The U.S. Senate on Thursday evening passed an energy bill that requires greater fuel economy for vehicles and more renewable fuels.

If it's approved again by the House and signed by President Bush, as expected, the bill will mandate a corporate average fuel economy standard of 35 miles per gallon and the use of 36 billion gallons of biofuels, both by 2020.

The Union of Concerned Scientists called the bill, which passed 86-8, a "landmark" that strengthens fuel-economy standards for the first time in 30 years.

"We've turned a corner. Congress has finally taken action to cut America's oil dependency by giving the country more fuel-efficient cars and trucks," said Michelle Robinson, director of the group's clean-vehicles program, in a written statement. "Now the only thing standing between Americans and relief at the pump is the president's signature."

But other greentech supporters said they were disappointed by the bill.

The approval comes after the Senate twice tried -- and failed -- to call for a vote on a larger bill that also included $21.5 billion in renewable tax credits over the next decade, paid in part by a repeal of $13 billion in tax subsidies for oil and gas producers.

The first attempt to win cloture -- or to break a filibuster and require a yes-or-no vote -- last week fell seven short of the 60 needed. That bill would have included the tax credits, as well as a requirement that utilities get 15 percent of their energy from renewable sources (see Senate Sends Energy Bill Back to Beginning, House Passes Energy Bill, Will Greentech Get Anything from the Energy Bill? and Renewable Tax Credit and Portfolio Standard Could Get Cut From Energy Bill).

On Thursday morning, Senate leaders removed the renewable-energy portfolio standard from the bill, but still fell one vote short of the count required to end debate.

Chris O'Brien, vice president for government relations for Sharp Solar and chair of the Solar Energy Industries Association, called the bill "a significant missed opportunity."

"We're frankly surprised that the signal of support from folks was ignored," he said. "Over 100,000 letters were sent to the Congress to voice support for solar tax credits, but none of the senators we saw as potential swing votes voted in favor of cloture."

While the bill will increase automobile energy efficiency and biofuel production, it does nothing to provide a significant shift in the electricity sector, he said.

"That's a big gap in terms of addressing broader climate change, energy security and economic development," he said. "It was very disappointing."

O'Brien said the failure to pass the tax credits will result in much greater uncertainty about the market after 2008, when the current tax credits are set to expire, and a dramatic slowdown of project-development activity next year.

Because the availability of the tax credit in 2009 is uncertain and because large solar projects take 12 to 14 months to develop, the solar industry is likely to see an immediate stop to the development of projects that wouldn't be completed until 2009, he said.

"While we expect to see continued growth in individual state markets, such as in California, this was really a big missed opportunity to develop a broader national market," he said.

Others in the solar industry have said the failure of a long-term incentive would not keep the industry from growing, but would relegate most of that growth to other countries. Countries such as Germany and Spain already have large incentives for renewables.

The U.S. solar industry isn't ready to give up hope, however. O'Brien said the association will try to get an extension bill introduced as early as possible next year to minimize the uncertainty.

Ed Feo, a senior partner involved in energy matters at the law firm Milbank, Tweed, Hadley & McCloy, said he thinks its clear the tax credits will be extended next year, "although the duration and terms may be in play."

"If the tax package isn't passed, look for an insane level of activity in 2008 as sponsors work to go into service before the sunset date," he said. "The tax incentives are critical to the growth of renewables. Period."