PO Box 1146
Salida, CO USA  81201
(719) 539-0300
Fax: (719) 539-0301
info@bbibiofuels.com  

Posted on  

August 8, 2005

President Bush Signs Historic Energy Bill Into Law

Legislation Will Reshape the Rural Economy and Renewable Fuels Industries

Washington, DC - President George Bush today signed into law the comprehensive energy bill conference report, H.R. 6, at a national energy laboratory in Albuquerque, New Mexico. The legislation fundamentally alters U.S. motor fuels policy and makes the first ever federal commitment to the use of renewable fuels in our Nation's gasoline.

"America is addicted to foreign oil," stated Renewable Fuels Association (RFA) President Bob Dinneen. "And the first step toward recovery is to admit there's a problem. This legislation does that and more. The energy bill takes the first steps down America's long road to recovery from foreign oil addiction. The renewable fuels standard alone will reduce foreign oil dependency by 5 percent. By focusing on renewable fuels, we've set a new course for energy policy and significantly widened the role American agriculture plays in providing for our most basic human needs. Without President Bush's strong leadership, the country would not have its first new energy policy in well over a decade."

Highlights for motor fuels in the energy bill:

Renewable Fuels Standard: Makes the first ever commitment to expanding domestic fuel supplies with renewable fuels like ethanol and biodiesel. The renewable fuels standard (RFS), which sets a national minimum usage requirement, begins at 4 billion gallons in 2006 and increases to 7.5 billion gallons in 2012.

Greater Refinery Flexibility: Provides refiners flexibility by creating RFS credits (for renewable fuel blended above baseline) that have a lifespan of 12 months. This allows refiners to use renewable fuels when and where they are most cost-effective. In addition, the reformulated gasoline (RFG) oxygenate standard is eliminated 270 days after date of enactment (immediately for California) - a provision refiners have sought for six years. Finally, MTBE was not banned thereby allowing refiners to decide when and if to stop using the gasoline additive blamed for widespread water contamination.

Consumer Protections: The clean air gains for the RFG program will be maintained as the remaining RFG air quality performance standards are enhanced to make up for the elimination of the oxygenate standard. Further, RFS waiver options in the event of limited supply or unusually high biofuels prices will protect consumers from any negative gas price implications.

Farmer Provisions: Updates the small ethanol producer definition from 30 to 60 million gallons per year. This change, which allows modern farmer-owned plants access to the existing small ethanol producer tax credit (SEPTC), ensures farmer-owned ethanol plants continue to play a vital role in the growing ethanol industry. Additionally, the bill creates a similar program for small agri-biodiesel producers.

Diversification of Renewable Fuels: While ethanol is expected to provide the bulk of renewable fuels under the RFS, the bill promotes other renewable fuels by extending the volumetric excise tax credit for biodiesel, currently scheduled to expire at the end of 2006, through 2008. Further, ethanol from non-grain sources is boosted. Every gallon of cellulosic or waste derived ethanol counts as 2.5 gallons toward RFS requirements. Grants and loan guarantee programs are created for cellulosic production facilities. Finally, the bill authorizes a variety of measures to bolster a "bioeconomy" including research and development, biobased product procurement, and new financial incentives to industry and academia.

Building Alternative Fuel Infrastructure: While most renewable fuels are blended with petroleum products and sold through normal gasoline stations, there is a growing interest in utilizing renewable fuels to "replace" fossil fuels. To make these fuels more available to the public, the bill allows taxpayers to claim a 30% credit for the cost of installing alternative, clean-fuel pumps up to a maximum of $30,000. Clean fuels must contain at least 85% ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. Biodiesel blends of 20% or higher also qualify.

The enhanced role for renewable fuels in U.S. motor fuels supplies promises to spur rural economic development from coast-to-coast. According to an analysis by John Urbanchuk with LECG, LLC, establishing an RFS similar to the one contained in the final energy bill between 2005 and 2012 would:

• Spark $6 billion (2005 dollars) of new investment to build 4.3 billion gallons of new ethanol capacity;
  
• Add nearly $200 billion (2005 dollars) to GDP;
  
• Generate an additional $43 billion (2005 dollars) of household income for all Americans;
  
• Create more than 230,000 new jobs in all sectors of the economy;
  
• Displace over 2 billion barrels of crude oil;
  
• Reduce the outflow of dollars largely to foreign oil producers by $64.1 billion (2005 dollars); and,
  
• Lessen America's dependence on imported oil from an estimated 67.4 percent to 62.3 percent.

Click here to see previously posted News items in our Archive