House Panel Backs Bush Plan To Drill In ANWR

By Tom Doggett and Christopher Doering

4/8/03

WASHINGTON (Reuters) - The centerpiece of the Bush administration's national energy policy -- drilling for oil in the Arctic National Wildlife Refuge -- was resuscitated on Wednesday when a House panel voted to allow energy exploration in the Alaskan wilderness.

The House Resources Committee voted to give oil companies access to the refuge, whose potential 16 billion barrels of oil the Bush administration wants to use to help reduce U.S. dependence on foreign crude imports.

The ANWR bill will eventually be folded into legislation that is designed to significantly update U.S. energy policy for the first time in a decade.

The House panel's vote was a much-needed victory for the administration's national energy plan after the full Senate narrowly voted last month to keep the Arctic refuge closed to oil companies.

The White House still faces an uphill battle in getting the both the Senate and House to go along with allowing drilling in the refuge.

The chairman of the Senate Energy Committee has said he won't include language to open the refuge in energy legislation that his panel will begin writing next week, citing the recent Senate vote against ANWR drilling.

Separately, the Senate Finance Committee approved on Wednesday a $16 billion energy tax incentive package that promotes alternative fuels, traditional energy sources and conservation measures.

The bill would provide new or extend tax credits to encourage electricity production from energy sources like wind, solar, agricultural waste, landfill gas and biomass.

Biomass is waste materials that include crates, construction wood and agricultural sources like orchard trees, grain and vines.

The legislation also enhanced tax credits to increase the production of ethanol that is blended into gasoline to make a cleaner-burning motor fuel.

SENATE BILL BACKS ETHANOL

In addition, the bill would require ethanol-blended fuels to be subject to the same federal excise tax as gasoline, which would be deposited into the government's highway trust fund for future road projects.

Currently, ethanol-blended gasoline is taxed at 13.2 cents a gallon, lower than gasoline at 18.4 cents. Raising the ethanol tax to 18.4 cents should bring in an extra $400 million for road projects, according to committee staff.

The bill also supports building a pipeline to ship Alaskan natural gas to the lower 48 states by providing a tax credit to gas producers if gas prices fell too low.

Small oil and natural gas operators would receive a separate tax credit to make it more affordable for them to keep their low-volume wells running when energy prices are low.

Other provisions in the bill would:

* Eliminate the 4.3-cent federal excise tax on fuel used by trains and barges.

* Allow small refiners to immediately deduct 75 percent of their costs for equipment to meet federal rules requiring the production of low-sulfur diesel fuel. Small refiners could also claim a tax credit of 5 cents for each gallon of cleaner diesel produced.

* Give consumers an income tax credit of up to $4,000 for buying cars and light trucks that run on fuel cells, which create energy by combining hydrogen and oxygen.

* Allow appliance makers to claim an income tax credit up to $150 on each super energy efficient clothes washer and refrigerator manufactured.

The package of energy tax credits and incentives will be molded into a much larger comprehensive energy policy bill that will be sent to the Senate floor later this spring.

HOUSE PANEL TO VOTE ON TAX CREDITS

The House Ways and Means Committee begins voting on Thursday on its own package of energy tax incentives that will also be added to the House's broader energy bill that is being written by the House Energy and Commerce Committee.

Consumer groups are concerned that the House tax package would eliminate tax incentives for energy efficient appliances and commercial buildings.

"Most troubling, the new House proposal would greatly weaken the provision for highly efficient cars and light trucks, thereby gutting the important tax incentive for reducing oil imports," said David Nemtzow, president of the Alliance to Save Energy.

The Republican-led House Energy and Commerce Committee on Wednesday defeated Democratic attempts to strip electricity grid provisions from an energy bill and instead focus on preventing a repeat of the market manipulation that occurred in California.

Democrats on the House panel sought to replace the grid-building initiatives in the bill with a plan that would give the Federal Energy Regulatory Commission more authority to punish energy companies that attempt to manipulate markets.

The committee is writing the House's broad energy bill that promotes oil drilling, nuclear plants and hydrogen-powered automobiles. After the bill is approved by the panel, it will go to the full House for debate in the coming weeks.

Differences in both the Senate and House energy bills would eventually have to be reconciled in final legislation that is acceptable to both chambers before it can be sent to President Bush for his signature.