Senate Action Doubles Renewables in Fuel Supply

Energy Committee adopts 8 billion renewable fuels standard mandate for comprehensive energy bill. Compiled by staff

Published on: May 25, 2005

The Senate Energy Committee approved an amendment to the Energy Bill that requires eight billion gallon national Renewable Fuels Standard (RFS) to be phased in by 2012, starting with four billion gallons in 2006.

The ethanol and biodiesel industries have undergone unprecedented growth over the past several years. In fact, the U.S. currently has the capacity to produce more than 3.7 billion gallons of ethanol and biodiesel, and plants under construction will add an additional 700 million gallons of capacity by the end of the year. Most of this growth has been in farmer-owned plants, which taken as a whole, now represent the single largest producer in the country.

Agricultural groups, including the American Farm Bureau Federation, American Soybean Association and National Corn Growers Association, voiced support for the bill and for the work of amendment sponsors Sen. Jim Talent, R-Mo., Tim Johnson, D-S.D. and Byron Dorgan, D-N.D.

The production and use of 8 billion gallons of ethanol, biodiesel and other renewable fuels by 2012 will displace over 2 billion barrels of crude oil and reduce the outflow of dollars largely to foreign oil producers by $64.1 billion between 2005 and 2012. As a result of the RFS, America's dependence on imported oil will be reduced from an estimated 68 percent to 62 percent.

The renewable fuels sector will spend an estimated $6 billion to build 4.3 billion gallons of new ethanol and biodiesel capacity between 2005 and 2012, and nearly $70 billion on goods and services required to produce 8 billion gallons of ethanol and biodiesel by 2012. Purchases of corn, grain sorghum, soybeans, corn stover and wheat straw alone will total $43 billion between 2005 and 2012.

The amendment also establishes a one-year credit trading program for refiners and blenders who exceed minimum obligations, and includes an escalation clause that would allow the U.S. Environmental Protection Agency (EPA), in coordination with the secretaries of energy and agriculture, to increase the renewable fuel requirement in 2013 and beyond based on an overall review of the program. A Loan Guarantee Program of $250 million per cellulosic biomass facility was also included in the amendment, as well as three sugars to ethanol program provisions. The final amendment, approved by a voice vote, included three second degree amendments – two by Sen. Maria Cantwell, D-Wash., and one by Sen. Diane Feinstein, D-Calif.

Cantwell’s second degree amendment establishes cellulosic ethanol, derived from non-sugar based plant material, to be counted as 2.5 credits toward the RFS. In addition, a provision to set aside up to 250 million gallons of RFS demand for ethanol beginning in 2013 was also adopted. The amendment also establishes an "Advanced Biofuel Technologies Program," to demonstrate advanced technologies for the production of alternative transportation fuels, giving priority to projects that enhance the geographic diversity of alternative fuels production and utilizes feedstocks that represent 10 percent or less of ethanol or biodiesel fuel production in the United States during the previous year.

Feinstein’s seasonal variation amendment was adopted by a 12 -10 vote, which exempts California from the seasonal variation provision requiring EPA to issue regulations ensuring more regular use of renewable fuels should less than 35 percent of the RFS requirement be used in any season. The seasonal variation provision is intended to ensure year-round use of renewable fuels.

The committee is expected to complete its work on the energy bill on May 26. During the first part of June, the committee is expected to consider the tax title to be included in the comprehensive energy bill. Comprehensive energy legislation is expected to be on the Senate floor the last two weeks of June.