Dec. 3, 2007: Source – Forbes

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Democrats in the House of Representatives and Senate have finally hammered out an energy bill they can agree on. The cornerstone of the proposal calls for raising corporate average fuel economy, or CAFE, by 40 percent to a fleetwide average of 35 miles per gallon by the year 2020, up from today’s 27.5 miles per gallon for cars, and 22.5 miles per gallon for light trucks. Separate standards would be maintained for both classes of vehicles as long as an overall 35 miles per gallon is preserved. In other words, trucks could continue to have a lower fuel economy than cars, but cars would have to exceed 35 miles per gallon to make up the difference, and keep the average at or above the magic number.

Having gained the support of major automakers, the bill will now have to contend with the powerful lobbies of both, the utility and oil industries, as well as the veto power of President Bush, before having any chance of becoming a reality.

In a statement, Alliance of Automobile Manufacturers chief Dave McCurdy said, "Upon adoption of this legislation, Congress will have established aggressive, nationwide fuel economy requirements, concluding a longstanding debate." The Alliance is the voice in Washington for 10 major automakers including Ford, GM, Chrysler, and Toyota.

But the finer points of the bill are still being discussed, including a provision that requires the nation’s utility companies to obtain at least 15% of their power from renewable sources, like wind and solar. Heavy opposition is expected in this area from utilities such as Duke Energy and Southern Company, who insist that this measure may cause the price of power to spike drastically in some parts of the country. The bill is also expected to offer incentives for the production of vehicles that run on biofuels. Along those same lines, the measure may call for a mandate for a massive increase in biofuel production. The oil industry is opposed to such a measure.

Whether the energy bill is ultimately passed, and what it will be in its final form, is still up in the air. But having been negotiated to the point of Democratic agreement, and then endorsed by Detroit, makes the proposal a critical step in a greener direction.


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