DOE says ethanol can mostly meet 35-billion gal renewable mandate

Washington (Platts)--12Apr2007

The Bush administration believes that ethanol will provide most of the
fuel to meet its 35 billion gal renewable fuel mandate by 2017, a senior
Energy Department official told a Senate panel Thursday.

"I would imagine that cellulosic ethanol and ethanol in general would
make up the overwhelming majority, based on what I know today," Alexander
Karsner, assistant secretary for energy efficiency and renewable energy, told
the Senate Energy Committee.

Karsner said domestic production would be sufficient to meet the mandate.
"There is nothing in the data set that would lead us to believe that foreign
sources of ethanol would eclipse our own production."

While the administration is banking on ethanol to meet its goal, it
doesn't want to preclude the development of other fuel technologies, Karsner
said. The administration does not want to be "prescriptive" about various
technology pathways, he said.

Loan guarantees and enabling debt are "absolutely essential to achieve
these goals," he said.

Karsner said the administration generally supports a proposed Senate bill
calling for the use of 36 billion gal of renewable fuels by 2022. However, he
said a 10-year time frame is more appropriate and that the administration
supports a wider variety of alternative fuels.

"I believe in a stretch target across our entire portfolio," Karsner
said. "What we do in policy will either be an accelerant or an impediment. If
the goal is lower, the market will perform lower."

SENATE BILL'S DEADLINE CALLED 'ARTIFICIAL RESTRAINT'

The Senate bill imposes a 90-day deadline for approving requests for loan
guarantees, and Karsner said the deadline "places artificial restraints on the
administration's ability to evaluate requests." He added, "We don't want to
foreclose an application that is not sufficiently mature" for approval.

The department has been criticized for its slow pace in considering loan
guarantees under the Energy Policy Act of 2005. Energy Committee Chairman Jeff
Bingaman, Democrat-New Mexico, who sponsored the Senate's renewable fuel bill,
said, "We're trying to address the frustration we're feeling with the lack of
forward motion."

Karsner said the time needed to evaluate the requests "would vary with
each submission." Bingaman said that was not satisfactory. "If you have
concrete ideas rather than just back off and say give us more flexibility, I
want to hear it," he told Karsner.

--Gerald Karey, gerry_karey@platts.com