Des Moines Register, IA
12-16-07
Democrats embrace biofuels agenda while Republicans split
By PHILIP BRASHER
Register Washington Bureau
Tough decisions on energy policy, including biofuels, await the nation's next
president.
President Bush did it, as did his Democratic rivals in the 2000 and 2004
elections. Bill Clinton did it before any of them.
They campaigned in Iowa and talked up corn ethanol. It's assumed to be a rite of
passage for anyone wanting to win the presidency by starting strong in Iowa's
first-in-the-nation caucuses.
Democratic candidates this year are no different. They're embracing virtually
everything on the biofuel industry's wish list, including an energy bill nearly
completed that would require motorists to use 36 billion gallons of biofuels by
2022, nearly six times what ethanol producers will distill this year.
But the Republican candidates are divided over whether the government should
require increased production of the fuel or whether to continue the subsidies and
import tariff upon which the industry has come to depend.
"Some of the Republicans are not really pandering to the corn lobby. Whether
they are going to pay for that at the ballot box remains to be seen," said Kenneth
Green, an expert on energy policy at the American Enterprise Institute, a probusiness think tank in Washington, D.C.
The ethanol industry will lose a good friend when Bush leaves office. It's tough to
beat having a former Texas oilman declare the nation "addicted to oil" and
challenge Congress to dramatically increase biofuel production. And it was Bush
who introduced switchgrass, a potential new feedstock for ethanol, to the nation's
political lexicon.
Republicans differ dramatically on ethanol mandate, subsidies
Among the leading GOP candidates, Mike Huckabee and Mitt Romney talk the
most like Bush on ethanol.
Huckabee, a former Arkansas governor, goes even further than Bush, by
pledging to make the United States energy-independent in just 10 years.
Romney, the former governor of Massachusetts, supports some of the biofuel
industry's priorities, such as the continuation of tax subsidies, but he has stopped
short of endorsing the 36 billion-gallon mandate.
Romney has promised to support aggressive research into cellulosic ethanol.
Huckabee backs the 36 billion-gallon biofuels mandate, and also supports the
ethanol tariff and domestic biofuel subsidies. He believes the United States can
become energy-independent through a combination of alternative energy
sources, increased conservation and higher domestic oil production, including
drilling in Alaska's Arctic National Wildlife Refuge, says spokesman Eric
Woolson.
Calls for energy independence have been common since the 1970s, but they
never go anywhere because of what it would cost the U.S. economy to replace
foreign oil, said Jerry Taylor, an analyst at the Cato Institute, a think tank that
promotes free markets.
The United States currently imports nearly 60 percent of its petroleum needs.
Canada is the leading source.
Rudy Giuliani has said the United States should "get ahead" of Brazil, the chief
U.S. rival in ethanol production, but the former New York City mayor hasn't taken
public positions on key biofuel issues.
Arizona Sen. John McCain and former Tennessee Sen. Fred Thompson don't
support biofuel mandates at all. McCain believes the tariff on imported ethanol
should be abolished to lower U.S. gasoline prices.
Thompson said biofuels can be competitive without mandates, while McCain
believes high oil prices should be enough to encourage the use of new energy
sources. McCain, who has led efforts in the Senate to limit greenhouse gas
emissions, wants to speed the development of plug-in hybrid vehicles.
Leading Democrats support continued biofuels mandates
Experts believe the challenges of climate change and instability in oil-producing
countries will ensure that energy policy stays high on the next president's
agenda.
Biofuels advocates say that increasing usage of the products could help
moderate oil prices, reduce greenhouse gas emissions and boost rural
economies, hence the push in Washington for a higher mandate. The target of
7.5 billion gallons will be surpassed next year, four years ahead of schedule.
The 36 billion-gallon target passed the Senate in June and was adopted by
congressional Democratic leaders as part of an energy bill now pending in
Congress.
The higher mandate, however, has drawn opposition from oil companies, who
don't want to be forced to use biofuels, and from livestock producers, who fear
increased corn ethanol production will drive grain prices and feed costs still
higher. Environmental groups wanted safeguards added to the mandate.
All four Democratic senators who are running for president - Hillary Clinton of
New York, Barack Obama of Illinois, Joe Biden of Delaware and Chris Dodd of
Connecticut - voted for the Senate energy bill, which passed 65-27 in June.
McCain, the lone GOP candidate in the Senate, did not vote.
In voting for the energy bill, Clinton endorsed an ethanol mandate that exceeded
by nearly fivefold one she once opposed. Now, in addition to supporting the
legislation, she proposes spending $2 billion on biofuels development.
