AID Tax breaks, loan, guarantees would fund a gas pipeline to complement Alaska's oil line. (Photo courtesy of Conocophillips)

To do the deal, GOP lawmakers irked Democrats by cutting them out of drafting many key sections. But that strategy brought the political prize near. House and Senate conferees approved the voluminous measure Nov. 17 after rejecting more than a dozen proposed amendments from Democrats. The House passed the bill the following day by a 246-180 vote. Senators were preparing to debate the bill later that evening but one possible hurdle remained–a Democratic filibuster.

The outcome is "hard to tell," says the lead Senate conferee, Pete V. Domenici (R-N.M.). "But I think this is one of those [situations] where if nothing gets messed up I think we could have a very big vote" in favor of the bill. If the legislation were to sink, "I think it would send a signal, a very bad signal, to a number of markets that we’re not going to do very much about production of all these [energy] alternatives," he adds.

The bill’s drafters packed it with an estimated $23.5 billion in tax breaks and $5.4 billion in direct federal spending over the next 10 years. That doesn’t count billions of dollars in loan guarantees and other funding. They spread that wealth throughout the energy business. The bill also has a variety of policy changes that its supporters hope will stimulate energy investment (see table below).

"Over all, I think it helps the entire sector get a jump-start and get some incentives," says Christy Zeltner, head of research for Black & Veatch’s strategic marketing and planning group. Most importantly, the bill provides certainty. "I think this will let some people move forward on plans that they’ve had, and maybe break loose with some of their capital expenditures," she says.

A particular beneficiary–potentially–is an envisioned $20-billion, 3,600-mile-long natural gas pipeline from Alaska’s North Slope to Chicago. The bill has $18 billion in federal loan guarantees, plus accelerated depreciation and a tax credit for the megaproject. But those sweeteners may not be enough for ExxonMobil, BP and ConocoPhillips, which own the gas, to give the pipeline a green light.

"Even if the energy bill included everything that’s under discussion, that would not necessarily mean that a project would go forward," says Bob Davis, a spokesman for ExxonMobil, which owns the largest share of the gas, about 36%. The big issue is the plan’s steep cost, he says.

Energy Highlights: Spreading the Wealth

$18-billion loan guarantee, tax breaks for     Alaska-Chicago gas pipeline.

$1.8 billion for DOE clean coal projects.

Mandatory electricity reliability standards.

Expedites transmission line siting, with     federal eminent domain in some cases.

Requires 20% cut in federal buildings’     energy use by 2013.

Repeals 1935 Public Utility Holding     Company Act.

Sets ethanol production goal at 5-billion     gallons in 2012, up 85% from 2003.

Source: Senate, House committees

In the conference, the Senate side raised highway construction advocates’ hopes when they narrowly approved an amendment from Max Baucus (D-Mont.) to offset the revenue the Highway Trust Fund loses from ethanol-based fuels. Gasohol’s taxes are lower than those on gasoline and diesel. But that win was short-lived: House conferees rejected the Baucus amendment and the Senate side then went along with the House decision.

Environmentalists slammed many of the bill’s provisions, including one to allow several cities to delay compliance with Clean Air Act ozone standards and another that shields makers of the gasoline additive MTBE from liability.

Still, "green" groups did score one clear victory: The measure doesn’t include a House provision to open part of the Arctic National Wildlife Refuge to oil and gas drilling. "The biggest ‘give’ [by the House side] is that ANWR’s not in this bill," says the lead House conferee, W.J. Billy Tauzin (R-La.).