TOPICS > Politics

Senate Considers New Energy Package

June 12, 2007 at 6:25 PM EDT

JIM LEHRER: Now, the lobbying war over the energy bill. Judy Woodruff begins with some background.

JUDY WOODRUFF: As Americans pump up for summer with gas prices near record highs, the Senate began debate this week on a wide-ranging energy bill aimed at curbing the nation’s addiction to oil. The legislation includes a number of controversial proposals that mandate improved vehicle fuel efficiency and greater use of renewable energy.

North Dakota Democrat Byron Dorgan.

SEN. BYRON DORGAN (D), North Dakota: Much of what we get — where we get our oil, rather, is in very troubled parts of the world. And we could one day wake up with terrorists attacking a refinery somewhere and a shut-off of the oil to this country from foreign sources. And this country would be flat on its back; this country would have its economy in tatters.

JUDY WOODRUFF: Idaho Republican Larry Craig.

SEN. LARRY CRAIG (R), Idaho: It is not a complete package. It’s way out into the future. It’s not about tomorrow. It’s not about national security. It’s not about production. And if we don’t have those factors in a bill, this Senate will not serve its public and the American consumer in a responsible way in sustaining and building a great nation.

JUDY WOODRUFF: The proposal in the sprawling Senate bill expected to spark the biggest fight is the increase of corporate average fuel economy, or CAFE standards, for cars and light trucks to 35 miles per gallon by 2020, an increase of about 10 miles per gallon over current levels.

Other main provisions in the Senate legislation: ramp up the production of renewable fuels for cars and trucks to 36 billion gallons a year by 2022 — the current standard sets a goal of 8.5 billion per year in 2008; increase the production of coal-to-liquid fuels; and require utilities to have 15 percent of their power come from renewable sources by 2020.

A wide variety of industries are lobbying for and against the bill, since the outcome would affect automakers, electric utilities, oil companies, ethanol producers, and many others.

TELEVISION COMMERCIAL NARRATOR: America’s enemies understand that oil is the lifeblood of our economy…

JUDY WOODRUFF: This week, the Energy Security Leadership Council, a group of large energy-consuming companies, launched this TV ad to support the legislation.

TELEVISION COMMERCIAL NARRATOR: Support bipartisan energy security legislation.

JUDY WOODRUFF: Last week, auto industry executives told lawmakers on Capitol Hill the provision to raise fuel economy standards could hurt them. Rick Wagoner is the CEO of General Motors.

RICK WAGONER, CEO, General Motors: It’s time for us to move beyond exclusive reliance on historical regulatory approaches like CAFE that clearly have not solved these critical problems and move forward to embrace solutions that will yield the results that Americans expect and deserve.

Industry involvement

JUDY WOODRUFF: The Senate has allotted up to two weeks for debate on the energy legislation, while the House is expected to take up its own version later this summer.

For a closer look at the energy bill, what's at stake, and for whom, we turn to Edmund Andrews of the New York Times, who's covering the story for the paper, and Jeanne Cummings of She reports on political lobbying on Capitol Hill.

Let's start by talking about this big piece of legislation. We've talked about a lot of interests here. If you think of the energy sources in the United States as a big pie, right now, 40 percent is from oil, 23 percent or so from natural gas, and another 22 percent from coal, only 6 percent from renewable sources. In general, how would this legislation change that?

EDMUND ANDREWS, The New York Times: This legislation would, first of all, set a goal, a mandate, for companies in the energy industry to deliver up to 36 billion gallons a year of renewable fuel by 2017. And it would accomplish that mandate the way that it's currently done for ethanol, which is to put requirements on the companies that are delivering the fuels to us. They would have to mix it in or deliver it as individual fuels. That's one side.

But the bigger fight really is going to be about the government money that is used to subsidize direct payments, loan guarantees, or tax breaks to companies that would be developing alternative fuels of all different kinds.

JUDY WOODRUFF: And, Jeanne Cummings, why are there so many big industries who have a dog in this fight?

JEANNE CUMMINGS, Well, this affects everyone, because it's about electricity. They use electricity to create their own products, and so the cost of electricity is important to them. Many are producers of energy that are in this fight. Obviously, this matters to them.

This matters to consumers. I mean, right now, they're trying to bring in the high-tech community to impose some kind -- they'd like to debate about whether there should be more energy-efficient computers.

JUDY WOODRUFF: Because they suck up so much energy.

JEANNE CUMMINGS: That's right.

Coal, automobile interests

JUDY WOODRUFF: Now, is it possible to say, Ed Andrews, who has the most to lose, the most to gain out of all this?

EDMUND ANDREWS: There are a couple of players that have an awful lot to gain or to lose. The car companies for sure feel that they have an enormous amount to lose, they're already in dire straits. And so the prospect of being forced into developing much, much stiffer average fuel economy for their cars is a very daunting one to them, so they have a lot to lose.

My own feeling is that the industry who has the most to gain and the most to lose, potentially, is the coal industry. Coal is the main source of electricity in this country, so the electric utilities are their biggest customer, the coal producer's biggest customer. If we now go to a system that requires a much higher percentage of renewable fuels to be used by power-generating companies, that's going to whack them.

