Coal, Nuke Power and Corn Win in Energy Bill

WASHINGTON – A wide-ranging energy bill expected to move through Congress this week includes more than $8.5 billion in tax incentives and billions of dollars more in loan guarantees and other subsidies for the electricity, coal, nuclear, natural gas and oil industries.

Efficiency and conservation programs would get about $1.3 billion of the more than $14.1 billion in total tax breaks over 10 years, according to lawmakers who have been briefed on the legislation worked out in negotiations between the House and Senate. About $3 billion in tax breaks would go for renewable energy source, mostly to subsidize wind energy.

Sen. Jeff Bingaman (search) of New Mexico, the ranking Senate Democrat participating in the energy negotiations, bemoaned the reduction in support for energy efficiency and conservation programs in the tax package. The Senate had approved more than $3 billion in tax breaks.

But he said he will support the bill when it comes before the Senate, possibly as early as Thursday. The House could take up the measure late Wednesday.

"Given the makeup of the Congress today and given the policies of the administration this is as good a bill as I think we could hope to get," Bingaman said in a conference call with reporters.

Sen. Pete Domenici, R-N.M., who led Senate negotiators, said the measure would help diversify the nation's energy portfolio by spurring development of new technologies to help put in service the next generation of nuclear reactors and find ways to burn coal with less pollution.

"We mandate more conservation and higher efficiency," said Domenici, citing among other things new efficiency standards for 14 commercial appliances such as large refrigerators and cooling systems.

Still, the bill was criticized by some Democrats in Congress, as well as outside watchdog groups, for funneling billions of dollars to mature energy companies that are cash rich because of soaring oil prices and gasoline that is averaging $2.29 a gallon nationwide.

"The energy bill does little to nothing to reduce our dependence on Middle East oil," said Sen. Bill Nelson, D-Fla., who criticized the bill's failure to seriously address automobile fuel efficiency.

The nuclear industry, corn farmers and the coal industry did particularly well with the legislation.

The bill would require refiners to double the use of ethanol (search), mostly from corn, as an additive to gasoline to 7.5 billion gallons a year by 2012.

A boon to farmers, it also would cost the taxpayer because ethanol gets a substantial tax break compared to gasoline, said Myron Ebel, an energy analyst for the Competitive Enterprise Institute.

A last-minute proposal added to the tax package late Wednesday by House Speaker Dennis Hastert, R-Ill., also would provide a 30 percent tax credit, up to $30,000, for the installation of equipment to sell gasoline consisting of 85 percent ethanol. There are only about 400 such retail outlets, mainly in the farm belt region, and the tax incentive is designed to spur construction of more, according to a Hastert aide.

The nuclear industry hailed the legislation. It reaped major benefits, including "risk insurance" totaling $2 billion if there are permitting or regulatory delays in construction of the first six new nuclear power reactors.

The bill also provides loan guarantees for future reactors and a green light for building a $1.25 billion next-generation nuclear plant that could produce hydrogen as well as electricity.

The legislation also boosts the coal industry with loan guarantees and $2.9 billion in tax breaks mostly for development of technology to make coal more environmentally friendly and develop ways to capture climate-changing carbon emissions.

Oil and gas producers would get $1.5 billion in tax breaks as well as royalty relief for certain deep-well drilling. A $500 million program, paid for by royalty relief, would help oil companies drill for oil in extremely deep waters of the Gulf of Mexico. Another $1 billion is earmarked for coastal restoration in five states with offshore oil production.

As House-Senate conferees worked late into the night this week on the final paragraphs of the legislation, a proposal was made, and approved, to provide $250,000 for a study of "irradiated fuel" -- although many of the conference participants acknowledged they had no idea what that was.

"Lawmakers let go any financial inhibitions and started spending like a bunch of drunken sailors," said Jill Lancelot, president of the watchdog organization Taxpayers for Common Sense. "This energy bill is filled to the brim with massive giveaways for mega-rich energy companies."