Biofuel Use Mandates Remain
Every day we read news stories about this biodiesel processor going bankrupt or that ethanol 85 production goal being missed. Everyday we also read stories like these about new e85 stations being built and groundbreaking ceremonies for new biodiesel processing plants.
Why? The answer lies in two lines in a piece of legislation signed last December by President Bush. The Energy Independence and Security Act of 2007 is designed to help reduce America’s dependence on oil by:
1. Increasing the supply of alternative fuel sources by setting a mandatory Renewable Fuel Standard (RFS) requiring fuel producers to use at least 36 billion gallons of biofuel in 2022.
2. Reducing U.S. demand for oil by setting a national fuel economy standard of 35 miles per gallon by 2020 – which will increase fuel economy standards by 40 percent and save billions of gallons of fuel.
We predict we’ll see an increase in the number of large processor projects churning through the news over the next few years. The relatively high cost of producing biofuels in comparison to the cost of oil will keep risk levels high, while the markets promised by these government mandated use levels keeps the lure of rewards high as well. That makes our prediction is almost as well hedged as the bio fuel future.
