House passes energy bill, which would be good for farmers

By Jean Caspers-Simmet

DES MOINES — The U.S. House last week passed an energy bill with many provisions that will be good for Midwest agriculture, says Mark Salvador, Iowa Farm Bureau Federation national policy adviser.

What happens next to the bill, which faces strong opposition in the Senate and a veto threat from President Bush, is unclear.

Speaking at the Farm Bureau Federation annual meeting in Des Moines, Salvador said that the House passed an energy bill in August that included $16 billion in renewable fuels tax incentives. In June, the Senate drafted a bill with a Renewable Fuels Standard that mandated 36 billion gallons of domestic alternative fuels by 2022 and increasing the corporate average fuel economy standards for motor vehicles.


"These were two dramatically different bills, and the House and Senate spent a long time negotiating, but negotiations were never completely fruitful," Salvador said. "Eventually the House decided to start over, and that’s the bill that passed this week."

The House bill increases the Renewable Fuels Standard to 36 billion gallons by 2022 and requires that a certain portion come from corn-based ethanol, cellulosic ethanol, agricultural biodiesel and other biodiesel.

The bill creates $21 billion in new tax incentives for renewable fuels. All motor vehicles must meet fuel economy standards of 35 miles per gallon by 2020.

A bill provision, which Salvador describes as a lightening rod, is the Renewable Electricity Standard, requires electric utilities to generate 15 percent of their energy portfolios from renewable fuels.

The $21 billion in tax incentives will be paid for in part by the repeal of $13.5 billion in oil industry tax breaks.

Bush and Senate Republicans are opposed to Renewable Electricity Standard and to repealing oil industry tax breaks to pay for renewable energy tax incentives. They say both will drive up the cost of energy.

The House approved the bill 235 to 181, which is not a veto-proof margin, Salvador said. Just 14 Republicans voted for the bill. Farm Bureau supports the bill.

When the Senate will move on the bill remains to be seen because it will take up the farm bill in the coming weeks.


"It’s not clear how the energy bill will be dealt with," Salvador said. "In the Senate, Republicans have drawn a hard line against the RES and the tax offsets. If they strike those two provisions and bring it back to the House, there could be something the president would sign, and it would still have the bigger RFS."

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