How to Spur U.S. Renewable Energy

U.S. policy could do a lot better job supporting renewable energy, according to industry experts at a renewable energy conference today in Washington, DC, hosted by the American Council for Renewable Energy.

John Graham, the president of BP Wind Energy, renewed calls for long-term policy stability, citing sharp drop-offs in wind development as tax credits expired in 1999, 2001, and 2003. Since those credits are expected to expire again in the next few years–and since wind companies have three- to five-year time schedules–the wind industry could soon see another such slowdown, in addition to the hit its taken from the recession. He called on Congress to set up longer term credits, and a cap and trade system, to help wind projects get funding.

Steen Riisgaard, the CEO of Novozymes, based in Denmark, had more specific recommendations for the biofuels industry. He said the current 10 percent limit on the amount of ethanol in gasoline is slowing down the industry in the United States. He said that the EPA should raise what he called this “arbitrary limit” on ethanol content to 15 percent. The current limit effectively puts a cap on the amount of ethanol that can be sold in the U.S. Eventually flex fuel vehicles that run on E85 (85 percent ethanol) could increase the amount of ethanol purchased, but so far sales have been limited by the number of fueling stations that sell ethanol and the number of cars that can run on high percentages of ethanol. If the EPA raises the amount of ethanol that can be incorporated into regular gasoline, the market for ethanol could quickly climb. But higher percentages of ethanol are controversial because they could cause damage in some engines or void warranties.

Riisgaard’s other suggestions sounded less controversial. He wants the federal government to require 50 percent of all new vehicles in the next couple of years to be flex fuel vehicles capable of running on 85 percent ethanol (which seems feasible given the low cost of doing this), to require 25 percent of the largest gas stations to install E-85 pumps by 2014 (funded by reducing subsidies to the gasoline industry), and to require federal agencies to buy only flex-fuel vehicles and use only E-85 in new vehicles. Finally he called on the Department of Energy to send out what remains of $480 million already approved for funding advanced biofuels. Do this, he said, and you’ll create 100,000 jobs, and keep the rest of the world from overtaking the current U.S. lead in biofuels.