Grain News

Presidential Council Sees Increased Role for Ethanol, Renewable Fuels

Date Posted: December 5, 2006

Washington, DC-–The President’s Council of Advisors for Science and Technology (PCAST) late last week issued a report supporting increasing the role ethanol plays in America’s energy equation.

Notably, the report concluded that biofuels like ethanol are a vital and readily available solution to help address America’s dependence on foreign oil and that continued federal involvement is important to the sustained growth of the industry.

“Biofuels offer a clear, near-term opportunity to reduce the Nation’s dependence on oil,” the report noted.

“With potential improvements in crop production and biorefineries, cellulosic biofuels could replace a significant percentage of the Nation’s gasoline use by 2030.”

“The PCAST report reflects the growing consensus that the federal government must play an active role in maintaining and extending initiatives designed to spur greater investment in renewable fuels like ethanol,” said Renewable Fuels Association President Bob Dinneen.

“The members of this council understand that the U.S. biofuels industry is just now taking off.

"Continued consistent federal policy will be required to ensure the success our nation has achieved in building a domestic biofuels industry is not squandered or lost.”

Specifically, the council recognizes the importance tax incentives have played and will continue to play in fostering the development of a strong domestic renewable fuels industry.

While suggesting potential modification and not elimination of existing tax incentives, the report clearly states “the current ethanol industry has only recently experienced strong growth, compared to the decades of profitability for the petrochemical industry with its multiple historical subsidies” and recommends any changes in the current tax structure be carefully considered.

Included in PCAST’s proposals for the federal government regarding increasing biofuels production and use are:

>Increase the use of E10 (10% ethanol blends) as well as encourage the use of higher percentage ethanol blends.

>Support the commercial development of cellulosic ethanol technology. Identify lands that would be suitable for energy crop production, i.e. cellulosic material.

>Encourage automakers to increase the percentage of flex fuel vehicles (FFV) manufactured each year.

Among PCAST’s proposals is a suspension of the credit offset associated with imported ethanol.

Specifically, the report suggests that offset be repealed specifically for the importation of ethanol for E85 (85% ethanol) use.

While the RFA supports the vast majority of PCAST’s recommendations, repealing the offset for any reason is simply unnecessary.

This year alone, more than 500 million gallons of ethanol will be imported, pay the offset and compete effectively in the marketplace.

Additionally, limiting the proposal to imports for E85 use only present a whole host of concerns, including monitoring the ethanol’s use once it is on our shores.

U.S. ethanol production is growing rapidly so as to meet the demand for E10 as well as E85.

“America’s ethanol industry is responding to the growing demand for ethanol by increasing domestic production at unprecedented rates,” said Dinneen.

“The offset simply exists to ensure American taxpayers are not subsidizing foreign ethanol production.

"Tampering with the offset in any way sends the wrong signal about our country’s commitment to a domestic renewable fuels industry and is simply a solution in search of problem.”

The complete PCAST report, entitled “The Energy Imperative: Technology and the Role of Emerging Companies,” can be found at the web site below.

Currently, 109 ethanol biorefineries nationwide have the capacity to produce more than 5.2 billion gallons annually.

There are 53 ethanol refineries and 7 expansions under construction with a combined annual capacity of more than 4.2 billion gallons.

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