updated 6/24/2005 11:01:26 AM ET 2005-06-24T15:01:26

The Senate neared completion of a sweeping national energy agenda late Thursday that would promote conservation and environmentally friendly fuels. But senators rejected a last-minute bid to substantially raise automobile fuel economy over the next decade.

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The massive energy bill, which was essentially completed but awaits a final vote next Tuesday, contrasts with a bill more favorable to oil and gas producers and approved by the House in April.

If the Senate, as expected, passes the bill next week, it will set the stage for difficult, possibly lengthy negotiations with the House later this summer.

“It’s going to be a tough conference (with the House),” said Sen. Pete Domenici, R-N.M., who will lead the Senate negotiations with the other chamber.

Late Thursday, Sen. Dick Durbin, D-Ill., tried to put into the bill a provision that would require a nearly 50 percent increase in automobile fuel economy to a fleet average of 40 miles per gallon over the next decade. He said, “Instead of moving forward, we have been going backwards” as automobiles become less fuel efficient.

Transportation accounts for two-thirds of the nation’s oil use and most of that is consumed by motor vehicles. Durbin argued there’s no way to reduce U.S. reliance on foreign oil without more fuel efficient automobiles.

‘Politically inspired’
But Sen. Christopher Bond, R-Mo., called Durbin’s proposal “politically inspired” and said it would force motorists into smaller cars, “result in more fatalities” and lead to lost auto industry jobs. Durbin said the technology is available to increase fuel economy without making vehicles smaller and cited as an example the popular gas-electric hybrid vehicles now showing up in showrooms.

But Durbin’s proposal failed 67-28. Instead, the Senate passed an industry-friendly fuel economy amendment that does not call for any new federal standards. It imposes a dozen considerations — including safety and economic impact — that the Transportation Department must consider before it boosts auto fuel economy rules. Environmentalists have maintained this may make it harder for future administrations to boost auto fuel economy.

The Senate bill, cobbled together during months of behind-the-scenes discussions and then two weeks of floor debate, includes $18 billion in energy tax incentives, more than twice the amount approved by the House. About 40 percent of the tax breaks would go for conservation, renewable energy and programs promoting alternative motor fuels.

The Senate on Thursday added to the largess approving $1 billion over four years to help states that have offshore oil and gas production pay for environmental restoration of coastal estuaries. Most of the money which had been sought by Sen. Mary Landrieu, D-La., would go to four Gulf coast oil producing states.

The legislation also calls for doubling ethanol use in gasoline, a far more ambitious expansion of ethanol production than the House approved, but an idea that enjoys wide bipartisan support.

Arctic drilling
The bill’s total cost, taking into account new revenue and non-tax-related spending, would be about $16 billion, nearly three times what the White House said it would like to see. The House measure would cost $8 billion.

The legislation avoids some of the most divisive energy issues, including President Bush’s call for oil drilling in the Arctic National Wildlife Refuge in Alaska and a provision to give the makers of the gasoline additive MTBE liability protection from environmental lawsuits.

Both issues were sure to attract a filibuster which Domenici, the bill’s Republican floor leader, said would be tantamount to torpedoing any chance of the legislation passing the Senate. The MTBE liability provision, included in the bill the House passed in April, was blamed for scuttling energy legislation two years ago.

Senators have acknowledged that the bill, expected to run to 1,000 pages when completed, would do nothing in the short term to drive down high gasoline and other energy prices or significantly reduce America’s growing reliance on foreign oil.

But the legislation’s supporters said that through loan guarantees, tax incentives and other programs, it will spur the growth of non-fossil energy industries. They include production of ethanol, wind power and the use of biofuels made from garbage, plants and wood remnants — all initiatives that eventually would reduce the demand for foreign crude oil.

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