Bush seeks to scrap current ethanol standard

WASHINGTON (Reuters) - The Bush administration has proposed scrapping the current U.S. renewable fuels standard that requires ethanol use to reach 6.8 billion gallons a year in 2010 in favor of a wider alternative fuels requirement that aims to cut America’s foreign oil dependence.

Under the legislative proposal sent to Congress on Monday, the new standard would require U.S. ethanol and alternative fuel consumption to reach 10 billion gallons in 2010.

The alternative fuels standard would then slowly rise through 2014, and ramp up the following three years to reach 35 billion gallons annually in 2017.

The 35 billion gallon goal is part of the Bush administration’s plan to reduce projected 2017 gasoline consumption by 20 percent.

The administration’s plan “holds the promise of changing this trend, diversifying the sources, types, and volumes of fuels we use and reducing our nation’s vulnerability to supply disruption,” said U.S. Energy Secretary Sam Bodman and Environmental Protection Agency head Stephen Johnson in a joint letter that accompanied the draft bill sent on Monday to the House Energy and Commerce Committee.

In addition to ethanol, alternative fuels under the bill would include biodiesel and motor fuel made from municipal solid waste, natural gas, hydrogen, coal-derived liquid fuels, electricity and other fuels to be determined by the Energy Department.

The draft legislation calls for a credit, banking and trading program to encourage alternative fuel production.

The bill authorizes the federal government to sell compliance credits, which are weighted for their energy or BTU content, to make sure the program does not impose unreasonable costs on consumers, Bodman and Johnson said.

Identification numbers would be assigned to each batch of alternative fuel that is produced or imported. The numbers would be used by the obligated parties to demonstrate they are meeting the new fuel standard, or transferred to other parties that are not in compliance.

Many energy experts question whether Bush’s plan is feasible and doubt the United States will make the scientific breakthroughs necessary to produce affordable cellulosic ethanol that is made from agricultural and farm wastes. Most U.S. fuel ethanol is now made from higher-priced corn.

Still, Bush promoted his plan on Tuesday when he toured a General Motors Corp. plant in Kansas and a Ford Motor Co. facility in Missouri that make vehicles that run on limited alternative fuels.

“That technology is coming. It may be far-fetched to some,” Bush said in a speech following his tour. “I think it’s achievable,” he said.