Congress approves taxes on oil firms

Australian
Monday 6/8/2007 Page: 11

WASHINGTON: Declaring a new direction in energy policy, the US House of Representatives approved $US16 billion ($18.6 billion) in taxes on oil companies, while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts. Republican opponents said the legislation ignored the need to produce more domestic oil, natural gas and coal. One Republican bemoaned "the pure venom... against the oil and gas industry".

The house passed the tax provisions by a vote of 221-189 late on Saturday. Earlier, it had approved, 241-172, a companion energy package aimed at boosting energy efficiency and expanding use of biofuels, wind energy and other renewable energy sources. "We are turning to the future," said the house's Democratic Speaker Nancy Pelosi. The two bills, passed as legislators prepared to leave town for their summer recess, will be merged with legislation passed by the Senate in June.

On one of the most contentious and heavily lobbied issues, the house voted to require investor-owned electric utilities nationwide to generate at least 15 per cent of their electricity from renewable energy sources such as wind or biofuels. The utilities and business interests had argued against the federal renewables mandate, saying it would raise electricity prices in regions of the country that do not have abundant wind energy. But environmentalists said the requirement would spur investments in renewable fuels and help address global warming as utilities use less coal.

"This will save consumers money," said Democrat Tom Udall, the provision's cosponsor, maintaining that utilities would have to use less highpriced natural gas. He noted that nearly half the states already had a renewable energy mandate for utilities, and if utilities could not find enough renewable they could meet part of the requirement through power conservation measures.

The bill also calls for more stringent energy efficiency standards for appliances and lighting and incentives for building more energy-efficient "green" buildings. It would authorise special bonds for cities and counties to reduce energy demand. Ms Pelosi said it was essential to commit to renewable energy while reducing reliance on fossil fuels. Doing so would help address global warming and make the US more energy independent: "It's about our children, about our future, the world in which they live." Democrats avoided a nasty fight by ignoring at least for the time being calls for car manufacturers to make vehicles more fuel-efficient.

Cars, four-wheel-drives and small trucks use most of the country's oil and produce almost one-third of carbon dioxide emissions. That issue, as well as whether to require huge increases in the use of corn-based ethanol as a substitute for petrol, were left to be thrashed out when the house bill is merged with energy legislation the Senate passed in June. But the legislation does end a tax break for buying large 4WDs, known as the "Hummer tax loophole" because it allows people who buy some of the most expensive big cars to write off much of the cost.

Republicans said the house bill did nothing to increase domestic oil and natural gas production or take further advantage of coal, the country's most abundant energy resource. "There's a war going on against energy from fossil fuels," said Republican Ralph Halt, who is from oil-rich Texas. "I can't understand the pure venom felt against the oil and gas industry." Another Texan Republican, Joe Barton, said the bill was "a political exercise" to promote "pet projects (and) pet ideas". The White House indicated that Mr Bush might veto the bill, saying it made "no serious attempts to increase our energy security or address high energy costs" and would harm domestic oil and gas production.