Among the failures of H.R. 4, the House energy bill, to address U.S. energy needs, are the following.

• H.R. 4 offers a $33.5-billion gold mine of taxpayer-financed subsidies -- 75 percent going to coal, oil, gas and nuclear energy. Despite many references to "energy efficiency" and "conservation," only a quarter of the bill's tax credits would go to promote greater efficiency or renewable energy sources.
  
  
• The bill would open the Arctic National Wildlife Refuge to oil drilling, even though that would yield only a six-month supply of oil spread over many decades.
  
  
• It offers only a sham increase in vehicle fuel efficiency standards -- equivalent to just one day's oil consumption per year -- even though the National Academy of Sciences has found that much larger increases would pay for themselves in fuel savings. Further, the tax credit for hybrid vehicles -- which originally scaled the size of the tax credit to the amount of mileage improvement -- has been grossly distorted by giving the full credit to minor improvements from the most gas-guzzling SUVs.
  
  
• H.R. 4 bill would provide no short-term relief for consumers, and, over the long-term, it would increase pollution, despoil the environment, threaten public health, and accelerate global warming. Most of H.R. 4's provisions purporting to improve energy efficiency or promote conservation are of minor significance, unsound, or an outright sham. It would have no impact on energy prices, and no practical effect on U.S. dependence on foreign sources of oil.

Who would benefit? The oil, coal, and nuclear industries that have shoveled millions of dollars into congressional campaign coffers.

There is a better way. The bottom line is that the quickest, cleanest and cheapest way to meet our energy needs is a program that improves energy efficiency, increases fuel economy, and invests in renewable energy sources.

The House energy bill reeks of back-room deals and political payoffs to powerful energy industries at the taxpayers' expense. H.R. 4 would fulfill the wildest dreams of the oil and coal industries at the expense of public health and the environment. Nevertheless, NRDC remains hopeful that public debate, starting on the floor of the House of Representatives and continuing in the Senate, will open the doors to a new national energy policy -- one that meets our energy needs and improves environmental quality and the health of our citizens.

NRDC's key critiques of H.R. 4 and alternative approaches are summarized below.

Huge Subsidies for Coal Burning

H.R. 4 would expand our reliance on the dirtiest form of power generation. Leaning more heavily on coal for power generation means more deaths from particulate air pollution, more global warming, more poisoned water and more scarred land.

H.R. 4 includes three separate provisions that promote so-called "clean coal" technology. Altogether, these add up to a 10-year, $6 billion program -- three times more than proposed in the Bush energy plan. One provision (Sections 5005-5006) authorizes $2 billion in R"D funds over 10 years with at least some environmental criteria: It requires 80 percent of these funds to go to coal gasification technologies that have the potential to significantly reduce emissions of carbon dioxide, nitrogen oxides, sulfur dioxide and mercury. But another $3.5 billion in investment and production tax credits would go to coal-fired power plants (Sections 3117-3118) that are not significantly cleaner than conventional coal plants. To qualify, all a plant must do is make a marginal improvement in combustion efficiency or reduce emissions of a single pollutant. Another provision (Section 2401) authorizes another $537 million in coal plant subsidies with no meaningful environmental criteria.

The coal tax credit provisions are particularly egregious (Sections 3117-3118). The credit could be used even for converting a gas-fired plant to a much less efficient and more polluting coal-fired plant. Worse yet, this $3.3 billion tax credit for coal compares to only $2.4 billion in tax credits for renewable energy production. The renewable energy source tax credit, already in existing law, is supposed to help new technologies such as wind power become more competitive. Now taxpayers will foot the bill to throw the advantage back to coal. That's like driving with your foot on the gas and the brake at the same time.

Drilling in the Arctic Refuge

H.R. 4 follows the administration's proposal to open the Arctic National Wildlife Refuge to oil development. Drilling in the Arctic Refuge would do virtually nothing to meet America's long-term energy needs. There is only a six-month supply of economically recoverable oil in the refuge's coastal plain. Raising fuel economy standards to 40 miles per gallon would save 15 times more oil. Drilling in the Arctic Refuge would cause permanent and unnecessary environmental damage, would do nothing to address America's long-term need for greater energy efficiency, would not affect the price of gasoline at the pump, and would not significantly reduce U.S. dependence on foreign oil.

