At the beginning of the month, five Republican senators and five Democratic senators unveiled an energy package that increases offshore drilling and coal-to-liquids, as well has rolling back some oil industry subsidies in favor of renewable tax breaks.
Leading the group are Sen. Kent Conrad (D-N.D.) and Sen. Saxby Chambliss (R-Ga.). The other members of the group: Sens. John Thune (R-S.D.), Ben Nelson (D-Neb.), Lindsey Graham (R-S.C.), Blanche Lincoln (D-Ark.), Mary Landrieu (D-La.), Johnny Isakson (R-Ga.), Bob Corker (R-Tenn.) and Mark Pryor (D-Ark.). Pryor, Landrieu, Thune, and Graham are up for reelection; Graham is a close associate of Republican presidential nominee John McCain (R-Ariz.).
Provisions of the bill, as described by E&E News:
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Offshore drilling. The drilling provisions would open up large swaths of new acreage in the eastern Gulf of Mexico to new oil-and-gas drilling. Current law provides a 125-mile buffer for Florida in most areas; the proposal would shrink the no-drill zone to 50 miles. It would also allow drilling in federal waters in the Atlantic off the coasts of four Southeastern states – Virginia, North and South Carolina and Georgia – if the states allow it. The states would share in some revenue if they allow leasing.
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Oil subsidy repeal. Total funding for the proposal’s various energy programs is $84 billion—$30 billion of this would come from oil companies, according to a summary circulated today.
The oil industry revenues would come in part from repeal of major oil companies’ ability to claim the Section 199 domestic manufacturing credit and provisions to ensure federal revenues from flawed late 1990s deep-water gulf leases that currently allow royalty waivers regardless of energy prices.
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$20 billion automotive incentives. The conservation and alternative fuels provisions include $20 billion for an “Apollo Project” aimed at weaning 85 percent of America’s motor vehicles from oil-based fuels in 20 years. The program would include research and development in areas like advanced batteries and funding to help automakers re-tool to make alternative fuel vehicles. Also in the mix are tax credits of up to $7,500 per vehicle for consumers who buy cars that run primarily on non-petroleum fuels.
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Four-year clean credit extension. The proposal would also extend a suite of renewable energy credits – for wind, solar and other projects – and energy efficiency credits through 2012. Current renewable power production and investment tax credits are set to expire at year’s end, and the industry has been pressing for multi-year extensions to provide “certainty” to the market.
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New incentives. Elsewhere, the bill includes new tax credits for highly efficient vehicles and $2.5 billion in funding for development and demonstration of next-generation biofuels and infrastructure, among the suite of conservation and renewable energy provisions.
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Coal-to-liquids and nuclear. In addition to the drilling measures, the bill offers grants and loan guarantees for building coal-to-liquids plants capable of capturing carbon dioxide emissions. It also contains provisions to expand domestic nuclear power, such as increasing staff at the Nuclear Regulatory Commission – which has begun receiving the first applications to build new reactors in decades – as well as work force training.