Des Moines Register
11-05-06
Hunter: California vote illustrates big-league stakes of biofuels
By CAROL HUNTER
REGISTER EDITORIAL PAGE EDITOR
Iowa and California are separated by more than 1,200 miles in distance and
perhaps a wider gulf in sensibilities - in my humble opinion, Midwestern common
sense vs. left-coast eccentricities.
Yet a proposition on the ballot in California on Tuesday might have more
influence on Iowa's economic future than the candidate choices on ballots in
Iowa. Californians will decide whether to bankroll research and production of
alternative energy with $4 billion in spending over 10 years. (Yes, that's a B, as in
close to the size of Iowa's $5.3 billion state budget this year.) A stated goal of the
measure, called Proposition 87, is a 25 percent reduction of petroleum use in the
state by 2017.
To pay for it all, Proposition 87 would establish a new tax of 1.5 percent to 6
percent on each barrel of oil produced in California, the third-largest oil-producing
state behind Texas and Alaska. A legislative analysis estimates the tax would
generate $225 million to $485 million annually. Comparatively, Iowa's entire
Department of Economic Development budget is $139 million.
Those mega-numbers illustrate the stiff competition Iowa faces as it seeks to
maintain its edge in research and production of biofuels.
Measured by gross domestic product, California has the eighth-biggest economy
in the world, trailing Italy and besting Canada. Its GDP last year was more than
14 times that of Iowa's.
If California decides to get serious about renewable fuels, its efforts could quickly
dwarf Iowa's private and public investments in ethanol, biodiesel and wind
energy.
The ballot measure's prospects are uncertain. Advocates and opponents have
poured at least $105 million into the campaign, a record for a single initiative, the
San Diego Union-Tribune reported last week. Oil companies warn that the tax
would reduce oil production in the state and raise gas prices at the pump
(although the proposition states that the cost of the tax can't be passed on to
consumers). Big-name advocates, including former Vice President Al Gore and
Hollywood types such as Robert Redford, say the program would help clean the
air, lessen global warming and reduce dependence on foreign oil.
The $4 billion would pay for everything from subsidies for consumers who buy
alternative-fuel vehicles, to grants for university research, to incentives for
businesses to develop and produce alternative fuel, the infrastructure to deliver it
and the vehicles to use it. Eligible fuels include hydrogen, methanol, natural gas,
blends of 85 percent ethanol or higher or 20 percent biodiesel or higher, provided
they meet criteria such as reducing global-warming emissions.
Whether or not Prop 87 passes, California has taken other steps that likely will
push renewable-fuels production and might pull its epicenter westward.
In 2005, California adopted rules to limit greenhouse-gas emissions from
vehicles. (A lawsuit by automakers is pending.) And in September, Gov. Arnold
Schwarzennegger signed into law a bill requiring a 25 percent cut by 2020 of
carbon-dioxide pollution produced within the state. Those measures are spurring
interest in nuclear power, clean-coal technology, wind energy and biomass making fuel from feedstocks such as manure, prairie grasses or fast-growing
trees.
In their gubernatorial campaigns, both Republican Jim Nussle and Democrat
Chet Culver have outlined ambitious plans - by Iowa standards - for developing
the renewable-fuels industry here. But are their visions farsighted enough, in light
of competition from the likes of California and nations around the world? And the
question remains whether the Legislature will back up campaign talk with cash.
Mike Blouin, Iowa's director of economic development, while not addressing the
merits of Prop 87, said Iowa needs some sort of consistent funding source for
economic-development efforts such as renewable-fuels research.
"We badly need a revenue source to do what we have to do for our own future,"
he said.
Robert C. Brown, director of the Office of Biorenewables Programs at Iowa
State University, agreed that perhaps Iowa could "draw some inspiration from
California" in providing incentives for renewable-fuels development. He also
noted Europe's commitment to being a lead player.
Midwestern common sense would dictate the need for a sizable, sustained
financial commitment if Iowa is to compete in the big leagues of biofuels
development.