In big U.S. energy bill, who will pay?
Conservation measures may lead to most fuel savings since 1970s.
from the November 7, 2007 edition
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"We oppose any federal legislation that does not recognize regional differences because it would be an unfair burden," says Mike Tyndall, a spokesman for the Southern Company, an Atlanta-based utility serving the Southeast. "We have extremely limited cost-effective solar and wind resources compared with other parts of the country."
A recent compromise plan in the House-Senate negotiations would permit utilities to count energy-efficiency gains for roughly a quarter of the 15 percent mandate. That could broaden support for the measure, which is considered likely to survive in the energy bill despite a presidential veto threat, observers say. The leadership in both the Senate and House favor it and it has passed the Senate three times since 2002.
"I think it's most likely there will be an RPS," says Leon Lowery, a staffer on the Senate Committee on Energy and Natural Resources. "The South has one of the best renewable-energy sources in the country, and it's not wind, it's biomass."
Mr. Tyndall agrees biomass is promising but says its immediate prospects are small. "To attain a 15 percent level with biomass would be very difficult to achieve as a practical matter," he says.
A key part of the legislation is the Senate's provision for new CAFE standards in which cars and light trucks achieve a fleet average of 35 miles per gallon (m.p.g.) by 2020, a 40 percent increase that would slash greenhouse-gas emissions from cars by about 15 percent, experts say.
Automakers support a softer bill pending in the House that would keep the dual auto and truck mileage system, while raising fuel economy by a combined fleet average of 32 to 35 m.p.g. by 2022.
The automakers may hold a trump card. In a shot across Congress's bow, Allan Hubbard, director of the president's National Economic Council, wrote Speaker Pelosi Oct. 18 threatening a presidential veto if a final energy bill did not meet a laundry list of concerns and "maintain separate attribute-based standards for cars and light trucks."
Some observers see a compromise brewing.
"What we're seeing is probably the auto industry's best break in a generation for how things could come out for them," say Kevin Book, a senior vice president at FBR Capital Markets, an Arlington, Va., investment firm.
While Mr. Hubbard's letter also includes a threat to veto any bill with an RPS mandate, Mr. Lowery and others see some wiggle room. "It was a very carefully worded letter," Lowery says. "It said that senior advisers would recommend veto – not that the president himself would veto this bill."
How much energy can proposals save?
The House and Senate energy proposals promise to be the most aggressive reforms in decades, but just how much will they save? Here is a breakdown of a few key components:
• Auto fuel efficiency: A Senate provision would mandate a 35 m.p.g. fuel standard for all cars and light trucks by 2020. That would cut US oil use by 2.5 million barrels per day and lower carbon and carbon dioxide emissions by 134 million metric tons (MMT) and 495 MMT, respectively, by 2030. (One MMT is equal to about two Empire State buildings.) It would also save 5.6 quads of electricity. (In 2004, the US used about 100 quads.)
• Renewable sources for electricity: A House bill calls for US utilities to produce 15 percent of their power through renewable energy by 2020. That would cut 36 MMT of carbon dioxide and save 44 billion kWh of electricity annually.
• Lighting efficiency: The House bill requires common light bulbs to use 20 to 30 percent less energy than current incandescent bulbs by 2014. It would cut 29.7 MMT of carbon and 108.6 MMT of carbon dioxide, and save 1.5 quads of electricity annually by 2030.
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