House Democrats agree on higher fuel standards

WASHINGTON (Reuters) - Democrats in the U.S. House of Representatives agreed on Friday on a bill to raise automotive fuel efficiency standards by 40 percent by 2020 but set separate rules for cars and light trucks as a concession to Detroit automakers.

After getting an earful from constituents over the Thanksgiving holiday about U.S. pump prices over $3 a gallon and crude oil prices hovering near $100 a barrel, House lawmakers look poised to take quick action next week.

The House is expected to vote on an energy bill as soon as December 5 after House Speaker Nancy Pelosi struck a deal with Michigan Rep. John Dingell, a long-time champion of Detroit automakers like General Motors and Ford, to raise Corporate Average Fuel Economy standards to 35 miles per gallon by 2020.

That's similar to a provision passed by the Senate this summer -- but modified to set separate efficiency rules for cars and light trucks.

"This landmark energy legislation will offer the automobile industry the certainty it needs, while offering flexibility to automakers and ensuring we keep American manufacturing jobs and continued domestic production of smaller vehicles," Pelosi said in a statement announcing the deal.

Pelosi said she wants the bill to contain a controversial provision sought by Democrats to require utilities to get 15 percent of their electricity from wind, solar and other renewable sources.

Dingell and Pelosi have sparred over the fuel efficiency standards for months.

Dingell, chairman of the House Energy and Commerce Committee, had threatened to lobby against the proposal because it could endanger Detroit automakers in his home district. He said the CAFE provisions in the new bill will "provide critical environmental safeguards without jeopardizing American jobs."

Dingell said the concession would save about 17,000 domestic assembly plant jobs. The bill will also expand incentives for automakers to build cars that run on biofuels like ethanol or biodiesel, Dingell said.

Once passed by the House, the Senate would take up an identical bill, avoiding a bargaining session to rectify differences that has kept previously passed energy legislation hamstrung so far.

According to a draft of the energy bill obtained by Reuters, the legislation would require 20.5 billion gallons of renewable fuels like ethanol to be mixed with U.S. motor fuel supplies by 2015, with 5.5 billion gallons of that coming from non-food sources like cellulosic ethanol.

In the short-term, the bill sets targets of 9.5 billion gallons in 2008 and 11.6 billion gallons in 2009, according to the draft language.

That stops short of a Senate-passed proposal to require 36 billion gallons of ethanol use by 2022 -- a four-fold increase from current usage levels.

After 2015, the House bill would raise at a level indexed to increases in renewable fuel production.

(Reporting by Chris Baltimore, editing by Todd Eastham)