According to sources close to the negotiation, the Senate’s renewable fuels provision may also be included in the comprehensive bill, although the final package is likely to be less aggressive than the Senate’s mandate for 36 billion gallons of biofuels by 2022.

Unfortunately, the fate of other key renewable energy provisions is still uncertain. President Bush opposes the renewable energy tax provisions in the House bill because those provisions are funded by repealing more than $15 billion in subsidies for the oil and gas industry. The Federal Renewable Portfolio Standard (RPS) provision in the House bill also faces stiff opposition from the utility industry and from President Bush. Speaker Pelosi has expressed her continued support for these two critical portions of the House bill but both provisions may be sacrificed in the final bill to gain 60 votes in the Senate. There are indications that House and Senate leaders may try to move these provisions into a separate legislative package, which would effectively kill both proposals.

It would be unfortunate if congressional leaders abandoned these progressive renewable energy provisions now. A recent report (pdf) from the Government Accountability Office (GAO) emphasizes the current imbalance in federal support for different energy sources. Between 2002 and 2007, the fossil fuel industry received $13.7 billion in direct federal subsidies, while renewable energy sources received less than $2.8 billion. No surprise there. And that’s just direct subsidies over the past five years; consider the myriad indirect subsidies over the long term, and you can bet that the divide is exponentially greater. The tax provisions in the House bill would go a long way towards reversing this divide at a critical time in the development of our domestic renewable energy sector. With the costs of generating renewable energy falling, and public interest in alternative energy sources rising, this is the time to focus our resources on advancing the industry. Unfortunately looks like the current energy bill compromise will only further perpetuate the historical imbalance in federal support for different energy sources; if current production and investment tax credits for renewable resources aren’t extended it will actually be a dramatic step backward for the renewable energy industry.

Google Inc (GOOG.O) said on Tuesday it plans to spend hundreds of millions of dollars to help drive down the cost of electricity made from renewable energy below the price of coal.

The project, dubbed Renewable Energy Cheaper Than Coal, is hiring dozens of engineers and targeting investment financing at advanced solar thermal power, wind power, enhanced geothermal systems and other new technologies, Google said.

The Web services and online advertising group will be a big customer for the project, running computers and networks on the electricity and selling back what’s left to the power grid.

“Our goal is to produce one gigawatt of renewable energy capacity that is cheaper than coal. We are optimistic this can be done in years, not decades,” Larry Page, Google’s co-founder and president of products, said in a statement.

The Wall Street Journal has more on Google’s renewable electricity initiative:

The company is primarily looking at solar, geothermal and wind technologies that show potential for making electricity so cheaply they can displace fossil-fuel plants. “We’re optimistic we can do this in years, not decades,” Mr. Page said, adding that even though lots of venture capital is flowing to renewable-energy start-ups and the government funds research through its national energy labs, “we don’t see a lot of investment in very aggressive, low-cost things” that could reshape the coal-heavy generation mix and reduce power-industry emissions.

One firm Google already is supporting is Makani Power, a company based in Alameda, Calif., working on high-altitude, wind-power systems. Mr. Page said he believes most of Google’s investments will be in technologies capable of producing grid-scale quantities of electricity that would use existing infrastructure like the high-voltage transmission system.

The New York Times editorial this morning asks: Where’s That Energy Bill?

Two months ago, Washington was filled with hope that Congress would produce an energy bill that would begin to address the two great challenges of oil dependency and climate change. Each chamber had approved respectable if incomplete measures that could be combined in one outstanding bill. Then the bills disappeared into the back rooms as Democratic leaders tried to negotiate a final product.

These talks have now reached a dangerous point. With both houses feeling pressure to do something — anything — to deal with high oil prices, there’s a real danger that one or more essential provisions could be dropped just for the sake of producing a bill.

According to the NYT, a number of important provisions in the competing House and Senate bills may be on the chopping-block, including the CAFE fuel efficiency provision, the renewable portifolio standard provision, and the production tax credit provisions. There’s also talk of moving the Renewable Fuels Standard to the Senate agriculture bill.

National Public Radio interviewed several key legislators on the status of the energy bill yesterday. Republican leadership in the Senate is blocking appointment of a conference committee to resolve differences in the House and Senate energy bills, but informal negotations are on-going. Speaker Pelosi hopes to have a compormise bill before Thanksgiving; Senate Majority Leader Harry Reid thinks they’ll be lucky to have a bill by Chirstmas break.

WattHead and Gristmill have more on what may be going on behind closed Capitol doors.