Viewpoint of an ethanol group and an ethanol expert on what the President's plan really means for ethanol and biofuels.
We optimistically, yet with caution, applaud President Bush's Twenty by Ten proposal to reduce gasoline consumption by 20% as "potentially" a huge development for ethanol and other renewably derived fuels. Other X factor renewably-based proposals such as 25x25, the president's previous 30x30, the existing 7.5x12 renewable fuel standard (RFS), and the 60x30 legislation proposed by Senators Lugar, Nelson, and Obama to extend the RFS all have great intentions. If realized, the benefits of these X factor programs to the nation "could" be enormous. On the surface, and particularly when you look at the President's numbers in terms of gallons, what's not to like, right? There are some obvious challenges the proposal faces such as legislation from a Democratic Congress that likes the old RFS, along with some flaws that as a nation we will all need to take a closer look at.
For many of us DC veterans who lived through the Clean Air Act Amendment wars of 1990, and the subsequent battles that followed, lumping similar fuels together creates some sibling rivalry that can be fatal. In the case of clean air, with low emission, ultra low emission, and zero emission technologies being given equal status they began to argue about degrees of clean, sort of a mom- likes- me- best. While they all joined hands and supported clean fuel programs they circled back around to try to carve out their own favored nation-type deals. The end result was that they killed each other off. Similarly, and more to the point for ethanol, the memories of the rise and fall of the oxygen standard, and the false promises of ethanol use to meet the reformulated gasoline (RFG) standards are still very fresh scares. Once again, this "new and improved" Alternative Fuels Standard effectively lumps renewables with non renewables. That should be of some concern and a checkpoint before we let what could be another Trojan horse in to the gates of the RFS castle. Some people live and learn, others just keep on living. Still others die.
When CFDC worked to create the oxygen and RFG standards in 1989-90, we did so through our member companies, good friends in the White House, and in cooperation with our other good friends in House and Senate who all wanted to support ethanol to meet "many" national policy goals. No one had the foresight to the rise of MTBE in the marketplace as a competing oxygenate and we did not think to carve out anything specific for ethanol. MTBE quickly became the oxygenate of choice by the oil industry and then completely and effectively shut out ethanol in the RFG market. Only by an interesting twist of fate, and some sound science, did ethanol resume its rightful place in the RFG market to meet national goals outside of just complying with a new fuel standard.
Many of our CFDC members are working on technologies that can produce fuels from a range of feedstocks, both renewable and non renewable so this is directionally a positive plan. However, while many of these waste/gas/coal-to-liquid technologies are an important part of any alternative fuel portfolio, they are secondary in value to the same fuel that is renewable. Fossil fuels still have 98% of the US gasoline market and they will be needed to meet the growing gasoline demands in China and India - so don't feel sorry for the losers. It will take every person in every ethanol stakeholder organization to rip the grip of the oil industry's dominance from US gasoline market -- and then protect it
The President's 20x10 is not an increase of the Renewable Fuels Standard (RFS) but rather the creation of a new Alternative Fuels Standard, of which ethanol and biofuels are once again delegated to be just one slice of what becomes a very larger pie that would be considered "alternative." The 20x10 proposal does not define in any detail exactly what "alternative" means. If it follows previous energy legislation and various elements of the tax code it would presumably be any non-petroleum fuel - any of which could be an alternative to the renewable fuel standard. This could include gas to liquids, coal to liquids, and a host of other fuels derived from things other than renewables. And, there is no distinction on these fuels in terms of being imported or domestic which, if imported, could have the opposite effect of growing our economy. All fuels are not created equal. And, lumping renewable fuels with non-renewable fuels is a giveaway for ethanol and biofuels our organization would not be able to support. As we read this initiative, a breakthrough technology in any of the myriad of ways to make synthetic gasoline could ensure we never produce another drop of ethanol beyond what is being built today. For those who keep calling this an extension of the RFS, they need to read the White House documents.
So the first thing this plan needs is a renewable standard within the alternative standard. In terms of greeenhouse gas reductions, stimulation of the U.S. economy, renewability, and a host of other considerations, ethanol has to be the favorite son.
We give the President a well deserved, yet polite golf-clap from the gallery for a great show of intention and courage to change the direction of our nation. But let's be smart enough to learn from the past. There is a reason we do not have a meaningful alternative fuels program in this country after 25 years of trying, and that reason is failing to craft the right program. An alternative fuel program, of which a minimum amount has to be renewable, is the first step to getting this ship on course.
The Clean Fuels Development Coalition is a national non-profit organization supporting the development of clean, renewable, and domestic transportation fuels. For more information visit www. Cleanfuelsdc.org or call 301 718 0077.