Bush set a goal of producing 35 billion gallons of alternative fuels by 2017 as part of a plan to reduce U.S. gasoline consumption by 20 percent in the next 10 years. The alternative fuels standard (AFS) would include more fuels than the current renewable fuels standard (RFS), which Bush signed into law as part of the Energy Policy Act of 2005. The RFS calls for 7.5 billion gallons of renewable fuel use by 2012.
The President’s plan, titled Twenty in Ten: Strengthening America’s Energy Security, also calls for reforming the Corporate Average Fuel Economy (CAFÉ) standards, stepping up domestic crude oil production and doubling the capacity of the Strategic Petroleum Reserve. “Let us build on the work we’ve done and reduce gasoline usage in the United States by 20 percent in the next 10 years,” Bush said. “When we do that we will have cut our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East.”
Currently, the U.S. ethanol industry has capacity to produce nearly 5.6 billion gallons of ethanol annually. An additional 4.1 billion gallons is under construction and expected on line within the next 18 months. “Our industry is up to the challenge,” said Renewable Fuels Association (RFA) Chairman Ron Miller.
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The biodiesel industry has the capacity to produce more than 700 million gallons of fuel. The National Biodiesel Board (NBB) estimates approximately 250 million gallons of biodiesel were produced in 2006. “We are glad to see that the President’s Twenty in Ten plan includes strong steps toward renewable energy, energy conservation and diversification, and carbon reduction,” said NBB CEO Joe Jobe.
Additional details of the President’s energy plans were listed in a pre-speech briefing released by the White House Office of Communications. The President’s proposal calls for 35 billion gallons of renewable and alternative fuels in 2017, and increasing the scope of the standard from an RFS to an alternative fuel standard, including corn-based ethanol, cellulosic ethanol, biodiesel, methanol, butanol, hydrogen and alternative fuels.
Bush began discussing energy about 15 minutes into his speech. “It's in our vital interest to diversify America's energy supply—the way forward is through technology,” Bush said. “We must continue changing the way America generates electric power, by even greater use of clean coal technology, solar and wind energy, and clean, safe nuclear power. We need to press on with battery research for plug-in and hybrid vehicles, and the use of clean diesel vehicles and biodiesel fuel. We must continue investing in new methods of producing ethanol, using everything from wood chips to grasses to agricultural wastes.”
The increased standard will also contain multiple “safety valves,” such as giving the EPA administrator and the Secretaries of Agriculture and Energy the authority to waive or modify the standard if deemed necessary. The standard will also include an automatic “safety valve” to protect against unforeseen increases in the prices of alternative fuels or their feedstocks.
Both corn and soybeans, the predominant feedstocks for the ethanol and biodiesel industries, have recently increased in prices. Cellulosic ethanol will likely have to play a significant role to meet Bush’s proposed AFS. “Between now and 2017, you’ll have cellulosic ethanol commercialized,” said RFA President Bob Dinneen.
The President expects most of the expanded fuel standard to be met with domestically produced alternative fuels, according to the pre-speech release. However, importing alternative fuels will also be part of the plan.
Under the plan, Congress would not legislate a particular numeric fuel economy standard. The Secretary of Transportation would be given the authority to set the fuel standard based on cost/benefit analysis.
The plan would also allow auto companies to buy and sell CAFÉ credits. By 2017, the renewable fuel and fuel efficiency components of the plan would cut annual emissions from cars and light trucks by as much as 10 percent, or about 175 million metric tons.
Funding for the plan was also discussed in the pre-speech briefing. The President’s 2008 budget contains funding for advanced energy technologies, including nearly $2.7 billion for the Advanced Energy Initiative, which Bush announced in his 2006 State of the Union Address. The initiative focuses on increasing research and development on energy technology.
The budget also provides $179 million for the Biofuels Initiative, which is aimed at accelerating cost reduction and commercial development of cellulosic ethanol.
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