Saturday, January 06, 2007

New U.S. Congress looks to boost alternate fuels

New U.S. Congress looks to boost alternate fuels
By Chris Baltimore

WASHINGTON (Reuters) - U.S. lawmakers unveiled a raft of energy-related bills in the early hours of the 110th Congress aimed at boosting fuel ethanol use, extracting liquid fuels from coal and tightening automobile fuel efficiency rules.

But instead of heaping all their ideas into a behemoth energy bill like they did in 2005, this year's Congress looks poised to pursue energy legislation on a piecemeal basis.

U.S. crude oil prices shot to nearly $80 a barrel in 2006 and sounded alarms across Capitol Hill. Mild winter temperatures, new global supplies and slowing economic growth have sparked a 10 percent decline in prices since the beginning of 2007 - the sharpest drop since December 2004.

But a rising focus on "energy security" by both the Bush administration and Congress has added momentum to efforts to employ home-grown fuel sources like ethanol and coal to temper U.S. import needs.

Harry Reid, the Senate's top Democrat, introduced a broad "message bill" that will shape near-term talks in the chamber's energy and environment panels, which together hold jurisdiction over most energy matters.

Rather than specific initiatives, the bill provides a broad framework for committee action on hot button issues like vehicle fuel efficiency, biofuels and global warming.

The Senate Energy Committee slated an all-day session on February 1 to discuss ways to expand transportation biofuel use with industry groups and other stakeholders.

The panel will also hold a January 10 hearing on global oil markets and their impacts on U.S. economic and national security.

Separately, a group of Midwest senators, including prospective presidential candidate and Illinois Democrat Barack Obama, introduced the BioFuels Security Act, which would require the United States to use 60 billion gallons of ethanol and biodiesel a year by 2030.

"It's time for Congress to realize what farmers in America's heartland have known all along - that we have the capacity and ingenuity to decrease our dependence on foreign oil by growing our own fuel," Obama said. "But what we've been lacking is the political will."

Rising ethanol use has been a boon to U.S. farmers and has driven corn prices to the highest level in a decade.

Biorefineries produced about 5 billion gallons of ethanol last year, well on the way to the U.S. target of using at least 7.5 billion gallons of renewable fuels annually by 2012.


Obama and Sen. Jim Bunning, Kentucky Republican, also introduced the Coal-to-Liquid Fuel Promotion Act of 2007, which would set the stage for large-scale production of transportation fuels from coal.

Both lawmakers come from states with prodigious coal supplies, and the United States has a 250-year supply.

The bill focuses on using a process called "Fischer-Tropsch" which turns natural gas or coal into liquid fuel. The fuel, which was used by Germany during World World II, has seen a resurgence.

The bill would extend loan guarantees and tax credits for new coal-to-liquid plants, which can cost about $2 billion.

The bill boosts a current 20 percent tax credit for coal-to-liquid plants to a maximum of $200 million for each of the first 10 plants built, and extends the expiration of excise tax credits from 2009 to 2020, among other things.

Sen. Ted Stevens of Alaska, senior Republican on the Senate Commerce Committee, wants to raise corporate average fuel economy standards to 40 miles per gallon (mpg) by or before 2017.

The fuel economy of cars and light trucks is down to 24.6 miles per gallon from its 1987-88 peak of 25.9 mpg.

Cars account for about 25 percent of domestic oil use, according to government estimates.