Clinton said she voted against the original mandate in 2005 out of fear it would
raise gas prices for her New York constituents.
Obama, who has pushed ethanol issues since his election to the Senate in 2004,
said he'll not only ensure a new mandate is met, he promises it will be
surpassed. He's proposing a $150 billion fund to finance new biorefineries and
says he wants to require all new cars to run on E85, a mix of 85 percent ethanol
and 15 percent gasoline.
Former North Carolina Sen. John Edwards has said oil companies should be
required to sell E85 fuel, a move that would help the country reach the far greater
mandate.
Perhaps no candidate has been as enthusiastic as Bill Richardson, the New
Mexico governor and former U.S. energy secretary, who has said renewable
fuels would be "central to my entire presidency." Richardson wants to accelerate
the development of cellulosic ethanol, biofuel made from plant residue.
"Most of the candidates are singing the praises of ethanol," said Robert Brown
of Iowa State University's Office of Biorenewables Programs. "That's a start,
but it also shows that they may be pandering to the voters of Iowa."
Among the leading Republican candidates, Romney has promised that his
administration would work to make breakthroughs on biofuels' infrastructure and
support aggressive research into cellulosic ethanol.
Tariff, creating a market, new mandate decisions await
A higher biofuel mandate, should it be enacted, will pose a stiff challenge for
whoever wins the presidency.
Under the energy bill, 21 billion of the 36 billion gallons of biofuels required by
2022 would come from advanced forms of biofuels, such as cellulosic ethanol.
However, producing fuel from crop residue and other sources of biomass is still
not economically viable, and costly new biofuel refineries must be built.
Researchers also must come up with efficient methods to harvest and store the
large quantities of crop residue and other biomass necessary to make the fuel.
The next administration is likely to be lobbied by the ethanol industry to increase
the market for the fuel by allowing more of it to be used in conventional gasoline.
Under current regulations, ethanol cannot be used in most cars in blends
exceeding 10 percent, which limits the market for the fuel to 15 billion gallons a
year.
The Environmental Protection Agency is studying the impact on engines and air
quality of using amounts of more than 10 percent ethanol in gasoline.
Ethanol producers are certain to press the next president to keep the 54-centper-gallon tariff on imported ethanol that protects U.S. producers from foreign
competition. Brazil is arguing at the World Trade Organization that ethanol is an
environmentally beneficial product that should be exempt, or nearly exempt, from
tariffs.
Proposals that Democrats are pushing track closely with the recommendations of
a coalition of farm groups, renewable energy interests and environmentalists who
want the nation to produce 25 percent of its energy from renewable sources by
2025. Both the House and Senate have adopted the target.
Reaching that goal would reduce emissions of carbon dioxide by 14 percent from
2005 levels, the Energy Department estimates. Carbon dioxide is the leading
human-made U.S. greenhouse gas.
But some experts are concerned that some of the ideas Democrats have pitched
in Iowa, especially those with a focus on E85, could forestall the development of
more economical alternative fuels
Conventional fuels like gasoline and diesel, for example, can be made from plant
cellulose using thermal or chemical processes. And a new study published by the
Proceedings of the National Academy of Sciences says that hydrogen fuel can
be efficiently produced from biomass.
"There has been probably too much emphasis on just one approach and one fuel
for the future. That has been cellulosic ethanol," said Iowa State's Brown.
Hitting a 2025 target wouldn't be cheap. A new farm bill that Congress is working
on will likely provide some new funding for biofuels, but it's nowhere near the
$12.7 billion a year that a group called the 25x25 National Steering Committee
seeks for both renewable electricity development and biofuels.
The House-passed version would provide $2.4 billion for loan guarantees,
research and production subsidies over a five-year period. The Senate has just
$600 million.
The focus on biofuels in Congress owes a lot to the importance of the Iowa
presidential caucuses, according to the industry's critics.
"Ethanol is not going to solve all the problems" with the nation's energy needs,
but the candidates are communicating that it will, said Jay Truitt, a lobbyist for the
National Cattlemen's Beef Association. His group has lobbied against increasing
the biofuels mandate because of the impact of higher corn feed prices on cattle
producers.
But for Iowa's ethanol and biodiesel producers the federal mandates, subsidies
and the import tariff are a matter of economic survival, both in the near term and
in the future, industry officials say. They like what they've heard.
"I couldn't sit here and say any one candidate, Republican or Democrat, has
somewhat cornered" the biofuel issue, said Monte Shaw, executive director of
the Iowa Renewable Fuels Association. "They're all pretty up to speed on why it's
important to the country."
Reporter Philip Brasher can be reached at (202) 906-8138 or
pbrasher@dmreg.com