Monday, August 06, 2007

House Passes 15% Renewable Energy by 2020

The United States House of Representatives has passed an Energy Bill requiring utility companies to produce 15 per cent of their electricity from renewable sources such as wind and solar power by 2020.

The Bill passed in the House on a 241-172 vote, despite strong opposition from electric utility companies and the White House, which has threatened to veto the measure. Twenty six Republicans voted in favor and nine Democrats opposed the bill.

A senior analyst for Lazard Capital Markets described the bill as "a significant positive step towards creating a cohesive energy policy."

The renewable electricity standard applies only to investor-owned utilities and exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate.

The bill also calls for stronger energy efficiency standards for appliances and lighting and incentives for building more energy-efficient buildings. The bill bans the sale of 100-watt incandescent light bulbs by 2012 and requires that all bulbs be 300% more efficient than today’s ordinary bulbs by 2020. The bill also includes a range of loan guarantees, federal grants and tax breaks for alternative energy programs. These include building biomass factories, research into making ethanol from wood chips and switch grass and producing better batteries for hybrid cars.

The bill will repeal a tax break for oil companies from 2004, and another tax break relating to income from foreign oil production. Critics of the two tax breaks called them loopholes that the industry had taken advantage of.

The 786-page House energy bill does not include an increase in fuel-efficiency standards for cars and light trucks. That issue, as well as whether to force major increases in the use of E85 fuel as a substitute for gasoline, were left to be negotiated when the House bill is merged with energy legislation the Senate passed in June.

"There's a war going on against energy from fossil fuels" said Representative Ralph Hall, Republican-Texas. Representative Joe Barton predicted the bill "isn't going to go anywhere" because President Bush would veto it if it reaches his desk.

In a somewhat surprising comment from the White House, they accused the bill of making "no serious attempts to increase our energy security". This defies commonsense as by producing more electricity from domestic renewable sources rather than with imported natural gas by definition increases the United States' diversity and security of energy supply.

As with all legislation the details (such as a subsidy for installing gas pumps for expensive and inefficient E85 fuel) need to be checked carefully. Regardless a 15% renewable energy standard is good news.

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