WASHINGTON – The Senate late Thursday passed 65-27 an energy bill that imposes an average 35-mpg fuel efficiency standard for cars and sport-utility-vehicles by 2020.
But the bill lacks two green-friendly pillars Democrats originally sought: tens of billions in taxes on oil companies to fund alternative energy subsidies and a federal mandate to generate electricity with renewable energy sources.
Democratic leaders worked furiously late Thursday to win an agreement to pass the bill, a maneuver designed to beat back equally aggressive efforts by the auto, coal, nuclear and oil industry to block final passage with a filibuster.
The filibuster strategy has already worked in eliminating billions in oil industry taxes and federal mandates that could reduce or inhibit the production and use of coal and nuclear power by replacing them with renewable energy sources.
A key compromise late Thursday cleared the way for new fuel efficiency standards for cars, trucks and SUVs — the first of its kind in U.S. history. The agreement orders automakers to achieve an average fuel economy standard by 2020 of 35 mpg while including mpg ratings for less-fuel-efficient light trucks and SUVs. The current fuel standard is 27.5 mpg for cars and 22.2 mpg for light-trucks and SUVs.
The auto industry calls this mandate — a 40 percent increase over existing fuel economy standards — unrealistic and unachievable and had fought hard for a less aggressive timetable to meet the 35-mpg threshold.
All week auto industry allies in the Senate appeared to hold the 40 votes necessary to block the new fuel standards via a filibuster. That changed when Alaska Republican Sen. Ted Stevens and Delaware Democrat Sen. Tom Carper engineered a compromise that kept the 35 mpg standard by 2020, but removed a requirement to increase fleet fuel efficiency by 4 percent every year until 2030.
The auto industry was unimpressed.
"This isn't a compromise, this is lipstick on a pig," one auto industry lobbyist, who declined to be named, told FOX.
Others hailed the agreement to raise corporate average fuel economy or CAFE standards.
"We've been fighting to reach this day for over twenty years," Sen. John Kerry, Massachusetts Democrat, said in a statement. "Because of an historic bipartisan compromise, for the first time in a generation we've overcome powerful opposition to make our cares more fuel efficient."
In fact, Kerry interrupted a press conference on Capitol Hill to announce the Senate had agreed to the new fuel efficiency standards by voice vote — a simple, unanimous and instant agreement to shift energy policy that belied the 20-year fight to impose new fuel standards on the auto industry.
"We just passed the entire amendment by voice vote on the floor of the Senate," Kerry said to an amazed group of senators huddled around the podium in the Senate Radio and TV gallery.
"You're kidding," exclaimed California Democrat Dianne Feinstein.
"Done deal," Kerry said.
"Isn't that — I'm flabbergasted," Feinstein said with a laugh. "I thought we'd be arguing this all night."
Added Sen. Maria Cantwell, Washington Democrat, and key author of the new fuel efficiency standards: "Americans will get more out of a tank of gas. And when they drive, whether it's an SUV or a truck or a family sedan, by 2020, you will be able to go 40 percent farther in having to fill up with your tank of gas."
Cantwell estimated the new fuel standards would save consumers, on average, a minimum of $13 per tank of gas. That calculation is based on a car traveling 375 miles on a tank of gas with a gallon costing roughly $3.00 with a per-tank cost of $45. With the new fuel efficiency standards and those gas prices adjusted for inflation, the same trip would cost $32, Cantwell said.
The energy bill does not contain $29 billion in tax increases on the oil industry that were designed to bankroll nearly $32 billion in subsidies and tax credits to boost production of ethanol and encourage development of renewable energy sources such as wind, solar, geothermal and biomass.
A Republican-led filibuster killed the tax increases when supporters fell 3 votes short of the 60 required to keep them in the underlying energy bill.
"I'm deeply disappointed that this has become political," said Sen. Max Baucus, Montana Democrat, and chairman of the Finance Committee that wrote the tax bill.
Baucus said the tax increases are dead for now but vowed to resurrect them as the energy bill continues its way through Congress.
"This is just today, there are many more days," Baucus said.
It's possible the tax increases could surface in a House-Senate conference committee. The House is drafting its energy bill but is already on course to debate $18 billion in oil industry taxes to fund development of alternative energy sources.
The Senate Democratic leadership on Thursday also dropped from the bill a federal requirement that all states produce 15 percent of their electricity via wind, solar, geothermal or biomass by the year 2020. Twenty-three states and the District of Columbia already have mandatory or voluntary renewable energy requirements, some more stringent than the proposed federal standard of 15 percent by 2020, some much less.
Senate Majority Leader Harry Reid said negotiations on a federal renewable energy standard failed to produce an agreement in time to incorporate a deal into the final energy bill, a bitter setback for New Mexico Democrat Jeff Bingaman, who pushed aggressively for the so-called renewable portfolio standard — or RPS.
No southern state or state bordering the deep South has approved an RPS, in large part because of the scarcity of wind power, currently the most available and cost-effective renewable energy alternative to carbon-based or nuclear-powered electricity generation.
Southern Republicans mounted an aggressive effort to block the federal RPS, fearing it would lead to increases in energy rates in their states as utilities would be forced to purchase renewable energy sources elsewhere and at marked-up rates.