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Bush's energy plan grabs headlines but fails as a broad policy

WASHINGTON—President Bush proposed in his State of the Union address to reduce U.S. gasoline usage by 20 percent over the next decade.

The president's "Twenty in Ten" plan calls for:

_Federal mandates to quadruple the production of alternative fuels such as ethanol by 2017.

_Setting higher fuel-efficiency standards for cars, light trucks and SUVs.

_Having the secretary of transportation set those standards, not Congress.

_Doubling the Strategic Petroleum Reserve to 1.5 billion barrels of oil by 2027.

Experts said Bush's plan contained worthwhile pieces but that it failed as a broad energy policy.

"It's kind of a yawner. Directionally it's correct, but it's not bold enough," said Frank Verrastro, the director of energy programs for the Center for Strategic and International Studies, a center-right research center.

The American Petroleum Institute, the trade association for Big Oil, criticized the plan for favoring ethanol and forcing refiners to blend the alternative fuel into gasoline.

"If you want to achieve this kind of production by some types of incentives that will bring people into the marketplace, we're far more comfortable," said John Felmy, the chief economist for the institute.

Refiners are upset that Bush proposes more than quadrupling a renewable-fuels standard that was established just two years ago. In 2005, the president signed into law mandates for refiners to blend 7.5 billion gallons of ethanol into the nation's fuel supply by 2012. That number will be met this year. Now he's proposing 35 billion gallons by 2017. Refiners say this might cause them to rethink plans to expand production capacity.

"You have to severely call them into question," said Charles Drevna, the executive vice president of the National Petrochemical and Refiners Associations. "Why do it?"

Ethanol producers were elated.

"We certainly do support the president's vision and support his goal," said Bob Dineen, the president of the Renewable Fuels Association.

However, Dineen admits that production of traditional corn-made ethanol is unlikely to exceed 15 billion gallons by 2015.

The other 20 billion gallons would have to come from making cellulosic ethanol, which relies on using mass-produced enzymes to break down virtually any plant material for conversion into a fuel source. The technology to do that doesn't exist yet.

"We're on the cusp of very dramatic technological breakthroughs. . . . To reach the goal in 2017 we're going to need some technological breakthroughs," said Joel Kaplan, a domestic policy adviser to Bush. "We're optimistic that it can happen, and when it does we're going to meet that goal."

Dineen of the Renewable Fuels Association said: "This is sending a very important signal to the marketplace."

The president's call for higher fuel-efficiency standards will be a hard sell. He advocates boosting efficiency by 4 percent per year for cars starting in model year 2010 and trucks starting in 2012, but he wouldn't mandate it.

The White House also proposes moving away from the fleet-wide minimum average of 27.5 miles per gallon, set in 1975. Only one carmaker, Honda, has met this fleet-wide average. Instead, Bush would have the transportation secretary set different efficiency minimums for small and large vehicles.

Carmakers want no part of higher efficiency thresholds. Instead, they want to offer consumers fuel-efficient cars as one of several options.

"We have advocated for tax incentives to consumers for the purchase of alternative-fuel autos," said Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, which represents nine major carmakers.


(c) 2007, McClatchy-Tribune Information Services.

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