paint Democrats as tax-raisers.

Democrats promised to try again next year to pass the renewable-electricity standard.

“This is not the last that we will hear of the renewable-electricity standard,” Reid said. “The Senate passed a similar bill before. We’ll do it again.”

richard.simon@latimes.com

Times staff writer Janet Wilson contributed to this report.