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Energy Battle on Capitol Hill

Prepared by: Robert McMahon, Editor
Updated: January 19, 2007

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The Republican-controlled 109th Congress concluded in December with a gesture for U.S. energy independence—approving deep-sea drilling in 8.3 million acres (Miami Herald) in the Gulf of Mexico. The new Democrat-dominated legislature has further raised the volume on “energy security.” The House of Representatives voted on January 18 to repeal tax breaks (WashPost) oil and gas companies received in 2004 and use some of the billions of dollars in expected new revenues for alternative energy plans. The measure’s fate in the Senate is unclear. House Speaker Nancy Pelosi (D-CA) has called on the committees with oversight of energy to pass legislation (MercuryNews) on energy independence and global warming by July.

Overall, numerous initiatives from both parties are likely to come before a slew of committees responsible for everything from taxes to the environment. This Backgrounder looks at the energy issues facing the 110th Congress.

Policy experts expect the most significant energy package to emerge from the agriculture committee as it undertakes talks on renewing the 2002 Farm Bill. The previous bill included a title on energy for the first time, with incentives for ethanol and other biofuels. Despite the overriding issue of farm supports and their implications for international trade in the new bill, some reports say energy is attracting the most attention (NYT) at this point. This is because of excitement over corn-based ethanol as a partial substitute for gasoline. President Bush last year warned in his State of the Union address of the nation’s “addiction” to foreign oil and requested funding for a range of alternatives fuels, including $150 million for biofuel research. Congress had already mandated greater use of corn-based ethanol but Bush’s mention of materials such as switchgrass for biofuel “really started people thinking,” (Bloomberg) said Rep. Collin Peterson, (D-MN), chairman of the House Agriculture Committee. Peterson has decided to create a new subcommittee with energy as part of the title for the first time.

But all is not quiet on the farm. In the Senate, tensions over corn’s new role (Des Moines Register) as an energy source were apparent in the year’s first meeting of the agriculture committee. With many experts acknowledging the small share corn-based ethanol will have in replacing the country’s demand for fuel, more attention is shifting to research on cellulosic ethanol, derived from matter such as plant stalks and switchgrass. Sen. Tom Harkin (D-IA), who chairs the Senate Agriculture Committee, is emphasizing such non-food crops for fuel to help ease disputes over use of corn. One of Silicon Valley’s leading venture capitalists, Vinod Khosla, believes biofuels are the way to U.S. energy independence. He told a recent CFR meeting that, according to his calculations, devoting fifty million acres of farmland to biofuels could replace all of the country’s gasoline needs.

Still, veteran energy policymakers say it is unrealistic to assume such fuels can replace petroleum demand in the short term. A recent CFR Independent Task Force on energy, for example, urges expanded domestic oil exploration, in Alaska or in coastal waters, as well as greater investment in alternative fuel technologies. The vice chairman of Goldman Sachs, Robert D. Hormats, told a Senate Energy Committee meeting this month that calls for energy independence “offer a false promise to the American people” (Word doc) but recommends steps at ending heavy U.S. reliance on oil such as making cars more fuel-efficient. Most experts doubt comprehensive energy legislation will emerge from Congress this year.

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