The contentious plan to drill for oil in the Arctic National Wildlife Refuge was omitted to ease the bill's passage.

Solar energy received a big boost with the increasing of federal investment tax credits for commercial solar installations to 30%, up from 10%, for two years, with no cap on the credit, and a 30% tax credit for all domestic solar installations, also for two years

The wind energy sector also breathed a collective sigh of relief as the coveted wind power Production Tax Credit has been extended another two years.

Ethanol received a major boost with the act providing credit for ethanol made from non-traditional feedstocks like wheat straw and corn stover, in addition to requiring that the amount of renewable fuels – such as ethanol – blended with gasoline increase from four billion gallons in 2006 to 7.5Bg in 2012.

It also provides $US200 million yearly until 2015 to update the Biomass Research and Development Act, with the goal of rapidly boosting the production of bio-based fuels at competitive prices and developing a broad range of bio-based products that replace petroleum-based products.

The US Biotechnology Industry Organisation (BIO) has welcomed the passing through Congress of the Energy Policy Act, saying it will improve domestic energy security by setting goals for production of renewable fuels made from US agricultural resources.

BIO president and chief executive officer Jim Greenwood said the act, which president Bush is about to sign into law, was a big step toward enhancing the country's security by providing incentives for energy produced from renewable agricultural feedstocks.

"The application of biotechnology in the industrial setting is affecting a paradigm shift in how we produce energy, and this legislation will provide incentives to hurry the future of biofuels," Greenwood said.

"Soon, we could be producing up to 25% of our transportation fuel needs by using industrial biotechnology to produce bioethanol, while adding $US5 billion to the farm economy."

In addition to requiring that the amount of renewable fuels – such as ethanol – blended with gasoline increase from four billion gallons in 2006 to 7.5Bg in 2012, the act provides credit for ethanol made from non-traditional feedstocks like wheat straw and corn stover.

It also provides $US200 million yearly until 2015 to update the Biomass Research and Development Act, with the goal of rapidly boosting the production of bio-based fuels at competitive prices and developing a broad range of bio-based products that replace petroleum-based products.

In addition, the act establishes a reverse auction to spur production of the first billion gallons of ethanol from cellulosic biomass and the creation of a bioethanol industry.

BIO said enzymes and other life science tools developed by industrial biotechnology companies could now convert crop residues – such as corn stover and wheat straw – to sugars that could in turn be made into bioethanol, bioplastics and other renewable chemicals.

New biotech processes are considered essential to reaching the alternative fuel production targets needed to enhance domestic US energy security.