Biofuels Security Act introduced

By EPM Staff Writer Ron Kotrba | May 01, 2006
U.S. Sens. Tom Harkin, D-Iowa, and Richard Lugar, R-Ind., introduced the Biofuels Security Act to Congress on May 17 in hopes of providing a booster shot to the 7.5 billion gallon renewable fuels standard (RFS) passed in last year's Energy Policy Act.

According to Lugar's office, the act also includes language that would require all vehicles sold in the United States to be flexible-fuel-capable by 2016. Additionally, the package would mandate major-branded oil companies to carry E85 at half of their retail gas stations by the same year. The act also seeks to raise the federal tax credit for retail outlets converting pumps to dispense E85 from 30 percent to 50 percent; a tax credit of 75 percent is proposed for companies with less than five stations.

The aggressive attempt to rework the RFS looks to raise the required amount of renewable fuels to be blended into refiners' supplies from the current 7.5 billion gallons by 2012 to an ambitious 10 billion gallons by 2010, 30 billion gallons by 2020, and 60 billion gallons by 2030—representing a three-part growth strategy for ethanol, and a strategic security move to distance the country from its heavy reliance on imports and non-renewable energies. Ethanol from lignocellulosic materials, or biomass, is expected to have the major role in upcoming years once the disconnections on the technological, financial and logistical fronts are mustered together.

According to Washington, D.C., insider for the American Coalition for Ethanol (ACE), Eric Washburn, ACE worked closely with the two senators to get this bipartisan renewables package introduced. ACE has a list of provisions the organization announced May 15, many of which are similar to the terms in the Lugar-Harkin package.

Projections indicating that U.S. ethanol production capacity will surpass 7.5 billion gallons much sooner than 2012—perhaps four years ahead of schedule—have been a major driver behind this initiative and similar ones. With the nationwide MTBE phaseout, there's little doubt that U.S. markets will absorb much of the domestic supply, provided cheaper imports don't quench the demand that U.S. ethanol producers anticipate satisfying.