WASHINGTON — Congress and President Bush are poised to agree on major steps to increase auto fuel efficiency and the supply of biofuels, but New Mexico's fledgling solar technology renewable energy industry was left by the side of the legislative road.

Under the twin pressures of a veto threat by Bush and a Republican filibuster led by Sen. Pete Domenici, an Albuquerque Republican, Senate Democrats on Thursday stripped from the bill provisions to extend and strengthen tax incentives for homeowners and businesses that install solar renewable energy products, and other clean renewable energy measures, offset with $21.8 billion in tax hikes, mostly on the oil industry.

Rusty Schmit, founder of Advent Solar, the only Albuquerque company that makes photovoltaic cells, said that not extending the credits into the future will make it harder for solar power companies to build a market for their products and invest in new equipment.

"It is a big disappointment, not only for Advent Solar, but the country's renewable (energy) future," said Schmit.

Homeowners now can receive a tax credit equal to 30 percent of their investment in solar renewable energy, up to a maximum of $2,000. But the renewable energy credit expires at the end of 2008.

The House-approved energy bill would have raised the cap to $4,000 and extended the renewable energy credit another eight years. There were similar incentives for businesses.

The New Mexico Solar Energy Association, representing 400 solar professionals, said the renewable energy credit is helping to grow the renewable energy industry in the state and should be extended.

"It's very disappointing," said association President Marlene Brown. "The federal government needs to acknowledge that renewable energy is part of the solution and to fund it."

She noted that when New Mexico passed a similar solar renewable energy tax credit it was good for 10 years.

Doug Smith, president of NanoPore, an Albuquerque company that makes advanced thermal insulation, was hoping for a provision to allow manufacturers, not just homeowners, a tax credit for using his product.

Smith and Schmit said there are far more solar renewable energy applications being done in Europe because those countries have built the market with hefty and long-lasting tax incentives.

During Thursday's Senate debate, Domenici said he favored many of the tax incentives and would try to get them in another bill. But he said they should not be paid for by singling out the oil industry for tax hikes and should not be part of this particular energy bill.

"The issue is not whether this is a good package. This issue is what is going to happen if we decide we're going to pass this bill as it sits, with $21 billion worth of taxes. It's very simple: It's going to get vetoed," Domenici said.

But Senate Majority Leader Harry Reid, Nevada Democrat, responded that he was disappointed his longtime friend would say "this is a bad bill because President Bush doesn't want certain provisions."

"We have to flex our legislative muscles and do the right thing and not be stampeded because of 16th and Pennsylvania Avenue," said Reid.

Democrats came up one vote short of the 60 needed to bring the bill up for debate. Nine Republicans voted in favor. One Democrat, Mary Landrieu of Louisiana, voted against.

Senate Energy Committee Chairman Jeff Bingaman, a Silver City Democrat, then brought a bill stripped of the tax provisions back to the Senate on Thursday night. It was approved 86-8. The House is now expected to pass the bill and send it to Bush for his signature.

The bill would raise the fuel efficiency standard for vehicles to an average 35 miles per gallon by 2020. The current standard, set in 1975, is 27.5 miles per gallon for cars and 22.2 miles per gallon for light trucks, vans and sport utility vehicles.

The bill also mandates the use of 36 billion gallons of biofuels a year by 2022, with no more than 15 billion gallons from corn ethanol.

Bingaman said new efficiency standards for light bulbs, refrigerators and other consumer products would save more energy than all previous standards combined.

Bingaman said he regretted they could not pass the renewable energy tax incentives, or a mandate to force utilities to get 15 percent of their energy from renewable energy resources by 2020.

But he used the same word as Domenici to describe what was left in the package: historic.

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