Obama, Harkin: Raising Renewable Fuel Standard Boosts Our Rural Economy

Bill will ensure market keeps pace with ethanol boom; Builds bridge to next generation of biofuels

October 19, 2007 -- WASHINGTON, D.C. –U.S. Senators Barack Obama (D-IL) and Tom Harkin (D-IA) yesterday introduced a bill to immediately update the Renewable Fuels Standard (RFS) to require the production of 18 billion gallons of renewable fuels by 2016 including 3 billion gallons of advanced biofuels, such as cellulosic ethanol.

The legislation will implement the RFS requirements that were included in the energy bill passed by the Senate in June. However, negotiations between Senate and House on competing energy bills have stalled, and the new RFS has yet to take effect. Obama and Harkin's bill recognizes the need for prompt action to update these renewable fuel requirements to provide market certainty to small, local, and farmer-owned ethanol producers.

Despite a boom in production of ethanol by small plants across the country, most consumers around the country have been unable to fill up their cars and trucks with E85 gasoline because of problems in the distribution of ethanol and obstacles to greater ethanol distribution by oil companies. The average spot market price for ethanol has dropped 30 percent over the past six months. With ethanol prices dropping this severely, according to the New York Times, "there is likely to be a sweeping consolidation of the industry, and some small companies could go out of business."

Without the market stability provided by an increased RFS, many small ethanol plants would face increasing financial danger that could cause them to fail, which would not only jeopardize an important bridge to the next-generation of cellulosic fuels, but also hurt farmers, small ethanol producers, and the rural economy as a whole.

"Those family farmers and local ethanol producers have set an example for how to embrace new technologies to lessen our dependence on foreign oil, and they've in turn strengthened the rural economy," Senator Obama said. "I've listened to local producers and heard first-hand how the dive in ethanol prices is having real, day to day effects on their livelihood. We need to ensure that Washington is giving them a fair shot to compete against the big oil companies that have dominated this industry, kept us dependent on foreign oil, and compromised our environment. We are at a critical time in the history of our renewable fuels industry, and we need to fix the imbalance in the market that's working against locally owned plants. If we are serious about creating clean, renewable sources of energy, we need to support the creation of a domestic biofuels industry that will take us from corn ethanol to cellulosic ethanol. It won't happen if these ethanol plants go out of business because ethanol prices continue to fall and Washington insiders continue to block much-needed reforms. I thank Senator Harkin for his longstanding leadership on this issue."

"We need to increase domestic production of clean, renewable biofuels for national energy security," said Senator Harkin. "While the backbone of that industry has been, and continues to be ethanol from corn, we know we need to develop and commercialize biofuels made from cellulosic feedstocks as well. Our farm bill will support that advanced biofuels development. In the meantime, we also need to ensure steadily expanding markets for biofuels, markets that currently are being pinched by limited product distribution channels and consumer access. This new standard is precisely the bridge required to support the steadily expanding use of biofuels to replace more of the gasoline powering the vehicles on our highways."

The need for an updated RFS is clear. Currently, ethanol production is booming – but the energy industry is not keeping up. Less than one percent of the nation's 179,000 gas stations, which are franchised from major petroleum companies, offer E-85. Two percent of the nation's 230 million cars are capable of burning E85 ethanol, and American automakers are poised to make half their fleets E85 capable in the next five years – but await the oil industry to allow consumer access to these fuels.

A higher RFS was also part of The Biofuels Security Act, legislation introduced on the first day of the new Congress in January, by Senators Obama, Harkin, Lugar, Biden, and Dorgan.

Source: Senator Barack Obama

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