UPDATE 2-US Senate Democrats battling for viable energy bill

* Bill to contain reforms on offshore drilling

* May have $4.1 billion in natural gas incentives

* Electric car measure expected to be included

* Republicans have alternative bill
(Adds details on Republicans, renewable energy standard)

By Timothy Gardner and Richard Cowan

WASHINGTON, July 26 (BestGrowthStock) – Senate Majority Leader
Harry Reid hopes to unveil his pared-back U.S. energy bill on
Tuesday that focuses on reforming offshore oil drilling but
Republicans were quick to dismiss its chances of passing.

The bill would aim to hold BP Plc (BP.N: )(BP.L: ) accountable
for its Gulf of Mexico oil spill and boost investment in
vehicles fueled by natural gas and electricity.

Democrats, who last week abandoned a key Obama
administration effort to forge a broad climate bill because of
a lack of votes, are hoping to get the narrowly focused bill
passed by next week.

“Tomorrow afternoon, we expect to release the text of this
plan,” said Reid’s spokesman Jim Manley.

Among its provisions, the bill will likely force companies
to spend more money to cover the costs of oil spills, raising
the liability cap to $10 billion or more from $75 million.

But partisan conflicts could delay the bill’s passage and,
as Republican aides warn, there might not be enough time to
pass it ahead of the congressional recess starting on Aug. 6.

Some expect Reid to not allow any amendments to the bill
once it is brought to the Senate floor. But such a move could
provoke an uproar from Republicans.

“I would think so,” said Matt Dempsey, a spokesman for
Republican senators on the Senate Environment and Public Works
Committee when asked whether they would boycott the energy bill
if they are not allowed to offer amendments.

Some Senate Republican leadership aides speculated that
Democrats might opt to return to work on a bill stimulating
investment in small business rather than the energy bill in the
days leading up to the recess in early August.

Republicans released an energy bill of their own on Friday
that would lift a moratorium on deepwater drilling pushed by
the Obama administration after requirements were met and
inspections were completed. It would also allow for royalty
revenue sharing with states.

Last week, Reid said Congress could revisit climate
legislation in September but lawmakers and analysts doubt there
will be much appetite ahead of congressional elections in
November.

And if Republicans pick up seats in Congress, as expected,
the effort to put a price on carbon emissions could be stalled
for years, which would also hamper the Obama administration’s
efforts to take a lead role at world climate talks.

ALTERNATIVE FUELS, EFFICIENCY

Reid’s bill will also contain incentives to convert trucks
to run on natural gas and for cars to run on electricity.

It will outline $900 million a year for land and water
conservation and increase energy efficiency in homes, according
to one Senate source.

Analyst Kevin Book of ClearView Energy Partners LLC said he
expects the energy efficiency measure known as Home Star to
include $5 billion in incentives for plugging window leaks and
insulating attics.

The natural gas incentives for trucks could cost the
government $4.1 billion, compared with the $19 billion price
tag for an earlier bill that had been endorsed by energy tycoon
T. Boone Pickens, Book said.

To pay for these measures, lawmakers may consider raising
taxes on the the oil and gas industry.

“One possibility would be to raise the Oil Spill Liability
Trust Fund tax from 8 cents per barrel to 49 cents per barrel,
which would raise approximately $18 billion,” said analyst
Whitney Stanco of the Washington Research Group.

This fund, created in the aftermath of the Exxon-Valdez
accident in Alaska in 2004, helps pay claims for financial or
property losses caused by oil spills.

Environmentalists worry they are not winning a battle to
get a renewable energy standard in the bill, requiring
utilities to produce some power from wind and solar sources.
The greens and some utilities warn that without such measures,
China would surpass the United States in alternative energy.

Lew Hay, chief executive of the utility NextEra Energy
(NEE.N: ), told reporters in a teleconference that such a measure
would allow his company to create more than 40,000 jobs over
five years.

Republican Senator Sam Brownback joined the push for a
renewable mandate on Monday, calling for bipartisan support of
the “moderate” target approved by the Senate Energy and Natural
Resources committee last year.

Stock Market Analysis

(Additional reporting by Ayesha Rascoe; Editing by Russell
Blinch and John O’Callaghan)

UPDATE 2-US Senate Democrats battling for viable energy bill