Plans Sputter to Strip Ethanol Rules From Senate Energy Bill

Senators from both coasts lost their effort Tuesday to strip from energy legislation an ethanol provision that they warned would lead to gasoline price spikes.

The Senate bill, heading toward a final vote later this week, would significantly increase the amount of ethanol--made from corn and other crops--added to gasoline to help reduce pollution. But the lawmakers from California and New York said their constituents would face unfair gasoline price hikes because of the costs of shipping ethanol from the Midwest.

After a debate that pitted Democratic colleagues from different regions against one another, the vote came down to simple arithmetic: opponents of the ethanol provision were outnumbered by Corn Belt senators whose home states would reap a windfall from it.

Senators voted overwhelmingly--68 to 31--to keep the ethanol provision in the bill.

The vote was the latest to leave a group of senators disappointed with the energy legislation. Last week, senators rejected drilling in the Arctic National Wildlife Refuge, a key component of the energy plan President Bush proposed almost a year ago. Last month, the senators voted down tougher miles-per-gallon standards for vehicles, the top priority of environmentalists and most Democrats.

Having rejected these two high-profile proposals, the Senate is moving to wrap up work on the legislation, which remains packed with measures to promote conservation and production. The final vote could come Thursday.

The 500-page-plus bill includes $14 billion in tax breaks to, among other things, encourage consumers to buy fuel-efficient hybrid cars. The measure provides a federal loan guarantee to spur construction of a $20-billion, 2,100-mile pipeline to carry Alaskan natural gas to the lower 48 states.

It would set new energy efficiency standards for traffic lights, establish new efforts to reduce school bus idling and create a program aimed at getting drivers out of their cars and onto bicycles.

Collectively, the proposals left in the bill would reduce energy use by 2% by 2020, some experts say. “We’re only doing part of what needs to be done,” said Steven Nadel, executive director of the American Council for an Energy Efficient Economy, a Washington-based think tank.

Senators are anxious to pass the bill and move to the next phase: House-Senate negotiations that could produce a compromise measure. The House last year passed a plan that closely followed Bush’s plan.

Ambitious Bill Becomes Modest

Lawmakers from both parties are striving to pass the first comprehensive energy bill in a decade, despite diminishing enthusiasm for what the final product might contain.

“If this had been developed and presented as a modest bill, people would be comfortable with it,” said David Nemtzow, president of the Alliance to Save Energy, a bipartisan coalition of business, consumer and environmental leaders. “It was presented by the president and leaders of each house as a major bill. . . . So expectations were high, and that’s where it fails.”

Sen. Dianne Feinstein (D-Calif.) has vowed to vote against the overall bill if the ethanol mandate remains. On Tuesday, she assailed the provision as “unconscionable, selfish and parochial” public policy.

She called it a hidden tax that could cost California drivers 10 cents a gallon at the pump. She also called attention to a House hearing Tuesday that alleged possible ethanol industry collusion to set prices.

The testimony at the hearing led Rep. Doug Ose (R-Sacramento), chairman of the House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, to request a Federal Trade Commission investigation.

Sen. Charles E. Schumer (D-N.Y.) joined Feinstein in the fight against the ethanol provision. “Remember the California electricity crisis?” Schumer said, suggesting that the ethanol requirement could lead to the same kind of stinging price increases and supply shortages that hit the West Coast last year.

But Senate Majority Leader Tom Daschle (D-S.D.), chief sponsor of the provision, contended that ethanol could be used as a smog-fighting substitute for MTBE, which helps gas burn cleaner but has been blamed for fouling water supplies. He also disputed predictions of big price spikes from its use.

“I’ll tell you what’s going to be disruptive,” Daschle shot back. “What’s going to be disruptive is if we phase out MTBE . . . and we don’t have anything in its place.”

The provision calls for tripling the amount of renewable fuels, most likely ethanol, in gasoline to 5 billion gallons by 2012 while phasing out over four years the use of MTBE (methyl tertiary butyl ether).

The Senate bill still includes a number of initiatives that were part of Bush’s energy plan, including $2 billion for technology to make coal-fired power plants less polluting and a cap on the nuclear industry’s liability for accidents.

The measure also would require utilities to generate more electricity from such alternative sources as solar and wind power. But environmentalists say the provision includes so many exemptions, including public power companies, that it would lead only to modest change.

Among the lesser-known provisions, the bill would direct regulators to establish new efficiency standards for vending machines, commercial refrigerators, ceiling fans, battery chargers and power supplies for consumer products. The bill seeks to reduce the amount of electricity used by TVs, VCRs, computers and microwaves when they’re not in use.

It establishes the “Next Generation Lighting Initiative,” a government-industry effort to develop more efficient lighting systems. It provides for the creation of a new federal office to watch out for consumer interests in energy markets.

And it would set aside about $5 million to establish 10 pilot projects in cities yet to be selected to promote bike riding as an alternative to driving.

“Every possible approach must be considered in order to solve our energy problems,” said Sen. Richard Durbin (D-Ill.), who proposed the program. “Something as simple as traveling by bike instead of car can play an important role in reducing our dependence on foreign oil.”