Ethanol Supports Increase With Energy Bill

The House passed the Energy Bill today (H.R. 6), the Energy Independence & Security Act of 2007 on a vote of 235-181 and now it moves to the Senate for final passage. President Bush has threatened to veto the bill because of provisions included that he opposes (Statement of Administration Policy). President Bush supports the most important provision of the legislation: increasing automobile fuel economy standards to 35 miles per gallon by 2020, 40 percent more than the current 27.5 mpg standard. AAEA supports the legislation (and administration objections).

Update (evening Dec 13): The Senate passed the revised energy bill 86 to 8, which makes it veto proof. President Bush will sign it anyway if the House passes the revised bill, which eliminated the tax package.

Update (morning Dec 13): The Senate voted 53 to 42 (evidently changed to 59 to 40), which fails to get the 60 votes needed to invoke cloture and close debate, effectively killing the measure. The Senate will try to rework the bill for passage before Congress adjourns. The bill failed largely because of the provision to pay for the renewables items with ending about $13 billion in tax breaks for oil companies over 10 years.

Energy Tax Incentives Package: The new $21 billion tax incentives package measured over 10 years includes 1) $2.8 billion in incentives for energy efficient products, 2) a $993 million credit for plug-in vehicles and 3) more than $7 billion in incentives for renewable fuels.


1) Fuel Efficiency. The new stardard would be 35 miles a gallon by 2020.
2) Renewable Energy. Electric utilities would be required to use renewable energy sources for at least 15 percent of their power generation.
3) Taxes. A $21 billion package of tax incentives.
4) Efficiency Standards. Incandescent light bulbs would be eliminated by 2015.
5) Renewable Fuels. Ethanol use would be increased to 36 billion gallons a year by 2022. (The Washington Post)

* Eliminated


E85 Biofuel Needs Cool Cars and More Stations

Wall Street Journal reporter Matt Vella drove a FlexFuel Chevrolet Suburban 1,907 miles on a round trip from New York City to Indianapolis to see if it was convenient to use a car that uses 85% ethanol and 15% gasoline. His findings: limited availability of flex fuel vehicles, E85 shortcomings but cheaper gas. He found a high concentration of stations that carried E85 in the Midwest, but stations are rare back East.

He found other pros and cons. E85 is a renewable energy source, it is cheaper and it provides an alternative to imported oil. E85 has a lower energy content and cuts fuel economy by 30%. Vella found that there weren't many 'cool' vehicles because Midwesterners that purchase most flex vehicles drive larger, less fuel efficieint models like the Ford Crown Victoria, Dodge Durango, Jeep Commander and Saturn Relay. And most of the stations are in middle America.

Vella found that the biggest reason people liked E86 was price, not environmental or foreign policy benefits. The highest E85 price was $3.11 in Philadelphia with a low of $2.39 in Moroevill, Pennsylvania. Regular gasoline was $3.50. (The Wall Street Journal, 6-19-07)


Midwest Ethanol Producers Will Have To Consolidate?

Ethanol is problematic because most American cars can only use about a 10% blend with regular gasoline and it cannot be moved via pipeline like gasoline because of it corrosiveness. Most ethanol is shipped from the Midwest by rail to terminals. So what is the ethanol industry to do? Consolidate? Possibly. There is also the expensive proposition of building specially constructed ethanol pipelines. Brazil is considering such pipelines.

Archer-Daniels-Midlands (ADM) controls about 20% of U.S. ethanol capacity. Small farmer-owned ethanol producers account for about a third of the market with midsize companes make up the rest. Some of these midsize companeis include: Aventine Renewable Energy Holdings, Inc, US BioEnergy Corp, and VeraSun Energy Corp. In order to increase market penetration the ethanol industry might have to bulk up by partnering up. There is also the question of purchasing or building an ethanol plant. An acquisition costs about $2.30 per gallon and building a new facility is about $2.00 per gallon. (The Wall Street Journal, 6-18-07)

Midwest In Center Of Energy Bill Tax Incentives

Senate Finance Committee Chairman Max Baucus (D-Mont) is considering tax incentives for the energy bill being debated on the Senate floor this week. Vehicles and coal, Midwest staples, are front and center. Fuel economiy standards and coal-to-liquids are getting lobbied from supporters and opponents, along with other clean energy proposals. Automakers want to weaken proposla to significantly increase Corporate Average Fuel Economy (CAFE) standards. The legislation proposes about 46 mpg, automakers say they 'could' do 'maybe' 36 mpg and AAEA wants about 40 mpg.

The Coal to Liquids Coalition, a consortium of coal producers, unions, airlines and railroads, wants $200 million in investment tax credits to help in building 12 coal-to-liquid (CTL) refineries. AAEA supports coal-to-liquids mostly for military use, although we want CO2 sequestration from these plants and we support Senator Barck Obama's legislation (notwithstanding his clarification). AAEA also believes CTL producers should be required to finance nuclear plants, solar power and wind turbines as carbon dioxide offsets.

The total energy bill tax incentives package for cleaner energy sources, ethanol, animal fat diesel, CTL, fuel economy standards and more will be about $14 billion over 10 years. (The Wall Street Journal, 6-18-07)

AAEA Establishes Midwest Office

James Mosley has agreed to be Director of the AAEA Midwest Office. This will enhance AAEA's outreach and increase our ability to address the issues affecting the Midwest. At the top of this list are ethanol and coal.

Moseley is an energy expert and a longtime environmentalist. He and AAEA President Norris McDonald are pictured at left at the State of Environmental Justice 2007 Conference at the Howard University Law School. AAEA help organize the conference.

This is an exciting time for us and the country. Mr. Mosley brings a wealth of knowledge and skills to our little organization. We continue to be small but very powerful.