NY Governor Calls for 25% Reduction in Oil Consumption Over 10 Years
9 August 2006
In a speech on Monday to the National Press Club, New York Governor George Pataki called for a national policy to be implemented over the next 10 years to replace 25% of current US oil consumption—the equivalent of oil imported today from OPEC nations—through greater efficiency, greater domestic production, and greater use of petroleum alternatives.
The plan calls for a new system of incentives to reduce US reliance on petroleum by reducing each vehicle’s reliance on petroleum.
How do we do that? We begin with what is by far the largest contributing factor to that oil dependency: transportation. Transportation accounts for 70% of US petroleum consumption. And that percentage continues to grow.
Why? Because in the US, the vehicles we rely on to move our people and goods are 97% dependent on just one type of fuel: petroleum. Talk about putting all your eggs in one barrel.
It is time for us as a nation to commit to a determined effort to diversify our energy supply, achieve greater energy-efficiency across the board, and build our national strength and global competitiveness through greater energy self-reliance.—Governor Pataki
Pataki outlined the three main components of his plan:
New Incentives to Promote Increased Efficiency and Greater Use of Non-petroleum Fuels. A key component of the proposal is a new tax incentive that would offer a sliding scale of tax credits that increase as a car’s reliance on petroleum decreases.
Under this initiative, automakers would have a greater incentive to manufacture vehicles that are more energy efficient, achieve higher fuel mileage, or are capable of running on alternative fuels. The greater the amount of petroleum saved, the higher the tax break.
By raising the average fuel economy of all cars on the road in the U.S. from about 21 miles per gallon to 34 miles per gallon of petroleum, the nation could reduce oil consumption by approximately 5.5 million barrels a day, according to Pataki.
Bolstering the Production of Non-petroleum Fuels. The Governor is proposing five initiatives to move non-petroleum fuels and alternative vehicle technologies from the periphery to the mainstream, providing consumers with a choice of fueling options.
Creating a national Center for Excellence for Alternative Fuels and Vehicle Technologies to leverage private R&D efforts with the best minds of American academia and foundations to develop the next generation of petroleum alternatives and energy-efficiency breakthroughs;
Reducing upfront costs and risks of building bio-refineries and other alternative fuel production facilities by allowing companies to immediately expense their capital investments in these projects;
Providing transportation fuel producers with a meaningful federal production tax credit for renewable fuels and clean petroleum alternatives;
Further reducing the risk to developers by significantly expanding the federal loan guarantee program to help finance alternative fuel plants; and
Leveraging the federal government’s huge purchasing power by moving all federal vehicles and offices to petroleum alternatives within the next 10 years.
Expanding the Fueling Infrastructure to Make Petroleum Alternatives Readily Available. Pataki is calling for immediate federal legislation to exempt renewable fuels from exclusivity agreements between fuel distributors and retail service stations. These contracts prohibit retail stations from obtaining or selling any brands of fuel from a source other than those offered by their main distributor. Since most major petroleum distributors do not currently offer E85 or other renewable fuels, retail stations are contractually prohibited from selling these fuels.
The Governor is also proposing a zero-interest loan program for service stations to eliminate upfront capital costs of installing new alternative fuel pumps or converting gas or diesel pumps to dispense renewable fuels. These loans would supplement the existing $30,000 federal tax credit available to retail stations for these infrastructure upgrades.
Last week, the Governor and Senate Majority Leader Joseph L. Bruno announced plans for a new $10-million State program to convert 600 hybrids vehicles in the State fleet to plug-in hybrids and for the construction of a state-of-the-art alternative fuel research laboratory at the Saratoga Technology + Energy Park (STEP). (Earlier post.)
Other initiatives pushed by the Governor are: the elimination of all State taxes on alternative fuels; a renewable fuel production tax credit that will provide tax savings of up to $2.5 million annually; the state-wide prohibition of exclusivity agreements; significant tax savings for clean energy businesses that locate in the State; $20 million for the development of a pilot cellulosic ethanol plant; a $10 million grant program to assist private fueling stations install renewable fuel pumps; $5 million to promote the use of advanced vehicle technologies such as lightweight materials, batteries and others; and $5 million to demonstrate the use of hydrogen and convert existing internal combustion engines to operate on hydrogen.
New York is also implementing a state Renewable Portfolio Standard (RPS) that will increase the percentage of renewable-generated electricity used in New York State to 25% by 2013. The Governor also issued Executive Orders that require state agencies, departments, and authorities to reduce the energy use at their facilities by 35% relative to 1990 levels and purchase increasing levels of electricity from renewable sources (at least 10% by 2005, and 20% by 2013).
By 2010, the State will require that all non-emergency vehicles purchase for the State fleet be alternative fuel vehicles. Currently, more than 80% of the State’s non-emergency vehicles operate on alternative fuels or are hybrid electric. Last year, the Governor directed state agencies to phase-in the use of renewable heating and transportation fuels, helping to stimulate new energy markets for an indigenous, renewable fuel supply.
Governor Pataki also initiated the effort to create the Regional Greenhouse Gas Initiative (RGGI), an agreement signed in December 2005 by seven Northeast states to combat global climate change through a mandatory cap-and-trade program for carbon dioxide emissions from power plants. Maryland also recently joined this program as well.
Remarks of Governor George E. Pataki, National Press Club Luncheon, Washington DC, 07 August 2006
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