Senate Agrees to Energy Tax Package

Industry groups and environmentalists lobbied hard to sway lawmakers' votes Monday as the Senate prepared for a major challenge to President Bush's global warming policy as part of emerging energy legislation.

WASHINGTON — Industry groups and environmentalists lobbied hard to sway lawmakers' votes Monday as the Senate prepared for a major challenge to President Bush's global warming policy as part of emerging energy legislation.

At the same time, the Senate agreed unanimously without debate to incorporate a package of energy tax incentives totaling $18 billion into the energy bill. The tax breaks lean heavily toward promoting energy efficiency, renewable energy sources, alternative motor fuels and clean coal technologies.

Partially offset by new or revamped energy taxes, the package would cost the government $14 billion over 10 years, more than twice what the White House had said it would accept and $6 billion more than the House approved.

The provisions include new tax credits to buy gas-electric hybrid cars, solar panels and energy-efficient appliances and to build energy-efficient homes. It also includes tax incentives for the biodiesel, clean coal and nuclear industries.

The Senate was set to consider two proposals as part of a broad energy bill this week that would, for the first time, call for mandatory limits on industry's release of heat-trapping gases that many climate scientists believe are warming the Earth.


The Bush administration has argued strongly against mandatory climate-related emissions caps, contending that its voluntary program is reeling in the growth of so-called "greenhouse" emissions, if not actually reducing the tons annually being released into the atmosphere.

Sen. Pete Domenici, R-N.M., met with other Republican senators Monday to gauge support for a provision, offered by Sen. Jeff Bingaman, D-N.M., that would require the growth of heat-trapping pollution be cut by 2.4 percent annually between 2010 and 2020.

Domenici generally supports the measure, but his overriding concern was whether it might torpedo the broader energy bill the Senate is close to approving, according to his aides.

But Sens. John McCain, R-Ariz., and Joe Lieberman, D-Conn., have argued that more aggressive actions are needed. They are proposing to require that industry roll back greenhouse gas emissions to where they were five years ago by 2010.

A third proposal by Sen. Chuck Hagel, R-Neb., would focus largely on developing new technology to handle climate change. It contains no mandatory limits.

Industry and free-market groups from the National Association of Manufacturers to the Cato Institute have waged a campaign against mandatory emissions caps, with various industry groups stepping up their lobbying in recent days.

"We have more effective alternatives than mandatory carbon caps to address climate change," maintains Steve Miller, president of Americans for Balanced Energy Choices, a nonprofit group that is largely funded by the coal and electricity industry. Miller said the government should invest more in technology to capture carbon and develop clean coal projects.

Business groups from the National Association of Manufacturers to various energy industries have lobbied vigorously against both the Bingaman and McCain-Lieberman proposals, citing two economic studies that said mandatory caps would cost up to 800,000 jobs and higher electricity costs. An Energy Department study has concluded Bingaman's proposal would have little adverse economic impact and Bingaman contends a "safety valve" that limits the cost of emission permits would ensure industry's costs would be contained.

But others don't see it that way.

"It's the camel's nose under the tent," Margo Thorning said of Bingaman's proposal. She is an economist at the American Council for Capital Formation, a free-market advocacy group strongly opposed to regulating carbon or other greenhouse gases.

Environmentalists are divided.

The Natural Resources Defense Council and U.S. PIRG said they can no longer support the McCain-Lieberman proposal because it includes incentives to build new nuclear reactors.

"Nuclear has no place on a global warming bill," says Anna Aurilio, U.S. PIRG's legislative director.

Environmental Defense supports the McCain-Lieberman provisions and considers Bingaman's proposal as too weak and stifling to innovation. U.S. PIRG also opposes Bingaman's plan, saying it does not go far enough.

But the NRDC's David Lashoff said of Bingaman's proposal, "If it passes it would mark a fundamental shift in the politics of global warming and make it clear a mandatory program (to control emissions) is inevitable."

Source: Associated Press