U.S. Senate Doubles National Ethanol Mandate

The fate of the full energy package being debated in the Senate this week is still uncertain, but the outlook for domestic fuels is looking as good as ever. The Senate overwhelmingly approved, by a vote of 70-26, a bipartisan amendment to the energy bill calling for an 8 billion gallon Renewable Fuels Standard by 2012, effectively doubling the current requirement.

A similar measure was secured in the House version of the energy bill, virtually guaranteeing the measure will become law if the final Senate version of the overall bill is passed. Senators also adopted an amendment by Senate Energy Chairman Pete Domenici (R-NM) to complete the RFS fuels package that includes repealing the reformulated gasoline oxygenate standard, strengthening the remaining RFG air quality standards to account for the removal of oxygen and banning the polluting gasoline additive MTBE in four years. The Domenici amendment was adopted by a vote of 70 to 26. The RFS is sometimes confused with a national Renewable Portfolio Standard (RPS), which is guaranteed to face a larger challenge in the Senate. As opposed to an RFS that provides incentives for the production of mostly ethanol and some biodiesel, an RPS would establish a percentage requirement for utilities to use renewable energy throughout the U.S. Numerous attempts to include an RPS in a final energy package have been shot down. That being said, the ethanol-friendly RFS didn’t get passed without a fight. Prior to passing the Domenici amendment, the Senate voted to defeat an amendment offered by Sen. Chuck Schumer (D-NY) that would have eliminated the 8 billion gallon renewable fuels standard (RFS) from the comprehensive energy legislation. Schumer’s amendment was defeated on a bipartisan vote of 69 to 28. The RFS included in the committee bill begins at 4 billion gallons in 2006 and increases to 8 billion gallons in 2012. It is a national program that includes flexibility for petroleum companies and numerous safeguards for consumers and air quality. “Today, the Senate reaffirmed its strong, bipartisan support for replacing foreign oil with American ethanol,” said Renewable Fuels Association (RFA) President Bob Dinneen. “America’s energy situation has reached the point where the status quo is unacceptable. The American Coalition for Ethanol (ACE), another ethanol trade association, called the Senate vote “the strongest display of support for ethanol to date in the U.S. Senate.” According to ACE, a recent study by the Consumer Federation of America shows that blending 10 percent ethanol into gasoline (E10) could lower prices at the pump by up to 8 cents per gallon. “The oil lobby alleges that ethanol increases the price of gasoline, but that couldn’t be further from the truth,” said said Brian Jennings, ACE Executive Vice President. “The bottom line is that blending cost-effective ethanol with high-priced gasoline brings down the overall cost of the fuel for consumers,” Jennings added. “American consumers deserve relief from high energy prices, and continuing to rely solely on crude oil is not the way to provide that relief.” Debate on the energy bill will continue in the Senate with final action expected within the next couple weeks.
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