New Energy Bill Will Have Significant Impact on Economy

The legislation will affect more than just the biofuels industry.

Published on: Dec 21, 2007

The Biotechnology Industry Organization hosted a teleconference Thursday to discuss the implications of the Energy Independence and Security Act of 2007. In his opening remarks, Brent Erickson, executive vice president of BIO, called the bill the most ambitious energy policy taken by any country in the world.

"This will create a demand for ethanol like we've never seen before," Erickson says. "It's going to signal to Wall Street that biofuels is an area to invest in and that will spur production of more flex-fuel vehicles."

The panel of industry experts agreed that meeting the 36 billion gallon Renewable Fuels Standard will require the construction of about 300 new ethanol plants, about 75 new corn ethanol facilities and more than 210 for conversion of cellulosic materials. This bill will create a lot of jobs, boosting not only the overall U.S. economy, but especially the rural economy.

"Not only are new plants going to have to be built," says Bill Caesar, a partner of McKinsey & Company. "But also all the elements of infrastructure will have to be built such as railways and feed storage facilities. This is going to change the face of energy in America."

According to Mark Stowers, vice president of research for POET, the nation's largest dry-mill ethanol producer, the new RFS will allow the U.S. to offset all the oil bought from OPEC by 2022. It is estimated that the bill will cut oil consumption by 1.5 million barrels per day.

The opportunities for the construction industry are tremendous. It is thought that 1.5% of the nation's gross domestic product will be needed to accomplish this undertaking. That is larger than the Manhattan Project and the Apollo program combined. It will also provide new opportunities in the biofuels industry beyond the Midwest.

"This will facilitate a geographical expansion of biofuels in the U.S.," says Gerson Santos, vice president of research and development for Abengoa Bioenergy. "With the requirement for cellulosic biofuels we'll see a move into the Southeast, which has great potential for energy crops, as well as the Northeast and the West."