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Alternative Fuel Development Depends On Government Investment

Gina-Marie Cheeseman
| Wednesday December 24th, 2008 | 0 Comments

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The lowest (relative) gas and oil prices ever made the number four spot on Common Current’s “Top Ten 2008 Sustainability Stories.” In 2008 the prices at the pump jumped to the highest on record, and then during the past month dipped to below $2 a gallon. Even with the low prices the global demand for oil has decreased due to the economy.
According to a December 15 New York Times piece, oil, and gas projects have been either canceled or suspended recently. If prices stay low, invest in alternative fuels could decrease.


A July report from the United States International Trade Commission on industrial biotechnology (IB) revealed that the bio-fuel industry “expanded significantly” from 2004 to 2007. The report cited “government incentives and mandates” as being significant to the growth of the bio-fuel industry. One of the biggest impediments to the bio-fuel industry, according to the report, is the “inability to attract sufficient investment.” Not being able to attract investment has caused some firms to not pursue bio-fuel projects.
Government programs are very important to the bio-fuel industry. The bio-fuel industry ranked tax incentives and mandatory use regulations as the most important government policies.
The U.S. Energy Information Administration reported last week that the U.S. will not be able to meet the mandate to create and use 36 billion gallons of biofuels by 2022.
Green Jobs Act & Farm Bill
The Green Jobs Act of 2007 authorized $125 million per year to create an Energy Efficiency and Renewable Energy Worker Training Program. The act was an amendment to the Workforce Investment Program. The program would train workers in, among other areas, biofuel production.
The Farm Bill, passed last May, granted $1 billion worth of government funding and subsidies for the R&D of alternative fuels. “America’s energy solution will be achieved by expanding renewable fuel production and alternative energy through investment in scientific research,” said Rep. Nick Lampson (D-TX). “We need to make sure we are providing incentives and resources to industries that are working to diversify America’s energy platform.”
Obama’s energy plan
President-elect Barack Obama’s energy plan calls for a $150 billion investment in a “clean energy economy” which would include next generation biofuels. Last week Obama appointed Steven Chu, a Nobel Prize winning physicist, to head the Energy Department.
“Chu understands the promise of advanced biofuels and their reach and scalability beyond existing fuels,” said Mike McAdams, head of the Advanced Biofuels Coalition.
“You have the perfect storm for renewable energy, you have a need for jobs and the need for alternative energy for our energy independence,” said Curt Pawlisch, a Madison, WI energy lawyer. “You put those two together and there’s going to be a lot of momentum, both at the federal and state level.”
Pennsylvania’s incentives for alternative fuels
In July, Pennsylvania passed legislation that encourages the development of alternative fuels grown in the state by requiring that every gallon of fossil fuels contain a percentage of ethanol and biodiesel. The maximum amount of biodiesel required is 20 percent, and 10 percent for ethanol. The Alternative Fuels Incentive Grant Program, under the legislation, awards 75 center for every gallon to applicants who are eligible.
“We are investing in Pennsylvania businesses and organizations that are committed to the development of clean-burning home-grown fuels and renewable energy sources,” said Governor Edward G. Rendell. “The investment in innovative technologies and energy efficiency will help drive energy costs down, provide affordable energy, create good-paying, green jobs in communities throughout the state and reduce our dependence on foreign fuel.”


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