Order Code RS22571
Updated January 22, 2007
The Strategic Energy Efficiency and
Renewables Reserve in the CLEAN Energy
Act of 2007 (H.R. 6)
Fred Sissine
Specialist in Energy Policy
Resources, Science, and Industry Division
Summary
H.R. 6 proposes to use revenue from certain oil and natural gas policy revisions to
create an Energy Efficiency and Renewables Reserve aimed at reducing foreign oil
dependence. The actual uses of the Reserve would be determined by ensuing legislation
that would attempt to draw down its financial resources. The Reserve could focus on
both fuels and electricity, and it could support a variety of tax, spending, or regulatory
initiatives to address these uses. The bill passed the House on January 18, 2007, by a
vote of 264-163.
Background
H.R. 6 was introduced by the House Democratic Leadership to revise certain tax and
royalty policies for oil and natural gas and use the resulting revenue to support a reserve
for energy efficiency and renewable energy. The bill is one of several introduced on
behalf of the Democratic Leadership in the House as part of its “100 hours” package of
legislative initiatives conducted early in the 110th Congress.
Title I proposes to reduce certain oil and natural gas tax subsidies to create a revenue
stream to support energy efficiency and renewable energy.1 Title II would modify certain
aspects of royalty relief for offshore oil and natural gas development to create a second
stream of revenue to support energy efficiency and renewable energy.2
1 A detailed description of existing oil and natural gas tax provisions is available in CRS Report
RL33763, Oil and Gas Tax Subsidies: Current Status and Analysis, by Salvatore Lazzari.
2 A detailed description of existing and proposed oil and natural gas royalty provisions is
available in CRS Report RS22567, Royalty Relief for U.S. Deepwater Oil and Gas Leases, by
Marc Humphries.

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Strategic Energy Efficiency and Renewables Reserve
Title III of H.R. 6 creates a budget procedure for the creation and use of a Strategic
Energy Efficiency and Renewable Energy Reserve, under which additional spending for
energy efficiency and renewable energy programs can be accommodated without violating
enforcement procedures in the Congressional Budget Act of 1974, as amended.
Bill Purpose and Permitted Reserve Uses

The stated purpose of the bill is to “reduce our nation’s dependency on foreign oil”
by investing in renewable energy and energy efficiency. Specifically, Section 301 (a) of
the bill would make the revenue in the Reserve available to “offset the cost of subsequent
legislation” that may be introduced “(1) to accelerate the use of domestic renewable
energy resources and alternative fuels, (2) to promote the utilization of energy-efficient
products and practices and conservation, and (3) to increase research, development, and
deployment of clean renewable energy and efficiency technologies.”
Budget Adjustment Procedure for Uses of the Reserve
The budget adjustment procedure for use of the Reserve is set out in Section 301 (b).
The procedure is similar to reserve fund procedures included in annual budget
resolutions.3 It would require the chairman of the House or Senate Budget Committee,
as appropriate, to adjust certain spending levels in the budget resolution, and the
committee spending allocations made thereunder, to accommodate a spending increase
(beyond FY2007 levels) in a reported bill, an amendment thereto, or a conference report
thereon that would address the three allowed uses of the Reserve noted above. The
adjustments for increased spending for a fiscal year could not exceed the amount of
increased receipts for that fiscal year, as estimated by the Congressional Budget Office,
attributable to H.R. 6.
Initial Revenue Estimates for the Reserve
According to the Congressional Budget Office (CBO), the proposed repeal of
selected tax incentives for oil and natural gas would make about $7.7 billion available
over 10 years, 2008 through 2017. The proposed changes to the royalty system for oil
and natural gas are estimated to generate an additional $6.3 billion. This would yield a
combined total of $14 billion for the Reserve over a 10-year period.4 The CBO estimates
show that the total annual revenue flow would vary annually over the 10-year period,
ranging from a low of about $900 million to a high of about $1.8 billion per year.
3 For more details on how reserve funds are used to make adjustments to a budget resolution, see
CRS Report RL33122, Congressional Budget Resolutions: Revisions and Adjustments, by Robert
Keith, p.12-13.
4 U.S. Congress. Congressional Budget Office. H.R. 6, CLEAN Energy Act of 2007. (Letter to
Chairman Nick Rahall, Committee on Natural Resources.) January 12, 2007. 4 p.
[http://www.cbo.gov/ftpdocs/77xx/doc7728/hr6prelim.pdf]

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H.R. 6 Action
H.R. 6 came to the House floor for debate on January 18, 2007. In the floor debate,
opponents argued that the reduction in oil and natural gas incentives would dampen
production, cause job losses, and lead to higher prices for gasoline and other fuels.
Opponents also complained that the proposal for the Reserve does not identify specific
policies and programs that would receive funding. Proponents of the bill countered that
record profits show that the oil and natural gas incentives were not needed. They also
contended that the language that would create the Reserve would allow it to be used to
support a variety of R&D, deployment, tax incentives, and other measures for renewables
and energy efficiency, and that the specifics would evolve as legislative proposals come
forth for to draw resources from the Reserve. The bill passed the House on January 18
by a vote of 264-163.

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