Supporters say the measure will revive America's nuclear power industry, boost oil drilling, convert coal into a cleaner-burning fuel and use home-grown, corn-based ethanol to stretch gasoline supplies.

 

Environmental groups and some Democrats criticised its extensive tax breaks, subsidies and loan guarantees as a lavish gift to an industry enjoying near-record profits.

 

The measure cleared the Senate 74 to 26, following the lead of the House of Representatives that approved it by a wide margin of 275 to 156 on Thursday.

 

President George Bush - who spent the past four years pressing Congress to overhaul US energy policy - is set to sign it into law.

 

"This bill digs us deeper into a budget black hole... it fails to decrease our dependence on foreign oil" 

Democratic Russ Feingold of Wisconsin

The bill will have no short-term impact on petrol prices or oil imports, Republicans acknowledged. But longer term, they said it would revitalise all types of energy production.

"For once, Congress and the United States are going to do something important that we will benefit from, not tomorrow, but for the next five or 10 years," said Republican Pete Domenici of New Mexico, one of the bill's authors.

 

"This bill will create jobs, job security and clean energy," he said. "Who could ask for anything more?"

 

Daylight-saving

Most Americans will feel the impact of the 1700-page bill when daylight-saving time is extended in 2007 to save energy. Homeowners will also be able to claim a tax credit of up to $500 to install more energy-efficient windows, and another modest credit for buying a hybrid fuel vehicle.

 

Domenici (R): The bill will create
jobs and clean energy 

The bulk of the bill's incentives are aimed at companies and utilities that produce energy.

Of the total $14.5 billion, $2.6 billion is in tax breaks for oil and gas drilling and the expansion of pipelines and refineries. Electric utilities are in line to get $3.1 billion in tax credits and subsidies to build the first nuclear power plants since the 1979 Three Mile Island accident.

Coal companies will get $2.9 billion to invest in new technology to generate gas or electricity with less air pollution. About $3.1 billion is earmarked for tax credits for renewable energy sources such as wind, biomass, geothermal, landfill gas and hydropower.


New market

The bill also orders the US oil industry to nearly double the amount of corn-distilled ethanol it uses as an additive in petrol, giving farmers a new market for their crop.

"By encouraging greater efficiency, increased energy production in an environmentally responsible way and encouraging investment in our nation's outdated energy infrastructure, this bill takes a balanced approach and embodies the right priorities for the American people," said US Energy Secretary Sam Bodman.

Rejection

Democrats who voted against the measure said it failed to curb oil demand with stricter fuel mileage requirements for gas-guzzling vehicles or encourage more renewable forms of energy.

 "For once, Congress and the United States are going to do something important that we will benefit from, not tomorrow, but for the next five or 10 years"

Pete Domenici,
Republican

US demand for oil is so steep that the country imports 60% of the 21 million barrels per day consumed.

"This bill digs us deeper into a budget black hole," said Democratic Russ Feingold of Wisconsin. "It fails to decrease our dependence on foreign oil; it rolls back important consumer protections; and, finally, it undermines some of the fundamental environmental laws that our citizens rely upon."

Feingold tried to block the bill by arguing it exceeded congressional spending limits, but the Senate rejected that move.

Some Democrats said they reluctantly voted for the bill even though it fell far short of steering the nation on a new energy course.