On the other hand, the coal industry is pushing very hard and they have an awful lot of support for massive government programs to promote coal-to-liquid fuels. If that happens, if they can crack open that market, they have developed a whole new product line that would be far bigger than anything they would lose.

JUDY WOODRUFF: Which is something the environmentalists very much -- most of the environmentalists very much oppose, Jeanne Cummings, but you've also got farmers involved here, you've got the food industry. What's that all about?

JEANNE CUMMINGS: Well, let's take ethanol. Everyone knows that ethanol is the number-one alternative fuel mentioned, particularly in a presidential year. Well, if the farmers are able to really break through in making fuel, then their product becomes more valuable. Prices go up.

And then the food service industry is affected, because they use the corn for breads, and for baking, and for making corn. And then there are the farmers who use corn in their feed. And so the ripple effect is pretty extraordinary.

I mean, I was struck that one of the leading corporate voices on all of this is FedEx. Now, how many people use FedEx? But because of their fleet of trucks and all the fuel that they buy, this is a terribly important issue for them. So it really gets down to the nitty-gritty of our society and, you know, it affects every single sector.

Lobbying activities

JUDY WOODRUFF: And, Ed Andrews, what are these lobbyists doing? I mean, both of you have talked about how the town is buzzing right now with folks who have something to win or to gain or lose. What are they doing to make their case?

EDMUND ANDREWS: They're doing the things that lobbyists usually do. I would say the smartest organizations out there, the smartest players have been plotting and planning for this for quite a while. And they've been positioning themselves, knowing now, of course, that they've got a Democratic majority in Congress, so those who were resisting or flatly opposing any kind of regulatory restraints are calibrating their positions and figuring out a way to live with regulations in a way that doesn't hurt too much.

They've been forming coalitions with each other, sort of public alliances to create a positive message on whatever position they want. The difficulty is that you have massive industry groups that are lobbying on many different sides, but the industry players themselves may be at odds with each other. You even have electric utilities that come at this from different standpoints, depending on their particular positions. So it's very tough; it's quite a snarl.

JUDY WOODRUFF: Depending on where they get their energy from.

EDMUND ANDREWS: Their energy from, exactly.

JUDY WOODRUFF: Jeanne, you've also taken a look at how many lobbyists there are out there on all different aspects of this.

JEANNE CUMMINGS: It's been a real boon for the lobbying community, that is for sure. Back in 2004, there were about 3,500 lobbyists who were registered to lobby on energy, environment, Superfund kind of issues. I checked today on At the end of 2006, there were more than 10,000 of them.

And that just shows how everyone was preparing early for this fight. This is an indication of the growth of the biofuels community. They are hiring lobbyists. The wind lobbying group is much bigger than it's ever been. They've become much more sophisticated up on the Hill.

And when we talk about biofuels, we're talking about people who are experimenting with making fuels from wood, as well as corn, as well as some kinds of grasses, and so it's a very diverse field. And when you talk about winners and losers, if you look at that alternative fuel section of the bill, it kind of narrows -- it shows you in a single moment what the stakes are.

There's going to be $25 billion -- that's what's proposed -- over 10 years to help generate new biofuels. That money comes from the oil and gas industry. That's the kind of fighting that we have going on.

When you look at, what kind of hybrid cars might be the future? Will they be electric? Will they be ethanol-based? There are different ways to create these new hybrid cars. And so, among the automakers, each one has been experimenting with a different design. They're ahead and behind one another. What will be the platform? What's the car that's going to sell for the next 50 years? And how do we build the infrastructure to support that vehicle? And which automaker comes out ahead? Because it's their version that they want picked, because they're further ahead in the research. These are really, really tough fights.

Fuel economy requirements

JUDY WOODRUFF: Ed Andrews, is it possible to say now what the biggest fights are going to be over?

EDMUND ANDREWS: Well, I think it's pretty clear that one of the biggest fights is going to be over those fuel economy requirements. Detroit is an incredibly important constituency in Congress, and they have a lot on the line, and they care a lot about it.

The second big fight is going to be about how much or whether to force electric utilities to generate as much as 15 percent of their power from renewable fuels.

The third big fight is going to be over those coal-to-liquid fuels and how much to subsidize them.

And the fourth thing, which Jeanne just alluded to, is, how are you going to pay for those alternative fuels? The idea is to take the money out of the oil industry and move it over to alternative fuels, that's going to be a tough nut to crack.

JUDY WOODRUFF: And it's seriously believed this can all be done in the next week or two?

JEANNE CUMMINGS: Well, some are wondering. Right now, the goal is maybe the Senate can get some kind of version out. The House has slowed its process down because they've hit a few bumps in the road over there.

It's interesting in the House, because the two sponsors of that legislation are Chairman Dingell from Detroit. He has made it clear, he told the lobbyists -- I've been told by other lobbyists and the chairman himself -- he put everybody on notice that he's not going to write a bill that sacrifices his Detroit constituents. They're not going to carry the load for these reforms. And working with him, Virginia Representative Boucher from a coal state.

JUDY WOODRUFF: So we're seeing the traditional party line differences broken up all over the place. Well, we're going to be watching, and we know you're going to be watching. Thanks very much. Ed Andrews, Jeanne Cummings, thank you.