updated 12/6/2007 4:07:16 PM ET 2007-12-06T21:07:16

The House approved the first increase in federal automobile fuel efficiency requirements in three decades Thursday as part of an energy bill that also repeals billions of dollars oil company tax breaks and encourages use of renewable fuels.

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The bill, passed by a vote of 235-181, faces a certain filibuster in the Senate and a veto threat from the White House.

Democrats characterized the legislation as "a new direction" in U.S. energy policy away from dependence on fossil fuels. But Republicans said the actions amount to government mandates that would lead to higher energy prices, while doing little to produce more domestic oil or natural gas -- fuels they say will remain essential for decades to come.

"We will send our energy dollars to the Midwest, not the Middle East," countered House Speaker Nancy Pelosi, referring to the bill's emphasis on promoting renewable energy sources, especially ethanol, which would see a sevenfold increase by 2022 to 36 billion gallons a year.

"The point of this is, are we about the past or are we about the future," declared Pelosi, D-Calif.

Oil company taxes
The bill would roll back $13.5 billion in tax breaks enjoyed by the five largest U.S. oil companies with the money to be used for tax incentives for development of renewable energy, including cellulosic ethanol from grasses and wood chips and biodiesel, and to spur energy efficiency programs and conservation.

"There's nothing in here that's going to lower gas prices in America ... nothing that is going to help American families deal with heating costs this winter ... nothing to increase production," complained Republican leader John Boehner of Ohio.

The centerpiece of the bill is a requirement to boost automobile fuel economy by 40 percent to an industry average of 35 miles per gallon by 2020, the first such increase since 1975, when Congress enacted the federal auto fuel economy requirements.

Pelosi garnered enough support to assure passage by working out a deal with Rep. John Dingell, D-Mich., a longtime staunch protector of the auto industry. Dingell more than a year ago warned auto executives the tide had turned on fuel economy and it was inevitable that stricter requirements were in the offing. He got some concessions to help the industry in return for his support of the bill.

Veto threatened
The White House said if Congress passes the bill President Bush will be advised to veto it.

"The bill raises taxes in a way that will increase energy costs facing consumers," the White House said a statement, calling the new taxes on the oil companies unfairly "punitive" to a single industry. The White House also objected to the requirement for electric utilities nationwide to use renewable fuels such as wind and solar to generate 15 percent of their electricity, saying some regions can't comply with such a mandate without higher electricity costs.

Pelosi was determined to get the bill through the House this week with Senate action likely next week before lawmakers depart for the holiday recess.

Her decision to insist on including the tax increases on oil companies -- costing them $13.5 billion in taxes over 10 years -- surprised even some environmentalists and set the stage for a contentious fight in the Senate where Republican leaders have indicated they will try to strip it from the bill.

Senate Republican leader Mitch McConnell of Kentucky said Thursday an energy bill could pass the Senate, but without the "twin millstones of tax hikes and utility bill increases around its neck."

Senate Majority Leader Harry Reid of Nevada told reporters he will move quickly to take up the bill if it passes the House. When asked about its prospects, Reid said, "I don't know. We're going to try very hard."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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