Senate Panel Votes to Boost Ethanol Mandate
Thursday, May 26, 2005
A Senate panel, responding to high gasoline prices and pressure from farm states, voted unanimously yesterday to require refiners and importers to more than double the use of ethanol and other agriculture-derived fuels by 2012.
The groundswell of bipartisan support for an ambitious renewable fuels "mandate" of 8 billion gallons a year came as the Energy and Natural Resources Committee continued work on an energy bill that still faces many obstacles. Once the requirement were fully implemented, corn-based ethanol and other renewables -- made from sugar cane, soybeans, beets, cornstalks and grasses -- would account for about 5 percent of the U.S. gasoline market, said Sen. Jim Talent (R-Mo.), sponsor of the plan.
"This is about fuel in our farm fields and not under sands in Saudi Arabia," said Sen. Byron L. Dorgan (D-N.D.).
The committee debate made clear that the steep rise in gas prices, the war in Iraq and environmental worries have broadened ethanol's appeal and provided an opening for farm-state lawmakers to press the issue. A 2003 House-Senate energy compromise, which was never enacted, called for an ethanol standard of 5 billion gallons a year, only slightly more than the 3.4 billion gallons that are currently being produced.
Talent said a gallon of ethanol costs 20 cents less than its gasoline equivalent today. Under his plan, ethanol would displace 2 billion barrels of imported crude oil between 2006 and 2012, he said.
Nonetheless, ethanol supporters still face formidable hurdles.
The oil industry strongly opposes the expanded requirement. The American Petroleum Institute this week released studies arguing that wider use could raise food costs without significantly cutting U.S. dependence on fossil fuels.
Resistance to requirements for expanded ethanol use is also coming from California, New York and New Jersey, where ethanol is higher-priced than in the Midwest.
"I firmly believe this is not good public policy," said Sen. Dianne Feinstein (D-Calif.). She cited a state study that found air quality deteriorated in some California communities during hot summer months, when motorists were using ethanol blended with gasoline.
Feinstein pushed through an amendment exempting her state from having to use its share of mandated ethanol between April to October. The vote was 12 to 10, with panel Chairman Pete V. Domenici (R-N.M.) opposing the amendment. "I don't support an opt-out for one state," he said.
The House in April passed a new energy bill that endorsed the 2003 standard of 5 billion gallons. The Senate Environment and Public Works Committee, chaired by oil and gas state Sen. James M. Inhofe (R-Okla.), favors limiting the requirement to 6 billion gallons.
In a letter this week, Inhofe urged Domenici "to refrain from dealing with this issue."
But Domenici indicated yesterday that inclusion of a renewable fuels package -- a top priority for farm-state senators in both parties -- would be critical to passage. "This bill is not going to go through the Senate without an ethanol provision," he said.