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Raising Fuel Efficiency

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Photo by gisleh from Flickr.

On Friday, the US House of Representative voted 235-181 to approve a major energy bill that would substantially raise fuel efficiency standards for the first time since 1975 when the OPEC oil embargoes, triggering oil shortages and long-lines at the pump, drove Congress to increase fuel economy.

Under the new bill, fuel economy for cars and light trucks would rise 40% from its current level of roughly 25 miles per gallon to 35 miles per gallon by the year 2020. While the change would be significant, it’s still a far cry from the much more ambitious aim of European nations to achieve 38 miles per gallon for gasoline-fueled vehicles by 2008. Japan, another country with fuel efficiency standards, is more in line with the Europeans, aiming for 35 miles per gallon by 2010.

In addition to increased fuel efficiency, the bill also mandates the introduction of 36 billion barrels of ethanol into the national fuel mix by 2022. It also includes new energy efficiency standards for buildings, which account for nearly 40% of the nation’s energy use.

Two other provisions passed by the US House of Representatives will face stiff resistance when it goes to the Senate, where a filibuster is almost certain. One is the creation of a Renewable Portfolio Standard which would require power companies to generate 15% of their electricity through renewable sources by 2020. Another is a tax package that would repeal $13 billion in subsidies for oil companies and redirect the money towards research and development for renewable energies.

President Bush has promised to veto any bill that repeals subsidies for the fossil fuel sector, and many senators oppose measures that divert money away from large energy companies.

So we’re probably going to see the bill broken down into pieces and passed separately in order to avoid a veto on the whole package. What is likely to happen is that the Senate will assemble the 60 votes required to overcome a filibuster and pass the fuel efficiency standards and the ethanol component, and wait to work on the Renewable Portfolio Standard and the tax package at a later date, probably some time in the spring.

But you should still keep your heads up – green winds are starting to blow. We may be experiencing a true shift in US environment and energy policy.

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