Iowa Public Television


Ethanol Fares Well in New Energy Plan

posted on July 29, 2005

Hello, I'm Mark Pearson.

Congress scurried to finish a host of legislative measures this week, including long-contested bills on trade and energy policy. Lawmakers were anxious to take action before breaking for their August recess.

Both the Central American Free Trade Agreement and a national energy plan won approval, scoring major victories for President Bush in the process.

Passage of the comprehensive energy legislation was an especially gratifying win for the president. He had been pressing Congress for energy reform since taking office more than four years ago.

Even so, the bill's price tag was twice what the White House was seeking ... and its generous tax breaks for a diverse mix of energy sources assures the new policy has something for everyone.


Ethanol Fares Well in New Energy Plan

The national energy plan emerged from conference committee early in the week and quickly moved through Congress.

The bill passed the House on Thursday by a wide margin and was approved by the Senate on Friday. It now goes to the president for his signature.

The stalemate over the legislation, which took Congress more than four years to pass, was broken only after lawmakers removed its most contentious proposals. Among those were:

--A liability waiver for the manufacturers of MTBE, an oxygenated gasoline additive that's been banned in some states as a cancer-causing pollutant.

--And, one of the president's top energy goals of opening the Arctic National Wildlife Refuge in Alaska to oil drilling.

At the heart of the new energy plan are billions of dollars in tax incentives to energy companies. Critics in the House called the bill "royalty relief" for the nation's wealthiest energy firms. The legislation includes $14.5 billion in tax breaks, including $2.6 billion for the oil and gas industries. Just half that amount, $1.3 billion, was earmarked for conservation and efficiency programs.

Opponents also complained the bill does nothing to dampen high gas prices at the pump or lessen dependence on foreign oil.

But supporters argue the plan fosters conservation, as well as production of alternative energy sources. Specifically, the bill calls for doubling the use of corn-based ethanol in gasoline to 7.5 billion gallons a year by 2012.

In addition, a special provision added to the bill by House Speaker Dennis Hastert gives tax credits to gas stations that install equipment accommodating E85 -- an ethanol-based fuel additive that its promoters say is up to 50 cents a gallon cheaper than unleaded gasoline. The credit would cover 30 percent of the installation costs at a given station up to $30,000. Currently, less than one percent of the nation's 180,000 gas stations are E85 equipped.


Tags: biofuels Congress energy policy ethanol George W. Bush government news reform renewable fuels