The U.S. consumes about 140 billion
gallons of gasoline a year. That is equivalent
to 200 billion gallons of ethanol –
because of ethanol’s lower energy
content. Replacing 25% of current U.S. gasoline
use would require about 50 billion gallons
of ethanol a year. It is clear that enough
cellulosic biomass is available on an annual
basis to produce that much fuel and probably
much more in the future.
Back to top Economist John Urbanchuk has estimated
that producing 10 billion gallons of ethanol
a year from corn would add $46 billion to
the U.S. economy and create up to 200,000
new jobs.
This relationship of employment to production
– about 2,000 jobs created for every
100 million gallons produced – is
roughly consistent with other studies.
Based on that ratio, expanding production
to 50 million gallons (enough to replace
25% of current U.S. gasoline use) would
add more than $200 billion to the economy
and create a million new jobs, both in rural
America and in major manufacturing centers.
Back to top Investment in the biofuels industry
has mushroomed in the last two years. According
to the Renewable Fuels Association, 78 ethanol
production facilities were under construction
in early 2007 that will add 6.2 billion
gallons of capacity, more than doubling
the size of the current industry.
According to the National Biodiesel Board,
the U.S. biodiesel industry has a capacity
of 395 million gallons, with an estimated
714 million gallons of capacity under construction,
an increase of 180%.
Back to top The 25x’25 Renewable
Energy Alliance, a volunteer group of respected
national farm leaders, believes that America’s
farms, ranches, and forests are positioned
to make significant contributions to the
development and implementation of new energy
solutions. The group supports a goal for
the country of “25x’25”
– producing 25% of the nation’s
energy from renewable resources by 2025
from the agricultural, forestry, and working
land of the United States, while continuing
to produce safe, abundant, and affordable
food, feed, and fiber.
This
vision, which has been embraced by a broad
array of agricultural organizations and
elected officials, as well as by leading
businesses and environmental and labor groups,
encompasses wind and solar energy as well
as biofuels.
Back to top The following list is
meant to be partial and illustrative only.
Corn
Ethanol
Biodiesel
Advanced
Biofuels
Flex-fuel
Vehicles
Enzyme
manufacturers
Private
Investors
ADM
Renewable Energy Group
DuPont / BP
GM
Diversa
Vinod Khosla
Cargill
Imperium Renewables
Iogen / Shell
Ford
Novozymes
Bill Gates
Broin
Southern States Power
Abengoa
Daimler
Chrysler
Genencor
Richard Branson
“We
may be finally willing to build
a new energy future. … [This]
is the single most significant opportunity
we have to create a new generation
of high-wage jobs, something we
have not done in this decade that
we did in the last decade with information
technology. We haven’t found
a substitute in this decade. It’s
in clean energy.”
– Former President Bill Clinton
“There are hundreds
of millions of dollars of economical
opportunities, and we are not organized
for it. And if we gave a pittance
of the tax incentive to a clean
energy and energy-conservation future
we give to old energy, we would
create jobs like no tomorrow. People
would wonder what the hell we had
been wasting all this time for.”
– Former President Bill Clinton
The
U.S. trade deficit in petroleum has been
rising rapidly, from $50 billion annually
in the 1990s to $108 billion in 2000, $163
billion in 2004, $229 billion in 2005, and
a projected $274 billion in 2006, as
shown at right.
Petroleum’s
share of the total U.S. trade deficit has
been rising even more steeply, from 27%
in 2004 to a projected 36% in 2006.
To the extent that domestically produced
biofuels displace oil imports, they will
also reduce the trade deficit, both in petroleum
and in total.
Back to top The
U.S. economy is less vulnerable to changes
in the price of oil than it was during the
last period of peak oil prices (1979-80),
because the U.S. consumes nearly 40% less
oil for every dollar of economic output.
Prior to the 1973 oil embargo, petroleum
expenditures amounted to less than 5% of
U.S. gross domestic product. With rising
prices, this increased to 8% in 1981 and
then fell below 3% in the late 1990s, before
climbing back to 5% in 2006.
Economist David Greene has written, “Significant
oil price shocks preceded every recession
of the past three decades, and every one
of the three significant oil price spikes
was followed by a recession. Clearly, oil
dependence ranks among the most significant
economic problems the United States has
faced over the past thirty years.”
However, the oil price rise since 2005 has
not had similar effects. By giving consumers a choice,
biofuels introduce competition to the transportation
fuels market. If that leads to a decline
in oil demand by the United States, it will
put downward pressure on world oil prices.
This effect would be compounded if other
countries also switched to biofuels.
Ironically, a dramatic decline in the price
of oil might be counterproductive over the
long haul, as it was after the oil shocks
of the 1970s. Dropping prices led then to
a re-addiction to oil and the abandonment
of alternatives. Investor Vinod Khosla and
others have suggested that this uncertainty
about the future of oil prices is the single
most important factor limiting investment
in alternative fuels. Thus, some have suggested
taking actions that would sustain biofuels
prices relative to gasoline in order to
encourage major long-term investments.
