Energy Independence and Security Act
The Energy Independence and Security Act of 2007 (Pub.L. 110-140 originally named the CLEAN Energy Act of 2007) is an Act of Congress concerning the energy policy of the United States. As part of the Democratic Party's 100-Hour Plan during the 110th Congress, it was introduced in the United States House of Representatives by Representative Nick Rahall of West Virginia, along with 198 cosponsors. Despite Rahall becoming 1 of only 4 Democrats to oppose the final bill, it passed in the House without amendment in January 2007. When the Act was introduced in the Senate in June 2007, it was combined with Senate Bill S. 1419: Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007. This amended version passed the Senate on June 21, 2007. After further amendments and negotiation between the House and Senate, a revised bill passed both houses on December 18, 2007 and President Bush, a Republican, signed it into law on December 19, 2007 in response to his "Twenty in Ten" challenge to reduce gasoline consumption by 20% in 10 years.
The stated purpose of the act is “to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purposes.”. House Speaker Nancy Pelosi promoted the Act as a way of lowering energy costs to consumers. The bill followed another major piece of energy legislation, the Energy Policy Act of 2005.
The bill originally sought to cut subsidies to the petroleum industry in order to promote petroleum independence and different forms of alternative energy. These tax changes were ultimately dropped after opposition in the Senate, and the final bill focused on automobile fuel economy, development of biofuels, and energy efficiency in public buildings and lighting.
Provisions of final version
The bill signed into law in December 2007 was an 822-page document changing U.S. energy policy in many areas.
Key provisions include:
- Energy security
o Increased CAFE standards. Automakers are required to boost fleetwide gas mileage to 35 mpg (14.8 km/l) by 2020. This applies to all passenger automobiles, including light trucks.
o Required vehicle technology and transportation electrification. Incentives for the development of plug-in hybrids.
o New conservation requirements for federal vehicle fleets.
o Taxpayer funding for increased production of biofuels. The total amount of biofuels added to gasoline is required to increase to 36 billion gallons by 2022, from 4.7 billion gallons in 2007. The Energy Act further specifies that 21 billion gallons of the 2022 total must be derived from non-cornstarch products (e.g. sugar or cellulose).
- Energy savings
o Revised standards for appliances and lighting.
+ Requires roughly 25 percent greater efficiency for light bulbs, phased in from 2012 through 2014. This effectively bans the sale of most current incandescent light bulbs.
+ Various specialty bulbs, including appliance bulbs, "rough service" bulbs, colored lights, plant lights, and 3-way bulbs, are exempt from these requirements as well as light bulbs currently less than 40 watts or more than 150 watts.
+ Requires roughly 200 percent greater efficiency for light bulbs, or similar energy savings, by 2020.
o New initiatives for promoting conservation in buildings and industry.
o Requires all lighting in Federal buildings to use Energy Star products.
o New standards and grants for promoting efficiency in government and public institutions. New and renovated federal buildings must reduce fossil fuel use by 55% (from 2003 levels) by 2010, and 80% by 2020. All new federal buildings must be carbon-neutral by 2030.
- Taxpayer funding of research and development of solar energy, geothermal energy, and marine and hydrokinetic renewable energy technologies.
- Expanded federal research on carbon sequestration technologies.
- Green jobs - creation of a training program for "Energy efficiency and renewable energy workers".
- Energy transportation and infrastructure. New initiatives for highway, sea and railroad infrastructure. Creation of the Office of Climate Change and Environment in the
Department of Transportation.
- Small business energy programs, offering small businesses loans toward energy efficiency improvements.
- Smart grid - modernization of the electricity grid to improve reliability and efficiency.
- Pool safety - new federal standards for drain covers and pool barriers.
Proposals not enacted
The House passed versions of the bill which contained two controversial provisions: a renewable portfolio standard which required that utilities to produce 15% of their power from renewable energy and a tax package which would fund renewable energy through the repeal of $21 billion in oil and gas tax breaks; the Senate failed to pass these provisions in two cloture votes. On June 21, 2007 an attempt by the Senate Democrats to raise taxes on oil & gas by $32 billion was reportedly blocked by the Republicans.
Title I of the original bill, the “Ending Subsidies for Big Oil Act of 2007,” denied certain tax deductions to producers of oil, natural gas, or primary products of oil or natural gas, and increased from five to seven years the period during which five major integrated oil companies must write off their expenditures on geological and geophysical studies related to oil exploration.
Title II, the “Royalty Relief for American Consumers Act of 2007,” addressed an oversight that occurred when the Interior Department issued oil and gas leases for off-shore drilling in the Gulf of Mexico in 1998 and 1999. The leases didn’t include price thresholds that require companies to pay royalties to the Federal Government when the price of oil and gas exceeds a certain level. These companies would be required to renegotiate their leases to include price thresholds that are equal or less than thresholds described in the Outer Continental Shelf Lands Act. Companies who failed to renegotiate their leases or pay the fees would not be allowed to obtain any oil or gas leases in the Gulf of Mexico.
