State of the Union Preview: Twenty in Ten
23 January 2007
Among the many policy initiatives President Bush will propose in his 2007 State of the Union Address tonight is the goal of reducing US gasoline usage by 20% in the next 10 years—“Twenty in Ten”—through a program that includes increasing the required use of renewable and alternative fuels and increasing fuel-efficiency standards for cars. The plan would result in reducing oil consumption by 10% in 2017, or 2 million barrels per day.
The White House released a compilation of all the policy initiatives today prior to the actual speech tonight.
To achieve the Twenty in Ten goal, the President will propose the following:
A 35 Billion Gallon Renewable Fuel Standard by 2017. This is nearly five times the 7.5 billion gallons by 2012 currently set by the existing Renewable Fuels Standard in law. Achieving the 35 billion gallon mark in 2017 would displace 15% of projected annual gasoline use.
The new proposal increases the scope of the current RFS, expanding it to an Alternative Fuel Standard (AFS) which includes sources such as corn ethanol, cellulosic ethanol, biodiesel, methanol, butanol, hydrogen, and other alternative fuels.
The EPA Administrator and the Secretaries of Agriculture and Energy will have authority to waive or modify the standard if they deem it necessary, and the new fuel standard will include an automatic “safety valve” to protect against unforeseen increases in the prices of alternative fuels or their feedstocks.
The increased and expanded fuel standard creates a tremendous incentive for research, development, and private investment into alternatives to oil, according to the Administration, and will encourage needed advances in crop yields, optimization of crops and cellulosic materials as fuel feedstock, and cost reduction in the production of cellulosic ethanol and other alternative fuels.
The 2008 Presidential budget provides $179 million for the President’s Biofuels Initiative, an increase of $29 million (19%) compared to the 2007 budget. The Biofuels Initiative aims to accelerate cost reduction and commercial development of cellulosic ethanol, which can be made from abundant biomass materials, including agricultural waste and forest residues, and from dedicated energy crops such as switchgrass.
Reforming Corporate Average Fuel Economy (CAFE) Standards for Cars and Extending the Current Light Truck Rule. The Whitehouse suggests that the result would be a reduction in projected annual gasoline use by up to 8.5 billion gallons in 2017—a further 5% reduction.
Achieving that level of reduction assumes that on average, fuel efficiency standards for both light trucks and passenger cars are increased 4% per year, beginning in Model Year 2010 for cars and Model Year 2012 for light trucks.
The Secretary of Transportation will determine the actual standard and fuel savings in a flexible rulemaking process, according to the Administration. The President will insist that Congress not legislate a specific numeric fuel economy standard, but leave that to the Secretary of Transportation.
Congress reformed the CAFE rules for light-trucks in 2006 (earlier post), but left the rules for cars untouched. The reformed CAFE rules for light-trucks establishes individual targets for automakers based on a combination of different targets based on vehicle footprints and the composition of the automakers’s new car fleets. The President is asking Congress to authorize the Secretary of Transportation to apply the same kind of attribute-based method to passenger cars.
The proposal also would allow automakers to buy and sell CAFE credits.
Reducing Congestion, Commute Times and Associated Fuel Consumption. In 2003, drivers in America’s 85 most congested urban areas experienced 3.7 billion hours of travel delay and wasted 2.3 billion gallons of fuel, costing a total of $63 billion.
The 2008 Budget redirects DOT funds to a new $175 million highway congestion initiative for the demonstration of ideas to address this problem including: congestion pricing, commuter transit services, commitments from employers to expand work schedule flexibility, and faster deployment of real-time traffic information.
Stepping Up Domestic Oil Production. The President will call for Congressional action to authorize oil and gas exploration in the Arctic National Wildlife Refuge, to develop legislation to encourage investments in refinery capacity, and to encourage all parties to resolve remaining issues regarding the Alaska Natural Gas Pipeline.
Doubling The Current Capacity Of The Strategic Petroleum Reserve. The President will propose doubling the current capacity of the Strategic Petroleum Reserve (SPR) to 1.5 billion barrels by 2027. Doubling the SPR will provide approximately 97 days of net oil import protection, enhancing America’s ability to respond to potential oil disruptions.
The SPR currently contains 691 million barrels. Due to increased consumption, this represents only 55 days of net oil imports. In 1985, the SPR, with 493 million barrels of oil, represented 118 days of net oil imports.
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