2007 Energy Act Presents Opportunities

ENVIRONMENTAL LAW UPDATE

On December 19, 2007, the Energy Independence and Security Act of 2007 (Act) was signed into law. The Act builds upon the energy security, conservation, and efficiency provisions of the Energy Policy Act of 2005 and is likely to present numerous growth and development opportunities for various industrial and energy sectors.

The Act is significant legislation. It contains provisions for increased fuel economy standards, production of renewable fuels, and provides financial incentives for research and development of renewable energy technologies, biofuels, waste energy recovery, and carbon-capture technology. The Act also encourages short-sea transportation and the development of programs to support international renewable-energy research and development. A summary of major aspects of the Act follows.

Corporate Average Fuel Economy Standards (CAFE)

The Act directs incremental increases in the CAFE standards beginning in 2011, resulting in a combined passenger and nonpassenger fleet-wide average of 35 mpg by 2020. This represents a 40 percent increase in current fuel economy standards. Domestic manufacturers of passenger automobile fleets must meet a minimum fuel economy standard of the greater of 27.5 mpg or 92 percent of the projected average fuel economy for the combined U.S. manufactured domestic and nondomestic passenger automobile fleets for that model year.

A fuel economy credit trading program may be established for manufacturers whose automobiles exceed CAFE standards. Manufacturers may earn credits which may be used to meet CAFE standards for their fleet in future model years or which may be sold to other manufacturers whose fleets do not meet CAFE standards. The flexible fuel vehicle credit program for automobile manufactures that produce flex-fuel vehicles has been extended to 2019.

Grants may be awarded for the development of improved vehicle technologies, including plug-in electric-drive vehicles, electric transportation projects, and hybrid and advanced diesel technologies. The federal government may provide loan guarantees for the construction of manufacturing facilities for advanced vehicle batteries and battery systems, and funding awards for facilities that produce advanced technology vehicles and components.

Renewable Fuels

The Act creates a "Renewable Fuel Standard" which requires that transportation fuel sold or introduced into commerce in the U.S. on an annual basis contain 36 billion gallons of...