At last it has started : 01/31 17:26
Republicans to Seek Energy Tax Breaks, More Drilling (Update3)
By Holly Rosenkrantz
Washington, Jan. 31 (Bloomberg) -- Senate Republicans said they'll introduce energy legislation next week that would allow oil and natural gas drilling on more U.S. land and give tax breaks for renewable and alternative energy.
The legislation incorporates President George W. Bush's push to open 1.5 million acres of Alaska's Arctic National Wildlife Refuge to oil exploration, said Republican Senator Frank Murkowski of Alaska, chairman of the Energy and Natural Resources Committee. Companies such as Exxon Mobil Corp., Chevron Corp. and BP Amoco Plc favor that plan.
A draft of the measure includes tax incentives for businesses and individuals to use solar and other forms of renewable energy, and calls for decreasing the U.S.'s dependence on imported oil by using some fees from leasing public land for energy exploration to pay for research into renewable fuels.
``This is a very comprehensive bill we've been working on for months and it's hard for me to believe there isn't something in it for everyone,'' Murkowski said.
The package comes as electricity shortages and rolling blackouts in California have prompted Democrats such as Senator Jeff Bingaman of New Mexico to say the Bush administration needs to do more to alleviate the crisis. Bush has named a task force to craft a broad energy policy and said California must find its own solutions.
Today a California state Senate panel approved a measure that allows the state to buy power for its cash-strapped utilities, PG&E Corp. and Edison International, and to finance purchases by selling as much as $10 billion worth of bonds.
Boosting Supplies
Federal actions to help California have caused a diversion of resources that have hurt agriculture in Arizona and shut down paper mills and aluminum smelters in the Pacific Northwest, Bush aides say. Energy Secretary Spencer Abraham will talk Friday about regional energy issues with western governors in Oregon, White House spokesman Ari Fleischer said.
The White House task force, led by Vice President Dick Cheney, will focus on increasing domestic supplies. That ``means oil, it means natural gas, it means coal, it means clean-burning coal,'' Fleischer said. Drilling in Alaska's Arctic National Wildlife Refuge is a key part of Bush's strategy, Fleischer said.
Democrats rule that out. ``The Arctic provisions are kryptonite,'' said one foe, Senator Ron Wyden, an Oregon Democrat. ``I think they are going to kill the package if they are kept in.'' Under a 1980s law, Congress controls drilling in the Alaska reserve, which environmental groups say would damage the habitat of caribou and other wildlife.
Reducing Foreign Dependence
The Senate bill aims to decrease U.S. dependence on foreign oil supplies to not more than 50 percent by 2010 from the current expectations of 65 percent. In 2000, the U.S. got more than 57 percent of its oil from imports, Murkowski spokesman Chuck Kleeschulte said.
Murkowski said his measure envisions opening up for oil exploration ``energy-rich'' land that President Bill Clinton put off-limits in states such as Wyoming, Montana, Idaho and Colorado.
Provisions in the legislation for oil exploration and drilling in western states seek to open the areas ``to see if the potential'' for oil exists, said another Republican on the Senate committee, Larry Craig of Idaho. They aren't calls ``for relaxing environmental standards,'' he said.
Rocky Mountain lands in Wyoming, Montana and Colorado contain oil deposits but are off-limits because of actions Clinton took to protect the environment, Craig said. With oil prices rising, ``consumers are going to be less tolerant'' of environmental protections that keep public lands out of reach, he said.
While environmentalists oppose most efforts to drill for oil on lands that are currently off-limits, their most vocal fight will be over the Arctic refuge, said Kalee Kreider, a lobbyist with the National Environmental Trust.
``ANWR is the highest profile effort of the administration on energy and its going to be the biggest political battle,'' she said. Environmentalists are going to seek to ``set a tone that says `you can't roll us on this issue.'''
Cutting Demand
Tax credits and incentives included in the legislation will seek to ``cut demand'' for energy, said Senator Bob Smith of New Hampshire, chairman of the Environment and Public Works Committee. Other proposals promote home weatherization and high occupancy vehicle lanes for cars that conserve energy, he said.
``We've extended $6 billion in the last six years'' to promote alternative sources of energy, Murkowski said, and the bill will include new measures to promote ``wind power, solar power, and hydrogen development.''
In addition, the bill calls for spending $100 million each year for 10 years on research and development on clean coal as an alternative energy source. That's about a 25 percent increase over what is currently being spend on this issue, and it's a ``big subsidy for coal producers,'' Kreider said.
Among the coal companies that could benefit are Consol Energy Inc., Arch Coal Inc. and Peabody Group, said Ned Leonard, a spokesman of the Western Fuel Association.
According to a draft of the legislation, the bill will offer exemptions from clean air requirements for utilities that develop new coal technology projects.
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