House leans green on sweeping energy bill

The House gets agressive, passes sweeping renewable enregy bill that faces a tough battle in the Senate and has drawn veto threats from the White House.

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WASHINGTON (AP) -- It surprised even some environmentalists when a $21 billion tax package, much of it new taxes on oil companies, emerged in the House Democrats' energy bill. A requirement on utilities to use renewable fuels was expected to be abandoned as well.

They could cause problems in the Senate, prompt a presidential veto and jeopardize a historic push for the first major increase in automobile fuel economy in 32 years, some lawmakers worried.

But House Speaker Nancy Pelosi pressed ahead with the entire package, taxes and all. "We have to pay for the bill," she told reporters.

And for the time being, Pelosi's instincts appeared to have been rewarded.

The House passed the energy legislation by a solid -- though not veto-proof -- 235-181 margin, sending it to the Senate for likely action soon.

Senate Majority Leader Harry Reid said he will try to bring it up Friday. Senate Republicans said they will try to strip out the new oil taxes and a requirement that utilities generate more electricity from windmills, solar panels and other renewable sources.

"I don't think anybody can predict what will happen in the Senate," Pelosi conceded after the vote, but added confidently -- and with a hint of possible further compromise: "We will have a bill."

The House-passed legislation would roll back $13.5 billion in tax breaks enjoyed by the five largest U.S. oil companies with the money to be used for tax incentives for development of renewable energy sources like ethanol from grasses and wood chips and biodiesel and for energy efficiency programs and conservation.

It also would impose new efficiency standards for appliances, building construction and require expansion of the use of ethanol sevenfold to 36 billion gallons a year by 2022 with 21 billion gallons coming from cellulosic feedstock such as wood chips and prairie grass.

But the centerpiece of the bill is a requirement to boost automobile fuel economy by 40 percent to an industry average of 35 miles per gallon by 2020, the first such action since 1975, when Congress first enacted the federal auto fuel economy requirements.

Pelosi garnered enough support to assure passage in the House by working out a deal with Rep. John Dingell, D-Mich., a longtime staunch protector of the auto industry. Dingell more than a year ago warned auto executives the tide had turned on fuel economy and it was inevitable that stricter requirements were in the offing. He got some concessions to help the industry in return for his support of the bill.

White House Press Secretary Dana Perino called the House-passed bill "misguided" and unacceptable, and said President Bush would veto it if the bill is not changed.

"Their proposal would raise taxes and increase energy prices for Americans. That is a misguided approach and if it made it to the president's desk, he would veto it," said Perino.

The White House in an earlier statement called the proposed taxes on the oil companies unfairly "punitive" to a single industry and said the requirement for electric utilities nationwide to use renewable fuels such as wind and solar to generate 15 percent of their electricity would be harmful to some regions where there is little wind or solar energy potential, resulting in higher electricity costs.

But Democrats characterized the legislation as "a new direction" in U.S. energy policy away from dependence on fossil fuels.

"We will send our energy dollars to the Midwest, not the Middle East," declared Pelosi. "The point of this is, are we about the past or are we about the future."

But Republicans said the actions amount to government mandates that would lead to higher energy prices while doing little to spur production of more domestic oil or natural gas -- fuels they say will remain essential for decades to come.

"There's nothing in here that's going to lower gas prices in America ... nothing that is going to help American families deal with heating costs this winter ... nothing to increase production," complained Republican leader John Boehner of Ohio.

Senate Republican leader Mitch McConnell of Kentucky said an energy bill could pass the Senate, but without the "twin millstones of tax hikes and utility bill increases around its neck."

Reid told reporters he will move quickly to take up the bill. When asked about its prospects, the Nevada lawmaker said, "I don't know. We're going to try very hard."