Critical policy recommendations mentioned above (Flex fuel GEM mandate, Alternative fuel infrastructure tax credit, and Government vehicle purchase mandate).We must solve the “chicken and egg” problem of the alcohol fuel market by forcing initial demand.
Increase the blending mandate of ethanol in the gas that we currently buy to 15%. Mandate fuel blenders to buy any ethanol offered to them until they meet the 15% minimum.Cars can safely run on 15% ethanol using the current infrastructure. This will guarantee demand until enough flex fuel cars and flex fuel pumps are in service.
Any newly built gasoline station should be able to carry any alcohol fuel in all pumps.Improve the ethanol distribution infrastructure.
Eliminate anti-competitive practices in gasoline distribution. Exempt gas station owners from exclusivity clauses if they cannot buy mixed blends from their exclusive supplier. The current law is not sufficient.Gasoline companies’ use of anti competitive practices to stifle blended fuel distribution should be stopped, by legal means if necessary.
An alcohol purchase mandate for gasoline distributors – force them to buy any quantity of blending alcohol like ethanol and methanol offered to them (similar to the electric utilities mandate for wind and solar).It will cause distributors to offer incentives to their franchise gas station owners to convert pumps (since they will need to sell the blended gasoline).
If the pace of fuel pump conversion is not satisfactory, then it could be mandated, although we do not believe it will be necessary.Requires monitoring of both supply and demand.
The government should not be in the business of selecting feedstock for ethanol (or other biofuels) production. Government intervention is required to reduce GHG. Therefore, any ethanol production and use cycle should have better global warming effect than the current gasoline production and use cycle, or it should be on a clear technological path to achieve that ratio in three years. This law should not be enforced by a permit procedure, but rather by a fine or conditional stop work order.Current corn based ethanol is GHG positive vs. gasoline. The President should have the authority to remove this restriction in case of an oil shock (e.g., shortages caused by a terror attack).
Eliminate the tariff on imported ethanol. It will encourage investors to invest in ethanol production from efficient plants in the developing world and export it to the U.S. “Growing ethanol” can lift many people out of poverty in countries that are friendly to us, especially in the Caribbean.Ethanol demand could not be satisfied solely by internal U.S. production. The worldwide potential of growing bio-mass in developing countries is $500 billion dollars a year (vs. combined worldwide aid of $60 billion).
Corn subsidies – given the immense investments already made in this sector, continue for at least four years (to help kick start the market). In four years, re-evaluate the market – subsidies may not be needed.Until we have a healthy supply system, we should help our farmers. The $4 billion subsidy saved us $60 billion in oil imports in 2008.
Maintain the current producers’ and blenders’ tax credit programs and extend them until 2018.Investors in ethanol production need a stable horizon. Incentives that have to be renewed frequently discourage investment.
Modify EPA regulations that give preferential treatment to gasoline.It is just one of the ways the gasoline monopoly is maintained.
Alternative methods for producing ethanol – government intervention is not required except in research.The government should stay away from choosing which ethanol production method is better. Let the market decide.
Recently bio-fuels in general and ethanol specifically have been blamed for the rise in food prices around the world and for causing hunger in poor countries. We now know better. The two leading components of the rise in food prices were oil price and speculation. This is evident by the recent identical drop in oil and food prices while ethanol production has been rising.The only reason why this subject is mentioned in the energy policy is the lesson to be learned. The anti-ethanol campaign was largely funded by oil interests. We should expect that foreign oil producing governments will try to sabotage this energy policy. We need the FBI to pay special attention to defending our independence in this area.