Energy Industry Serves Up Mixed Views of Bush's Ethanol Vision

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Energy Industry Serves Up Mixed Views of Bush's Ethanol Vision

WASHINGTON -- In a move that will reduce the nation's gasoline consumption by 20 percent, President George W. Bush called for a fivefold increase in ethanol production and other alternative fuels powering the country's vehicles over the next decade. The plan is being regarded as hopeful, yet achievable by some in the energy field, while others are unconvinced it will work.

The plan involves the production of 35 billion gallons of alternative fuels by 2017, which would replace approximately 15 percent of the projected gasoline use with alternative fuels by 2017.

Another branch of the plan involves increasing fuel efficiency for cars and trucks by 4 percent each year -- about one mile per gallon -- starting in 2010 for cars and 2012 for trucks, The New York Times reported. The Union of Concerned Scientists estimated that the mile per gallon increase for the nation's automobiles could save as much as 550,000 barrels of oil per day a decade from now, and would reduce emissions as much as "taking 14 million of today's cars and trucks off the road."

A third element of the plan would bulk up oil levels in the Strategic Petroleum Reserve to about 1.5 billion barrels -- double the amount currently -- over the next 20 years. When this element was announced, oil prices rose $2.46 a barrel Tuesday to $55.04, the Times reported.

Supporters commended President Bush for the proposals, stating that the desired results can be achieved. NewGen Technologies, Inc., a vertically integrated manufacturer and distributor of biofuels, applauded the President's message, describing it as "bold and far-reaching."

"The key to achieving this clear national goal is the efficient production, distribution, and marketing of these fuels." said James Peeples, senior vice president of business development & government relations for NewGen. "It is essential for the success of the energy policy proposal that the supply stream also meets the demands of the market," Peeples noted. "Consumers will buy and benefit from these 21st century fuels if they are of the highest quality, accessible at local gas stations and competitively-priced."

Industry association, the American Coaltition for Ethanol (ACE), also praised the proposal. "We're of course delighted that the president is calling for an ambitious, yet achievable goal and we're thankful for him bringing leadership to the issue," vice president of ACE, Brian Jennings, told CSNews Online earlier this week. "We've already been talking about something similar, working with Congress on the Biofuel Security Act, which would accomplish much of what the president is talking about."

Achieving the goals set forth in the plan calls for the removal of multiple roadblocks, industry experts told the Times. The 35 billion gallons of ethanol fuel requires advances in cellulosic ethanol -- fuel made from non-food sources such as switchgrass and wood chips. While corn-based ethanol is cheaper to produce, industry experts warned that corn shortages and price hikes in the food industry would be a result of farmers catering to energy demands instead of food production. However, cellulosic ethanol, which eliminates any threat to the food supply, is much more costly to produce than corn-based ethanol, the report stated. Another roadblock is the creation of the 40 million additional acres needed to grow the plant volume involved and an adequate infrastructure to transform plants into fuel.

"Corn can't do it alone. The ethanol industry must reduce the cost to make fuel from cellulose," Jennings acknowledged. "Corn will always be a major component, but we need to move beyond corn to achieve the goals. Today cellulosic ethanol is more expensive than corn-based ethanol, that's why we continue to do some research and develop ways to drive the costs down. We will make cellulosic ethanol a more efficient process in the future."

Skeptics stated that the plan does not consider the involvement of petroleum products in the future. "Oil and natural gas will continue to serve as foundation fuels for the American economy, not only today, but for the foreseeable future. U.S. energy policy must continue to encourage domestic production of petroleum products and natural gas supplies, and the efficient usage of these fuels, while maintaining environmental progress," said Charles T. Drevna, executive vice president of the National Petrochemical & Refiners Association (NPRA). "Unfortunately, biofuels are not a panacea for America's supply problems, nor can they deliver on the much-touted promise of energy independence."

Drevna added that while the NPRA does not oppose the use of ethanol, biodiesel, E-85, or other alternative fuels, it does not support their use based on mandates and subsidies.

He continued: "The near-term reality is that mandating a massive increase in ethanol usage far beyond the current capacity of 5.4 billion gallons is likely to impact corn prices, leading to unacceptable food price increases for those in society least able to afford them."

The NPRA also stated that future policies should be based on cost-effective approaches that maintain competitiveness between U.S. refiners and petrochemical manufacturers and allow them to provide needed petrochemical and fuel supplies.

"The big numbers may sound impressive, but this is nothing more than stay-the-course on global warming," Philip Clapp, president of the National Environmental Trust, told the Times. The plan is essentially a 1.5 percent cut in carbon emissions a decade from now, he said. "They will still go up by 14 percent over the next decade."

If the plan is achieved, its environmental and political benefits ultimately rest upon the consumers. A recent study commissioned by Pavilion Technologies and conducted by Harris Interactive revealed that 95 percent of consumers who do not use biofuels could be encouraged to switch from gasoline to an alternative fuel blend, including E85 or gasoline blended with 10 percent ethanol.

The survey found that nearly three quarters of consumers, or 72 percent, would switch to biofuel if it was priced lower than conventional gasoline. An additional 61 percent stated that they would purchase biofuels if the local gas station provided them. Out of the more than 2,500 drivers surveyed, 5 percent stated that nothing would convince them to purchase biofuels.

In addition, price does not matter to nearly half of the consumers that would purchase alternative fuels. While 75 percent stated that they choose the cheapest fuel available, 47 percent of those consumers would pay a premium price for biofuels if they were proven to be more environmentally friendly than gasoline.

"Americans are ready to make the switch to ethanol. The results of this survey demonstrate that drivers want to reduce the United States' dependence on foreign oil and some are even willing to pay a premium price to help the environment," said Matt Tormollen, chief marketing office for Pavilion.