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(6/25/2005)

 

 

Worst Waste in the Energy Bill

Citizens Against Government Waste presents their list

Citizens Against Government Waste (CAGW) today highlighted what it considers the worst aspects of the Energy Policy Act of 2005 (H.R. 6), which could receive a Senate vote next week. The 700-page bill is chock-full of corporate subsidies, targeted tax breaks, and costly regulations while carrying a total cost of $16 billion, twice the $8 billion in the House version.

"The Senate bill is a lobbyist's dream and a taxpayer's nightmare," CAGW President Tom Schatz said. "The energy bill is less a coherent policy than a grab bag of giveaways for special interests. A few provisions stand out as particularly wasteful blunders that will do nothing to reduce the price of gas or the nation's dependence on foreign oil."

  • Title XIV: Unlimited Loan Guarantees. Title XIV will guarantee up to 80 percent of the cost of developing new energy technologies, such as fuel cells, coal-fired power plants, and advanced nuclear reactors. When such endeavors fail, taxpayers will cover the losses. The Congressional Budget Office estimates the cost at $3.75 billion in loan guarantees over the first five years, carrying a 20 to 60 percent risk of default on the loans. But after five years, there is no limit on the amount of loans guaranteed. The guarantees will add a new layer of bureaucracy to the Department of Energy at an estimated cost of $400 million in the first five years. Taxpayers should not be forced to subsidize every speculative venture conceived by energy companies, who will profit from the few successes but shovel the losses onto the backs of taxpayers. Unfortunately, an amendment offered by Sens. John Sununu (R-N.H.) and Ron Wyden (D-Ore.) to eliminate Title XIV was defeated by a vote of 21-76.

  • $18 billion in tax breaks over 10 years. In addition to providing loan guarantees, some energy sectors would be eligible for tax credits worth more than $2.5 billion. Other tax incentives would be doled out for more energy-efficient homes, new home appliances, and hybrid cars. Though all American businesses could benefit from lower taxes, targeted tax breaks are a form of pork that skew market incentives. The free market, not Congress, should decide which form of energy is most efficient.

  • Ethanol mandate. This provision would require that 8 billion gallons of corn-derived ethanol be

    added to the domestic gasoline supply by 2012 -- double the current mandate -- which will raise gas prices for consumers. Supporters claim it will reduce dependence on foreign oil, but the energy required to grow the corn and distill the ethanol means that oil imports will fall by less than .05 percent. The mandate is nothing more than corporate welfare for Midwestern farmers. The Senate mandate is 3 billion gallons higher and will cost consumers two to four times more at the pump than the House version. Even worse, the Senate bill contains an $8 million giveaway for an ethanol study in the home state of pork-barreller extraordinaire Sen. Daniel Inouye (D-Hawaii).

  • Hydrogen car. The Senate bill allocates $3.8 billion over five years toward development of hydrogen fuel cell vehicles and has set a pipe-dream goal of 100,000 such cars on the road by 2010 and 2.5 million by 2020. General Motors, Ford, DaimlerChryser, Honda, Toyota, Volkswagon and BMW are already working on their own hydrogen-powered vehicles. In May 2004, the National Academy of Sciences stated that a commercially viable hydrogen car will likely take 20 to 30 years to produce.

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