Drilling on Public Lands

H.R. 4 impedes environmental oversight of oil and gas production. It moves decision-making about oil, gas, and geothermal leasing on national forests away from the local forest supervisor level to the national level to allow the administration to accelerate exploration (Section 6303). Meanwhile, it impedes wildlife protections and environmental standards on oil and gas operations within federal lands if they are any stronger than those promulgated by state oil and gas commissions, which are dominated by industry interests (Section 6223).

H.R. 4 also provides hundreds of millions of dollars in unmerited subsidies to the oil and gas industry at a time when prices are high and oil and gas company profits are at record levels. The bill provides royalty holidays for drillers in the outer continental shelf, expands the definition of "marginal" wells, and offers a variety of other unneeded tax benefits. The bill distorts the original goals of the royalty relief program by suspending payments to the federal government when oil prices are low (Sections 6202, 6231, 6233 and 6234).

Vehicle Fuel Economy

H.R. 4's provision on automobile fuel economy is actually worse than nothing. The bill contains a provision for light trucks that purports to save 5 billion gallons of gasoline for model years 2004 through 2010. This provision is a sham. The anticipated savings amount to only one day of oil consumption per year. Moreover, the bill could actually increase fuel consumption by mandating a four-year extension of CAFE credits for producing "dual-fueled" vehicles that rarely run on anything but gasoline. In a report issued this week, the National Academy of Sciences (NAS) noted that "these vehicles seldom use any fuel other than gasoline, yet enable automakers to increase their production of less fuel efficient vehicles." The NAS specifically recommended eliminating CAFE credits for dual-fuel vehicles.

H.R. 4 also includes tax credits for hybrid vehicles. Unfortunately, at the request of the automobile industry, this provision has been extensively weakened from the original CLEAR Act (H.R.1864). The changes undermine the environmental integrity of the original CLEAR Act by stripping out the original emission-based eligibility criteria and modifying the credit formula to give the full tax credit for making only minor improvements to the most gas guzzling SUVs. As a result, NRDC and other environmental organizations, which supported the CLEAR Act along with Ford and Toyota, oppose the vehicle tax credits contained in H.R. 4.

The Boehlert-Markey amendment would eliminate the light truck loophole in the existing CAFE standards. This is in line with findings of the NAS panel that separate treatment for SUVs and minivans no longer makes sense. It is a critical first step toward increasing overall fuel economy to 40 mpg over the course of a decade, which would save more than 50 billion barrels of oil over the next 50 years -- more than 15 times as much oil as is expected to be economically recoverable in the Arctic Refuge.

Building and Appliance Energy Efficiency

Increasing the energy efficiency of appliances would save money and reduce air pollution. But the House bill omits a proposal to reinstate stronger efficiency standards for new air conditioners, which President Bush decided to weaken shortly after taking office. This step by itself could avoid the need to build more than 40 power plants by 2020, save consumers as much as $900 million in higher electric bills in that year, and cut emissions of carbon dioxide by 180 million tons over the next three decades.

H.R. 4 also includes tax credits for energy efficiency improvements in homes, but because they are designed to reward expenditures rather than performance they could do more harm than good. The bill does not provide any incentive for higher performance homes. The full credit goes to homes that are 30 percent more efficient than current codes, yet we know from demonstrated field measurements that home efficiency can be improved by more than 70 percent over present practice. Good public policy would provide credits on a sliding scale, with greater rewards for higher efficiency. Further, the bill provides tax credits based on what is spent rather than what is achieved. It does not require any independent verification that energy savings are actually being achieved.

There is an excellent alternative readily available to Congress: the Cunningham-Markey bill (H.R. 778) and its Senate companion, the Smith-Feinstein bill (S. 207). These bills are based on successful state government and utility experience and are co-sponsored by more than 55 House members and a dozen senators. They have also been widely vetted by a broad mix of environmental interests, energy producers, energy-efficiency experts, progressive builders and other critical stakeholders. As a result, they avoid all of the above pitfalls and enjoy support from both industry members of both parties in Congress.

Nuclear Power

H.R. 4 provides approximately $2.5 billion in tax breaks and subsidies to the nuclear industry (Section 3210). The bill poses serious nuclear weapons proliferation risks by reversing the United States' decades-long ban on reprocessing nuclear fuel (Section 2321). It rewards uranium enrichment technologies that leach radioactive uranium and other toxic chemicals into groundwater and pose a major public health threat for communities surrounding the mines (Section 306). And the bill takes the nuclear waste fund off budget in order to shield it from annual congressional oversight (Section 301).