Renewable Fuels Could Save Money, Environment

By Cat Lazaroff

WASHINGTON, DC, January 4, 2002 (ENS) - Energy legislation emphasizing renewable fuels could help boost the U.S. economy by $300 billion and create as many as 300,000 new jobs by 2016, an independent analysis suggests. The study, sponsored by the National Biodiesel Board, finds that increased use of American made fuels such as biodiesel and ethanol would generate an additional $71 billion over the next 15 years.

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A farmer unloads a truck of corn for ethanol production at the Pekin Energy Company in Illinois (Two photos by Warren Gretz, courtesy National Renewable Energy Lab)
The AUS Consultants study assumes that the nation will reach goals such as meeting 1.2 percent of the nation's vehicle fuel needs with renewable fuels in 2002, increasing to four percent by 2016. The four percent level would displace the annual equivalent of 302 million barrels of crude oil by 2016, or almost 2.9 billion barrels of crude oil between 2002 and 2016.

"Relying on renewable fuels for an increasing share of our transportation fuel requirements means that every acre of land that produces biomass used to make a renewable fuel ethanol becomes an oil patch that never runs dry," the report states.

The study suggests that taxpayers would benefit from increased renewable fuels use, because increased demand for farm crops would decrease the need for government farm subsidies, in some scenarios by up to $7.8 billion between 2002 and 2016.

Soybean prices are projected to increase by an average of 68 cents per bushel. Corn prices could rise by more than 11 percent, as demand for corn for ethanol production rises from 652 million bushels in 2002 to nearly 2.5 billion bushels by 2016, the report projects.

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Ethanol manufacturing plant in South Bend, Indiana operated by the New Energy Company of Indiana turns corn or other cellulose fiber into ethanol
The production of biodiesel and ethanol would add $6.6 billion in annual cash income to farmers, for a total of $99 billion by 2016.

"This is common sense policy for America," said National Biodiesel Board (NBB) president Robert Metz of South Dakota. "We rely on foreign nations for 60 percent of our crude oil and that figure is expected to increase to as much as 75 percent by 2010. Imported petroleum is the single largest component of our trade deficit."

Energy packages now under consideration by the Senate would promote U.S. energy independence by having a percentage of U.S. motor fuels contain either biodiesel or ethanol. Based on U.S. Department of Energy projections, AUS Consultants looked at legislation sponsored by Senators Chuck Hagel, a Nebraska Republican, and Tim Johnson, a South Dakota Democrat.

"With U.S. dependence on foreign oil at an all time high and increasing, we must look for alternative forms of energy," said Hagel.

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These farm machines at the USDA research center in Beltsville, Maryland run on a mixture of diesel fuel and biodiesel, which is made from soybean oil. (Photo by Bob Nichols courtesy Department of Agriculture)
"I believe renewable fuels such as ethanol and biodiesel should be the centerpiece of our future energy strategy, because these fuels are home grown solutions," Johnson added.

Since the study was completed, Senate Majority Leader Tom Daschle has introduced another bill that includes even more support for alternative and renewable fuels.

Not everyone agrees that requiring the use of renewable fuels such as ethanol would be good for the nation. In December, a coalition of highway users, a construction union, small businesses, gasoline marketers, oil refiners, petrochemical manufacturers and oxygenated fuel manufacturers sent a letter to the Senate leadership warning that mandating ethanol use in transportation fuels would have "serious, adverse consequences on the U.S. economy, environment and fuel supply."

The letter, copies of which were sent to every member of the Senate, urged Senators to reject proposals to incorporate an ethanol mandate in Senate energy legislation. The letter argued that the mandate would increase fuel costs to consumers, because ethanol is currently twice as expensive as the gasoline it is intended to displace.

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Bus running on soybean biodiesel (Photo courtesy Nebraska Soybean Board)
The mandate would also pose problems for the environment because the volatility of ethanol blends could increase air pollution, the coalition charged.

But conservation groups welcome the Senate's consideration of ethanol mandates and other measures which would increase renewable fuel use.

"The debate over a national energy policy is at last moving in the right direction," said Deb Callahan, president of the League of Conservation Voters. "After months of negative haggling over old, tired ways to meet our energy needs, voters will finally hear a positive debate about what's next for America's energy future."

NBB's Metz noted that the European Union is considering a policy similar to the renewable standard provisions before the Senate.

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One of 14 ethanol powered buses that operate along regular routes in Peoria, Illinois (Photo courtesy Greater Peoria Mass Transit District)
"Biodiesel is a long time favorite in Europe, and it will be here too once Americans are given the chance to see the many benefits the fuel has to offer," Metz said.

The AUS study is available at: http://www.biodiesel.org