National Public Radio takes an in-depth look at the provisions of the new legislation, including an interview with Tom Carnahan (mp3), president of the Wind Capital Group. Mr. Carnahan discusses the likely impact of the failure to extend the production tax credit for renewable projects.

Meanwhile, on a related issue, EPA has just rejected California’s request for a Clean Air Act waiver to implement tighter carbon dioxide emissions standards for vehicles. EPA’s justification? We like the fuel economy standards in the new energy legislation better:

The Environmental Protection Agency on Wednesday slapped down California’s bid for first-in-the-nation greenhouse gas limits on cars, trucks and SUVs, denying a request for a waiver that would have allowed those restrictions to take effect.

“The Bush administration is moving forward with a clear national solution – not a confusing patchwork of state rules,” EPA Administrator Stephen L. Johnson told reporters on a conference call. “I believe this is a better approach than if individual states were to act alone.”

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In explaining his decision, Johnson cited energy legislation approved by Congress and signed into law Wednesday by President Bush. The law requires automakers to achieve an industrywide average fuel efficiency for cars, SUVs and small trucks of 35 miles per gallon by 2020 – the first increase in the federal requirement in 32 years. That law“achieves the greatest greenhouse reductions in the history of the United States,” Johnson said, and is preferable to a state-by-state approach.

Governor Schwarzenegger has already indicated that California will appeal the determination.

UPDATE: The L.A. Times has more on EPA’s waiver request denial as does Green Car Congress. EPA’s explanation of its decision is here.

Just when it looked like the House had abandoned plans for a federal renewable portfolio standard (RPS) and an important renewable energy tax package, Speaker Nancy Pelosi announced that both measures will be included in the final bill. According to the AP:

House Speaker Nancy Pelosi intends to push ahead with a $21 billion tax package, including repeal of tax breaks for major oil companies, as part of an energy bill, aides to the speaker said Tuesday. Democratic leaders circulated a summary of the legislation that includes the new taxes as well as a requirement for a 40 percent
increase in automobile fuel efficiency, a huge increase in the use of ethanol as a motor fuel, and a mandate for utilities to use renewable fuels.

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The House draft bill, expected to come up for a vote as early as Thursday, calls for repealing $13.5 billion in tax breaks given to major oil companies in 2004 and 2005 and another $7.5 billion in various non-energy tax increases and adjustment to raise revenue needed for the new energy programs, aides said. They spoke on condition of anonymity because a final bill was still being crafted. “We are repealing tax breaks for profit-rich oil companies so that we can invest in clean renewable energy” a summary notice to Democratic lawmakers said. Drew Hammill, a spokesman for Pelosi, confirmed that the energy package will include the sizable tax provision. “It’s in there,” he said.

The Speaker’s announcement has set off a new round of chest-thumping rhetoric from politicians opposed to both measures. E&E Daily reports that Republican Senators are threatening “war” (subscription required) if the legislation repeals tax subsidies previously handed-out to oil and gas companies or includes a federal RPS :

Sen. Pete Domenici (R-N.M.), the top Republican on the Senate Energy Committee, said the auto mileage and biofuels provisions are “great for America,” but he thinks the other two additions sully the bill. “If it comes over here, we have no alternative but to have war,” he told reporters. “I believe the bill will not pass with those two provisions on it,” Domenici added. “We will do everything we can to see that it doesn’t.” Sen. Kay Bailey Hutchison (R-Texas) predicted the bill would not pass with the tax and utility language, and Senate Minority Leader Mitch McConnell (R-Ky.) has also voiced opposition.

And the White House has taken several opportunities this week to re-emphasize the President’s opposition to legislation with either measure. Energy Secretary Samuel Bodman recently told reporters that “it is wrong to single out an industry, the oil industry or any industry” for new taxes (although it’s OK, apparently, to single out the oil industry for favorable tax subsidies). And earlier this week in a letter to Speaker Pelosi, Allan B. Hubbard, director of the National Economic Council, threatened a Presidential veto, saying that “it appears Congress may intend to produce a bill the President cannot sign.”

At the very least, democrats’ move on the tax measure will likely delay any action on the energy bill, according to the Wall Street Journal (subscription required).

Hill Heat has the summary of the new energy bill circulated by democratic leaders.

More to come as negotiations on this bill continue. In the meantime, someone should look into the potential for siting one of these in D.C. – you won’t even need the solar panels.

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.

The Senate bill, H.R. 6, was passed on June 21, 2007.

the House bill, H.R. 3221, was passed on August 4, 2007.

There are a number of major substantive differences between the two bills, and it remains to be seen whether a conference committee can reach a compromise that will meet with approval in both the House and Senate.

Some of the major issues to be resolved in committee include:

• Federal Renewable Portfolio Standards (RPS): The House bill requires utilities to produce 15% of their energy from renewable resources. A similar amendment to add a federal RPS to the Senate bill was blocked in the Senate.

• CAFE Standards: The Senate bill requires CAFE regulations that achieve a combined standard for passenger cars and light trucks of at least 35 miles per gallon by 2020. Efforts to improve CAFE standards were blocked in the House.

• Tax Provisions: The House bill provides $15B in new and extended renewable energy and energy efficiency tax credits, paid for primarily through repeal of tax-breaks and other subsidies for the oil & gas industry. Similar proposals were defeated in the Senate.

• Biofuels Mandate: The Senate bill includes mandates for renewable fuel use (36 billion gallons by 2022) and advanced biofuels (21 billion gallons by 2022). The House bill does not contain mandates for biofuels.

President Bush has already threatened to veto the current Senate legislation and has also indicated that he would veto any legislation that includes a federal RPS.