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Vol. 12, No. 51 Week of December 23, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Energy bill passes

Delegation herds legislation into law; includes Alaska-friendly provisions

Rose Ragsdale

For Petroleum News

President George W. Bush signed into law Dec. 19 bipartisan legislation sponsored by Sen. Ted Stevens, R-Alaska, to increase fuel economy for cars and light trucks to 35 miles per gallon, or 40 percent, by the year 2020 and require a fivefold increase — 36 billion gallons — in production of biofuels, such as ethanol, by 2022. The measure raises fuel economy standards for cars for the first time since 1975.

The bill, the final Senate substitute for a House-passed energy bill (H.R. 6), passed the U.S. House of Representative Dec. 18 by a 314-100 vote; the Senate approved it Dec. 13 by a vote of 86 to 8.

But the measure crafted by Stevens also protects the desires of Alaskans for vehicles capable of hauling and holding heavier loads and includes greater flexibility by keeping dual standards between cars and light trucks.

Stevens introduced the legislation, S.183, to increase fuel economy standards for cars and light trucks and pushed the Senate to adopt a bipartisan agreement in June as part of H.R. 6.

The legislation also requires car and light truck fuel economy standards to continue to increase between 2021 and 2030. The new standards should save more than 1.5 million barrels of oil a day by 2025, according to congressional estimates.

Fuel standards for commercial trucks?

Among provisions of the new law is one proposed by Sen. Lisa Murkowski, R-Alaska, earlier this year in her energy efficiency REFRESH Act. It requires a study of potential fuel savings that could be achieved by enacting a Corporate Average Fuel Efficiency CAFÉ standard on heavy commercial trucks, weighing more than 10,000 pounds.

The measure also includes a host of provisions to further renewable energy development including a Renewable Energy Deployment Grant program that Murkowski authored with Stevens. That measure will provide federal grants of up to 50 percent of the cost of building a wide variety of renewable electricity projects: wind, geothermal, ocean (wave, tidal and current), biomass, solar, landfill gas and small hydroelectric projects in Alaska. The grant program, when funded, should help with the installation of proposed projects such as a Fire Island wind farm, and ocean energy projects in Cook Inlet or Southeast Alaska.

Renewable fuels targeted

The legislation also includes a federal grant program specifically to help with construction of geothermal energy projects in areas of high electricity costs like Alaska, and could help with installation of geothermal projects from Mount Spurr to Naknek and Unalaska to Chena Hot Springs; an amendment co-authored by Murkowski with Sen. Daniel Akaka, D-Hawaii, that provides major federal aid to ocean energy development, including the establishment of at least one and perhaps six national ocean research centers to fund research on development of technology that will generate power from wave and tidal energy; and several sections to aid in the capture and storage of carbon dioxide, a greenhouse gas, including a provision that might help the Agrium coal gasification project at Kenai.

The measure also increases the renewable fuels standard to require annual production of 36 billion gallons of biofuels (most from non-corn sources) by 2022, compared with current production of about 7 billion gallons a year, and a host of other energy saving provisions.

Despite their support for the fuel economy provisions and the overall bill, Stevens and Murkowski criticized Congress for failing to address America’s need for increased domestic energy production.

Gas pipeline coordinator given latitude

In one of a few provisions that might increase traditional domestic energy production, Murkowski and Stevens included a measure that makes improvements in the operation of the Alaska Gas Pipeline Coordinator’s Office to help speed regulatory approval for construction of an Alaska natural gas pipeline project. The provision allows the pipeline coordinator to waive federal personnel rules so the office can hire staff more quickly and includes a provision granting the coordinator the right to assess fees from a successful applicant to pay for permit reviews and regulation of construction of a gas project that would move Alaska natural gas to market.

The American Council for an Energy-Efficient Economy has projected that the bill will reduce energy use by 7 percent and carbon dioxide emissions by 9 percent in 2030. U.S. Rep. Don Young, R-Alaska, meanwhile, introduced H.R. 4773, the Renewable and Hydroelectric Energy for Alaska’s Tomorrow Act (Renewable HEAT Act) Dec. 17. This bill, which Young said targets possible solutions for high energy costs in rural Alaska, would authorize the U.S. Department of Energy to make grants to carry out renewable energy and hydro-electric projects. The bill was referred to committee.

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