Bush's State of the Union: "twenty in ten", biofuel imports

Roughly two weeks after the EU launched its ambitious new energy strategy, President Bush held his State of the Union address which put energy security high on the agenda. It contained the proposal to cut back 20% (2 million barrels) of America's gasoline consumption over the next 10 years. This 'twenty in ten' goal is to be achieved by a program that entails a set of initiatives, including the import of biofuels, US$1.6 billion of additional new funding over ten years for energy innovation, including bioenergy research, energy efficiency grants, and US$2 billion in loans for cellulosic ethanol plants. Mr Bush's speech contained no major initiative on climate change.

A quick overview of the ways in which the President hopes to cut back America's 'addiction to oil':

Reducing Gasoline Consumption Through The Growth Of Alternative Fuel Sources
The President's Plan Calls For Facilitating The Growth Of Renewable And Alternative Fuel Sources By Increasing The Size And Expanding The Scope Of The Current Renewable Fuel Standard (RFS).

* The RFS, established by the President and Congress in the Energy Policy Act of 2005, has contributed to the rapid acceleration of the development and use of renewable fuels. Significant ongoing technological advances have made it possible to increase and expand the standard to displace even larger volumes of gasoline.
* Under current law, fuel blenders must use 7.5 billion gallons of renewable fuels in 2012.
* Under the President's proposal, the fuel standard will be set at 35 billion gallons of renewable and alternative fuels in 2017. This will displace 15 percent of projected annual gasoline use in 2017. The President's proposal will also increase the scope of the current Renewable Fuel Standard (RFS), expanding it to an Alternative Fuel Standard (AFS).
o The Alternative Fuel Standard will include sources such as corn ethanol, cellulosic ethanol, biodiesel, methanol, butanol, hydrogen, and alternative fuels.
* The increased standard will contain multiple "safety valves."
o The EPA Administrator and the Secretaries of Agriculture and Energy will have authority to waive or modify the standard if they deem it necessary, and the new fuel standard will include an automatic "safety valve" to protect against unforeseen increases in the prices of alternative fuels or their feedstocks.

* American Technology And Innovation Will Lead To Energy Security. President Bush believes our scientists, farmers, entrepreneurs, and industry leaders will continue to lead the world in developing and investing in cutting-edge technology, infrastructure, and farming methods. Advances in many fields will play an important role, such as continued improvement in crop yields, optimization of crops and cellulosic materials as fuel feedstock, and cost reduction in the production of cellulosic ethanol and other alternative fuels. The increased and expanded fuel standard creates a tremendous incentive for research, development, and private investment into alternatives to oil.

* Global Production Of Alternative Fuels Helps Us Reach Our Goal And Increases Our Energy Security. The President expects most of the expanded fuel standard to be met with domestically-produced alternative fuels. However, importing alternative fuels also increases the diversity of fuel sources, which further increases our energy security.

Note: this is an important indication for the Biopact. The US does not a priori block biofuel imports from the South, even though no word is said on lifting the US$0.54/gallon tariff on ethanol, nor on cutting back the heavy subsidies for domestic biofuels.

* The President's Plan Enables America To Lead The World To Energy Security. By establishing such a visible and ambitious fuel standard, America's global leadership will help encourage our friends and allies to consider similar policies. Actions by America's friends and allies to increase their production of oil and oil alternatives, diversify their supplies, reduce their consumption, and increase their oil reserves will enhance the energy security of America and the rest of the world. Conversely, foreign actions that undermine free, open, and competitive markets for trade and investment in energy supplies diminish the energy security of America and the world. This is why America opposes the political manipulation of oil and gas exports:
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Reducing Gasoline Consumption Through Increasing Vehicle Efficiency
The President's CAFE Plan Will Reduce Gasoline Consumption By Up To 8.5 Billion Gallons Per Year In 2017. The President's plan calls for reforming and increasing CAFE standards for cars, and for further increasing light truck and SUV standards. The President believes new technologies can be deployed to significantly improve fuel economy without impacting safety. Reducing projected consumption by up to 8.5 billion gallons in 2017 means a 5 percent reduction in projected gasoline consumption in that year. The fuel efficiency standard will have even larger benefits later, when consumers replace even more of the auto fleet with purchases of the more efficient new vehicles. These amounts are based on an assumption that on average, fuel efficiency standards for both light trucks and passenger cars are increased 4 percent per year, beginning in Model Year 2010 for cars and Model Year 2012 for light trucks. Given the changing nature of the marketplace for both cars and light trucks, the Secretary of Transportation will determine the actual standard and fuel savings in a flexible rulemaking process.

