The US Senate approved the long-anticipated energy bill that will demand increases in the fuel efficiency of US cars and trucks and boost production of controversial biofuels.

However, environmentalists were left frustrated by the bill after Senate Democrats were forced to drop around $13bn of proposed taxes on oil and gas companies. They also had to can a package of tax breaks for renewable energy companies in order to appease Republicans who were poised to block the legislation, and so avoid a veto from the White House.

After the bill was passed, a White House spokesperson said that President Bush would not veto the bill if, as seems likely, it is approved in a House of Representatives vote next week.

Under the so-called CAFE legislation, which has been fiercely opposed by many within the automotive industry, the fuel efficiency of cars and trucks would be raised by 40 per cent to an average 35 miles per gallon (mpg) by 2020, cutting US oil demand by an estimated 1.1 million barrels a day.

Passenger cars would be required to reach 27.5mpg and minivans, SUVs and other light trucks 22.2mpg.

Despite ongoing concerns about the impact on food prices and water supplies, the bill would also result in a fivefold increase in US production of renewable transport fuels such as ethanol by 2022.

Separately, the wide-reaching bill also contained a Green Jobs Act that will see $125m ploughed into new national and state job training programmes designed to tackle concerns over skills shortages in clean tech industries.

However, there was disappointment from many within the US renewable energy sector after Democrats were forced to water down proposed tax reforms to avoid a threatened veto from the White House. Without the extra revenue that would be raised from increased taxes on oil firms, there was no budget for the proposed tax breaks for clean energy suppliers.

Gregory Wetstone, senior director of governmental and public affairs at the American Wind Energy Association (AWEA), said that the vote was out of step with public support for the renewable energy sector.

"We will continue to work with Congressional leaders on these vital issues, and are confident that we will secure enactment of the tax incentives and other policies that Americans need and want to put our nation on the path to a clean and secure energy future," he said.