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Commentary By Max Schulz, Max Schulz

More (Or Less) Than CAFE In Energy Bill

After much wrangling, Democratic leaders in the House and Senate finally came together in agreement on a comprehensive energy bill to present to the full Congress.

News stories have focused on the surprising fact that House Speaker Nancy Pelosi, D-Calif., and House Energy Committee Chairman John Dingell, D-Mich., found common ground on a plan to overhaul Corporate Average Fuel Economy (CAFE) Standards for the first time since they were first established in 1975.

Given Dingell's longstanding opposition to raising CAFE standards and his ties to Detroit automakers, this is billed as an historic achievement, the political equivalent of the lion lying down with the lamb. The conventional wisdom in media and political circles is that the other elements filling out the compromise energy bill are just that — filler.

That view is wrongheaded.

The fact is, the CAFE changes are relatively benign compared to the bill's other features, most notably proposals to implement a national renewable portfolio standard and to expand the ill-conceived biofuels mandate that was part of the last major energy bill Congress passed.

Also worrisome are those things the bill lacks, such as any concrete steps to deal with long-term energy supply and infrastructure challenges.

There's less than meets the eye to the CAFE standards boost. Current regulations force automakers to achieve 27.5 miles per gallon on cars, and just over 22 mpg for light trucks, a category that includes not just pickup trucks, but minivans and SUVs.If the legislation passes and President Bush signs it (a big if), automakers will need to meet a combined 35 mpg standard fleetwide by 2020.

In past efforts to raise CAFE standards, Detroit has been right to push back against Washington on the principle that lawmakers have no business telling them how to build their products. In the current instance, however, Detroit can afford to go along with congressional meddling; it has a technological ace up its sleeve, and can likely meet the new targets.

This has nothing to do with any act of Congress, but with the present-day tech revolution. The march of technological progress in terms of computers and microprocessors is transforming what is under the hood of our cars, making the drivetrain considerably lighter than the weighty engines that have anchored vehicles for a century.

Rate Hike

Less weight to haul means greater efficiency, without having to cut in areas like body size and performance. Most cars and trucks built a decade from now could be built around a hybrid drivetrain. This will likely happen whether or not Congress passes its bill. That means the new CAFE targets are not just achievable but also irrelevant.

If only the legislation's other provisions were so innocuous.

The renewable portfolio standard would require the nation's electric utilities to generate 15% of their power from expensive renewable sources. Energy sources like nuclear power and large-scale hydropower that are clean but out-of-favor with the environmental lobby will be excluded from the new federal law.

The technologies environmentalists do favor, such as wind, solar and geothermal, now contribute barely 2% of America's electricity mix. Forcing utilities to increase their share of these uneconomic and unreliable technologies will surely mean hiking consumers' rates.

Consumers will also take a hit at the pump, where Congress wants to expand the amount of corn-based ethanol and other biofuels required in the nation's gasoline transportation fuel supply. And they'll take a hit at the grocery store: Iowa State University researchers figure that an increase in ethanol production on the order called for in the new bill is enough to raise prices of beef, pork and poultry by at least 4%. Egg prices should soar.

The shame of the energy compromise is further compounded by its lost opportunities.

Oil prices have skyrocketed to nearly $100 per barrel, but nothing in the new legislation offers relief by opening up the vast supplies the U.S. has locked away in Alaska and the Outer Continental Shelf.

And even as the nation's environmental policies force an increasing reliance on natural gas, legislators want to keep the huge stores of gas in the Gulf of Mexico and on federal lands in Western states off limits to exploration.

Furthermore, Nancy Pelosi's bill completely fails to address the looming nuclear waste dilemma as Congress holds Yucca Mountain hostage.

To congressional spinmeisters and the news media, this bill is momentous for its courageous attempt to reform CAFE. Those who examine the details more closely will find a bill that boosts energy prices at the expense of real energy security. There's nothing courageous about that.