One year later, energy law still controversial

By ROSALIE WESTENSKOW, UPI Correspondent  |  Dec. 16, 2008 at 3:54 PM
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One year after President Bush signed a massive energy bill into law, debate still rages as to whether it was ultimately a feat or a failure.

Friday marks the one-year anniversary of Bush signing the Energy Independence and Security Act, Capitol Hill's most consequential action on the energy policy front in the past year.

Controversy has surrounded the law since its enactment, particularly its biofuels provisions and increased fuel-efficiency requirements for vehicles.

Despite holding hearings questioning the effects of the law, Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M., still regards it as the committee's greatest success in the energy arena since last December, said his spokesman, David Marks.

"It was only 12 months ago that we passed for the first time in three decades very strong (fuel efficiency) standards and a biofuels mandate … and energy efficiency standards," Marks told United Press International. "These were very important."

For the first time since 1975 Congress voted to increase the Corporate Average Fuel Economy standards for cars and light trucks, pushing it up to 35 mpg by 2020. Environmentalists were happy to see the raise -- although many said it wasn't nearly high enough. Economist Peter Morici, professor at the University of Maryland, agrees.

"We could have had more ambitious targets," Morici said.

If Congress had passed higher targets sooner, it might have helped the Big Three automakers avoid the disaster that currently besets them by pushing the companies to produce vehicles with mileage comparable to those made by their foreign competitors, Morici said.

Others disagree, arguing the increase in CAFE standards spurred on the economic crisis currently looming over the Big Three, who are now hoping for an imminent bailout. By forcing automakers to make more efficient cars, government has undercut Detroit's ability to produce the kind of cars they're good at making, said Christopher Horner, senior fellow at the Competitive Enterprise Institute, a public policy organization with free-market ideals.

"The American manufacturers are very good at producing certain products people want from them, like jeeps and minivans," Horner told UPI. "They are not good at producing products people want to buy from other manufacturers."

But others say today's problems stem from economy-wide difficulties, such as the drastic drop in consumer confidence, and not legislation at all.

"Keep in mind, these standards won't come into effect until 2011," said Charles Territo, spokesman for the Alliance of Automobile Manufacturers, an association of 11 companies including the Big Three.

Whether the CAFE standards ultimately help or hinder Detroit, enacting them sent a positive signal internationally about the United States' energy future, said Branko Terzic, member of the National Petroleum Council, the advisory body for the U.S. secretary of energy.

Passing the standards "sent the signal to OPEC that we were ready and willing to reduce our demand and reduce our use of oil," Terzic said. "I think that was positive."

The Energy Independence and Security Act's biofuels provisions also have been the subject of much debate. The law set drastic increases for future biofuels production, requiring an eight-fold increase overall in annual production, from 4.7 billion gallons in 2007 to 36 billion in 2022. That sparked criticism this spring as a number of experts pegged the sharp rise in global food prices on increased ethanol production.

With growing doubts about whether corn-based ethanol actually decreases carbon emissions -- fueled by two articles published in a February edition of the journal Science -- the provision's wisdom is becoming doubtful, said Joseph Stanislaw, independent senior adviser to Deloitte Services, an energy and resources industry group.

"Traditional corn-based ethanol puts demands on other resources, and it's debatable whether it reduces CO2 emissions," Stanislaw told UPI. "We need to encourage breakthroughs, not something that just perpetuates the status quo."

Ethanol proponents argue the models used in those studies still remain highly debated in the scientific community.

"Among scientists there is no consensus whatsoever on the models that are used to come up with these carbon (calculations)," said Brian Jennings, executive vice president of the American Coalition for Ethanol, a trade association that recently released a study that contradicts the findings in one of the Science articles.

Jennings also said time has debunked the food-ethanol connection, as corn prices have plummeted from their high of $8 per bushel to $3 today -- without a corresponding decrease in grocery bills.

"Why have food prices stayed high while oil and corn prices are falling? I think that's a question that should be posed to the food industry and grocery manufacturers," Jennings told UPI. "The answer is that commodity prices, like corn, constitute a small share of food prices: Eighty cents of every food dollar goes to labor, marketing, processing" and other expenses.

Ethanol proponents also say increased production of the fuel provides jobs for American workers and decreases the country's dependence on foreign oil, making the Energy Independence and Security Act a step in the right direction.

"The 2007 Energy Act represents a remarkable revolution in energy policy in this country," Bob Dinneen, CEO of the Renewable Fuels Association, an ethanol trade organization, said during a Senate hearing on the subject in February.

The RFA announced earlier this month that the industry is on track to produce 9 billion gallons of ethanol this year.

While not everyone agrees on the pros and cons of traditional ethanol, there's widespread approval of the Energy Act's attempt to jump-start production of "second generation" or advanced fuels.

It does so by encouraging the construction of infrastructure for renewable fuels and requiring that 21 billion of the 36 billion gallons mandated by 2022 come from non-food sources, such as algae or switchgrass. There's broad consensus, even among traditional ethanol opponents, that advanced fuels hold the potential to address a host of energy woes.

"I think they're a positive thing," Stanislaw said.

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