Title II also repealed several provisions of the Energy Policy Act of 2005. One provision suspended royalty fees on oil and gas production in certain waters of the Gulf of Mexico. A provision of the Energy Policy Act that protects drilling permit applicants from additional fees to recover the cost of processing paperwork would also be repealed, and special policies for leases in the National Petroleum Reserve–Alaska and royalty relief for specific offshore drilling in Alaska would be discontinued.
Title III of the bill created a Strategic Energy Efficiency and Renewables Reserve, an account to hold additional money received by the Federal Government as a result of the enactment of the act, and to offset the cost of subsequent legislation.
Opposition to the bill
Oil industry taxes
Opponents argued that the act would "increase Americans reliance on foreign sources of energy by making new domestic exploration and production more costly" and stated that markets should drive U.S. energy policy. They were concerned that the Strategic Energy Efficiency and Renewables Reserve would be used for "politically-connected pet projects," citing a similar fund created by the Carter administration that went bankrupt after only a few years.
The U.S. Chamber of Commerce said that the bill would punish an industry that has made many Americans wealthy for generations, adding that "Congress and various Administrations have perhaps imposed more regulations on the oil and gas industry than any other industry in the United States." The Chamber said it supported the rapid development of alternative fuels but that the new technologies are not developed enough, and are insufficient to make any real difference. It believed more regulation on oil and gas producers is not the answer to the energy problem.
Grover Norquist, Conservative activist and president of Americans for Tax Reform, characterized the bill’s provisions regarding renegotiation of leases as a violation of binding contracts, calling the bill “a violation of the Taxpayer Protection Pledge” since it wouldn’t create tax cuts to offset the additional revenue it would raise.
Representative Ted Poe said the bill “will decrease U.S. exploration and will increase our dependence on foreign oil,” and, “by raising taxes and fees on oil and gas companies that choose to manufacture in America, the U.S. will become a less attractive place to produce oil and natural gas. This essentially creates incentives for foreign importation and could kill manufacturing jobs in an industry that employs nearly 1.8 million Americans.”
Opponents included Democratic Senators Claire McCaskill, Mary Landrieu, Carl Levin, and Debbie Stabenow. House Democratic opponents were John Barrow and Jim Marshall of Georgia, Nick Lampson of Texas, and Dan Boren of Oklahoma.
Congressmen representing automobile manufacturing regions objected to the proposed increase in fuel economy standards. They said the measure would sharply increase the cost of new cars, lowering demand and further burdening the struggling automotive industry. Representative John Dingell of Michigan advocated instead an increase in the federal gasoline tax, which he said would have more immediate effects on oil consumption by influencing consumer behavior (i.e. car purchase decisions and total miles driven).
Compact fluorescent lamp
Compact fluorescent lamps are an existing technology that currently exceed the EISA 2007 requirements for lumens per watt. Another lesser known existing technology technology that also meets the minimum EISA requirements is energy efficient halogen bulbs (see below). Representative Ted Poe contends that the United States Constitution does not give the federal government the power to determine what light bulbs people are allowed to use. EPA recommendations state that compact fluorescent light bulbs should be recycled due to their mercury content. The EPA provides recommendatons for cleaning up broken compact fluorescent light bulbs .
Energy efficient halogen lamps
Energy efficient halogen products use about 25% less energy than standard incandescent lamps. In most other ways, these products are very similar to standard incandescent lamps – in terms of size, shape, and appearance. Beyond appearance, the Energy Efficient Halogen lamps share with standard incandescent lamps the same technical features (e.g. dimmability, quality of light, and lifetime), as well. These products are more expensive than standard incandescent general service lamps, but are typically similar in price to comparable CFLs and may decrease in price when economies of scale are realized in production.
Energy efficient halogen lamps are designed with a halogen capsule at the center of the covered A-Line shell of glass (similar to the way in which a filament is at the center of a standard incandescent lamp. Although the halogen capsule (and the filament in a standard incandescent lamp) reaches very high temperatures, the heat output at the glass surface of the energy efficient halogen lamp is directly related to the wattage of the product as is the case with the heat output of a standard incandescent lamp.
Support for the bill
Oil industry taxes
The majority of the supporters for the original bill were Representatives from the Democratic party. Speaker of the House Nancy Pelosi described the vote as "the first step toward a future of energy independence." Moira Chapin, Environment California Federal Field Organizer, said "the 110th Congress made a down payment on a new energy future," referring to its investment in renewable energy resources from solar and wind power generation facilities.
Proponents believed that investing the new tax revenue in renewable energy resources would foster a new industry, creating more jobs and helping to reduce American dependency on oil imports. They claimed that as many as 3.3 million new jobs would be created, cutting unemployment, adding $1.4 trillion to the gross national product in the economy, and paying for itself within ten years. Air quality would be improved by reducing the amount of emissions released by using a cleaner energy source other than oil.
