FEDERAL ENERGY BILL

Congress is again trying to pass a federal energy bill to promote development and use of renewable fuels, and address other long-term energy issues in the U.S. The bill would provide tax cuts and subsidies to energy companies that develop renewable fuels, seeks to expand domestic oil and natural gas drilling, encourages the construction of new refineries, and prevents states from requiring specialized fuel blends that are different than federal requirements. On April 21, the U.S. House of Representatives passed a Federal Energy Bill by a vote of 249 to 183.

Following are some of the highlights of the Federal Energy Bill that passed the U.S. House:

  • Require refiners to use 5 billion gallons of ethanol in gasoline blends by 2012, which is 2.5 times greater than the current requirement, and 20 percent higher than the current amount of ethanol produced in the U.S. This would be phased in over 8 years, starting with a requirement of 3.1 billion gallons of ethanol used in 2002, and working up to the 5 billion gallons by 20012. There would also be Federal grants to encourage the development of ethanol from sugar cane, biomass, and other sources. Currently, nearly all ethanol produced in the U.S. is derived from processing corn.
  • Provide approximately $8.1 billion in tax breaks over the next 10 years to oil, gas, electric, and other providers of utilities.
  • More Federal control over energy issues, electric power lines, and fuel requirements.
  • Open the coastal plain of the Artic National Wildlife Refuge in Alaska to oil exploration and drilling.
  • Expand national daylight savings time by two months, with daylight savings time starting the first Sunday in March and ending the last Sunday in November. Currently daylight savings time starts the first Sunday in April and ends the last Sunday in October.
  • A tax credit of up to $2,000 for homeowners that add insulation and install more energy-efficient doors and windows in their home.
  • By the year 2015, bans the use of gasoline blends containing MTBE, a fuel additive that has been used extensively in the past couple of decades, and has been linked to drinking water contamination in some instances. States could choose to implement the MTBE ban earlier, if they desire.
  • Allocate up to $7.1 billion over an eight-year period to help cover costs of companies that switch from producing MTBE to production of other energy sources. It is interesting that much of the MTBE production in the U.S. is in Texas.
  • Provide liability protection for companies that make MTBE, regarding lawsuits associated with groundwater contamination and clean-up costs.

The Federal Energy Bill now goes to the U.S. Senate, where it stalled out in 2004 after being passed by the U.S. House. The main opposition in the Senate last year was the last provision listed above, regarding current and future liability protection for companies that make MTBE. This is likely to be a major ‚Äústicking point‚ÄĚ again this year when the Federal Energy Bill is debated in the U.S. Senate. Let‚Äôs hope that Congressional leaders can reach some compromise on the MTBE issue this year and pass a Federal Energy Bill. The lack of a new Federal Energy Bill not only affects the ethanol industry, but also affects development of soy diesel, wind energy, biomass, and other alternative energy resources in the United States.

Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.