* Congress Must Reform CAFE For Passenger Cars. The Administration has twice increased CAFE standards for light trucks using an attribute-based method. An attribute-based system (for example, a size-based system) reduces the risk that vehicle safety is compromised, helps preserve consumer choice, and helps spread the burden of compliance across all product lines and manufacturers. Congress should authorize the Secretary of Transportation to apply the same kind of attribute-based method to passenger cars.

* Congress Should Not Legislate A Particular Numeric Fuel Economy Standard. The Secretary of Transportation should be given the authority to set the fuel standard, based on cost/benefit analysis, using sound science, and without impacting safety.

* The President's Plan Incorporates Flexibility To Minimize Consumer Costs And Increase Consumer Benefits. The plan will enable auto companies to increase fuel economy at the lowest possible cost to consumers by building flexibility into the CAFE standard for both cars and light trucks, such as giving companies the opportunity to buy and sell CAFE credits.

Reduce Traffic Congestion, Help Save Fuel, And Reduce Commute Times.
In 2003, drivers in America's 85 most congested urban areas experienced 3.7 billion hours of travel delay and wasted 2.3 billion gallons of fuel, costing a total of $63 billion.

* The President's Budget Redirects DOT Funds To A New $175 Million Highway Congestion Initiative For State And Local Governments To Demonstrate Innovative Ideas For Curbing Congestion. These ideas include congestion pricing, commuter transit services, commitments from employers to expand work schedule flexibility, and faster deployment of real-time traffic information. In one year, this wasted fuel accounts for more than 20 million metric tons of carbon dioxide emissions.

Stepping Up Domestic Oil Production In Environmentally Sensitive Ways
The President Calls For Stepping Up Domestic Oil Production In Environmentally Sensitive Ways By:

* Continuing to support Congressional action to authorize environmentally responsible oil and gas exploration in a small area of the Arctic National Wildlife Refuge located in northern Alaska, which could produce as much as 1 million barrels of oil per day – Congress reserved this small area after the late 1970s oil shocks to help prevent future ones.
* Continuing to work with Congress to develop legislation to encourage investments in refinery capacity.
* Continuing to encourage all parties to resolve remaining issues regarding the Alaska Natural Gas Pipeline.

Doubling The Current Capacity Of The Strategic Petroleum Reserve
The President Proposes Doubling The Current Capacity Of The Strategic Petroleum Reserve (SPR) To 1.5 Billion Barrels By 2027. The SPR's purpose is to provide the United States with an emergency inventory of oil, an insurance policy in the event of a severe supply disruption, such as from a natural disaster or a terrorist attack in the energy supply chain. Doubling the SPR alone will provide approximately 97 days of net oil import protection, enhancing America's ability to respond to potential oil disruptions.

* The SPR Is Currently At 691 Million Barrels And, Due To Increased Consumption, This Represents Only 55 Days Of Net Oil Imports. In 1985, the SPR, with 493 million barrels of oil, represented 118 days of net oil imports.

Energy Security Will Be Further Enhanced By:

* Increasing The Transportation Sector's Energy Diversity. Increasing renewable and alternative fuels used in automobiles from 3 percent in 2006 to 15 percent in 2017 can give drivers a built-in defense against supply disruptions and high gasoline prices.

* Increasing The Supply Of Oil Alternatives And Reducing Oil Demand. The President's plan will reduce our oil consumption by 10 percent in 2017, or 2 million barrels per day. Increasing the supply of oil alternatives and reducing oil demand could slow the growth of oil prices and lower the price over time, increasing our energy security.

* Building Resilience Through Doubling The Current Capacity Of The Strategic Petroleum Reserve. Uninterrupted oil supply is critical to our energy security. Increasing oil reserves strengthens our ability to respond to oil shortages and reduces our vulnerability to terrorist attacks on energy supplies and infrastructure.

Funding For Advanced Energy Technologies that Provide Clean, Lower Carbon Energy for Homes And Businesses
The 2008 budget includes nearly $2.7 billion for the Advanced Energy Initiative, an increase of 26 percent above the 2007 request and 53 percent above 2006. The 2008 budget provides $179 million for the President's Biofuels Initiative, an increase of $29 million (19 percent) compared to the 2007 budget. The President's Biofuels Initiative aims to accelerate cost reduction and commercial development of cellulosic ethanol, which can be made from abundant biomass materials, including agricultural waste and forest residues, and from dedicated energy crops such as switchgrass.

The President's Farm Bill Proposal Will Include More Than $1.6 Billion Of Additional New Funding Over Ten Years For Energy Innovation, Including Bio-Energy Research, Energy Efficiency Grants, And $2 Billion In Loans For Cellulosic Ethanol Plants.


More information:
White House: Twenty In Ten: Strengthening America's Energy Security - Jan. 23, 2007