Another supporter of the bill, Representative Steve Rothman of New Jersey, said that if the proposed bill passed, "the U.S. can improve air quality, create jobs, and corner a new business market."
Under the law, incandescent bulbs that produce 310–2600 lumens of light are effectively phased out between 2012 and 2014. Bulbs outside this range (roughly, light bulbs currently less than 40 watts or more than 150 watts) are exempt from the ban. Also exempt are several classes of speciality lights, including appliance lamps, "rough service" bulbs, 3-way, colored lamps, and plant lights.
By 2020, a second tier of restrictions would become effective, which requires all general-purpose bulbs to produce at least 45 lumens per watt (similar to current CFLs). Exemptions from the Act include reflector flood, 3-way, candelabra, colored, and other specialty bulbs.
The phase-out of incandescent light bulbs was supported by the Alliance to Save Energy, a coalition of light bulb manufacturers, electric utilities and conservation groups. The group estimated that lighting accounts for 22% of total U.S. electricity usage, and that eliminating incandescent bulbs completely would save $18 billion per year (equivalent to the output of 80 coal plants). Light bulb manufacturers also hoped a single national standard would prevent the enactment of conflicting bans and efficiency standards by state governments.
The initial version of H.R. 6 passed the House of Representatives on January 18, 2007, by a vote of 264 to 163. The Senate version passed 65-27 on June 21, but bore almost no resemblance to the original bill. Speaker Pelosi indicated on Oct 10 that instead of sending the bill to a conference committee, the House would negotiate informally with the Senate to resolve their differences.
The House took up the energy bill again in December, passing a new version on December 6. This version, renamed the "Energy Independence and Security Act of 2007", restored the oil industry tax increases of the original bill. It also added a requirement that U.S. electric utilities must obtain 15 percent of their power from renewable sources by 2020.
When this bill was introduced to the Senate, the new provisions became the focus of debate. The White House and Sen. Domenici warned that Bush would veto the bill because of the tax portion. Senate Minority Leader Mitch McConnell (R-Ky.) said Democrats had "shown how to snatch defeat from the jaws of victory" by "inserting an enormous tax hike, a tax hike they knew would doom this legislation." Reid said Congress should not be intimidated by a veto threat, "We are the Congress of the United States. We can write things even though the president may not like them." Democrats said that the tax measure was modest and only took back tax breaks the oil companies received in 2004 and that they did not need them with oil prices at about $90 a barrel.
The House version of the bill (with $13 billion raised from the oil industry, a mandate that utilities rely on renewable energy for at least 15 percent of their power generation, and a $21.8 billion 10-year tax package) failed by a one vote margin. A final attempt to end debate and make way for a vote failed by 59 - 40 despite the return of four Democratic presidential candidates, Hillary Clinton (NY), Barack Obama (Ill.), Christopher Dodd (Conn.), and Joseph Biden (Del.). Nine Republicans voted in favor of ending debate while one Democrat, Sen. Mary Landrieu (D-La.) voted against it. Sen. John McCain was not present.
The revised Senate bill passed 86-8 on December 13. The House approved this final version 314-100 on December 18, and President Bush signed it the following day.
Unintended consequences of RFS mandate
The Renewable Fuel Standard (RFS) portion of EISA 2007 is in Sections 201 - 248 of the act. This section deals with bio-diesel and ethanol. Most of the section deals with bio-diesel and tax credits for E85 and Flex-Fuel vehicles. Section 202(a)(2) mandates the "applicable volumes of renewable fuel" that must be produced. The majority of it is to be ethanol to be blended into gasoline, in fact 10.5 billion gallons of ethanol this year (2009). In Section 241 the term Renewable Fuel is defined as: "The term ‘renewable fuel’ means any fuel—‘‘(A) at least 85 percent of the volume of which consists of ethanol; or" (goes on to define the bio-diesel renewable fuel). The renewable fuel described is commonly known as E85.
It is clear that the intent of the act was to promote Flex-Fuel vehicles and E85 production. Since the ethanol production mandates are hard production targets that must be manufactured and put into gasoline, all of the gasoline in the US is being taken E10, 10% ethanol mixed with 90% gasoline.
There are many engines that should not or cannot be operated on ethanol blended gasoline. These are engines in the marine and aviation industry, antique and classic cars and motorcycles, small engines, both 2 cycle and 4 cycle, used in small recreation vehicles like ATVs, and portable tools widely used in public safety applications like generators, pumps and hand tools. There are a few states, currently four with active laws, that have mandatory E10 laws and every state provides a method of providing ethanol free fuel for these applications. The other 46 states have no exemptions and are putting these users at risk of property damage, which is resulting in class action lawsuits.
The RFS mandate in EISA 2007 is not an E10 mandate. E10 is never mentioned in the act. The fact that all of the gasoline in the country is being taken E10 is an unintended consequence of the mandatory ethanol production quotas.