Fuel for Thought
The most discussed provision of the new federal energy legislation, just signed by President Bush, is that vehicle fuel economy standards will go up for ...
The most discussed provision of the new federal energy legislation, just signed by President Bush, is that vehicle fuel economy standards will go up for the first time in 32 years. I'm just as interested, however, in the law's ethanol provisions. Consider two statistics:
1) The law mandates that the United States produce 21 billion gallons of cellulosic ethanol a year by 2022.
2) Currently, rounding to the nearest billion, the U.S. produces 0 billion gallons of cellulosic ethanol a year.
For quite a while, many experts have regarded cellulosic ethanol as a preferable alternative to corn-based ethanol. Cellulosic ethanol can be made from any plant product, be it switchgrass, wood chips or waste from sugar production. As a result, cellulosic ethanol has the potential to be a much more significant fuel source than corn-based ethanol (which, obviously, can only come from land suitable for corn), without driving up food prices.
Over the past couple of years, state governments have become active in promoting cellulosic ethanol, but the scale of their efforts suggests how difficult the 21 billion gallon mandate will be to meet. When I spoke with state officials earlier this year, they were excited about subsidizing facilities that could produce 5 million gallons of cellulosic ethanol a year.
States could simply build 4,200 plants of that size and, voila, the federal mandate will be met. Currently, the nation's 134 corn-based ethanol plants can produce a little more than 7 billion gallons of fuel per year.
So, you can see why skeptics think that Congress' commitment to cellulosic ethanol is premature. However, Washington seems to have taken a lesson in regulation from Field of Dreams: If you mandate it, they will come.