The Heat Is Online

Bush Call for "Energy Independence" Leaves Execs Unsatisfied

Business chiefs welcome U.S. climate nod, want more

Reuters News Service, Jan. 24, 2007

 

DAVOS, Switzerland (Reuters) - World business leaders welcomed U.S. President George W. Bush's acknowledgment of climate change as "a serious challenge," but called on Wednesday for long-term emissions standards to help them plan.

 

While supporting the White House nod to alternative energies such as ethanol, wind, solar and nuclear power, corporate executives meeting at the Swiss ski resort of Davos said they wanted Washington to lock in stricter U.S. emissions standards.

 

Bush declined in his annual State of the Union address to support mandatory caps on heat-trapping carbon gases that big U.S. companies such as General Electric Co. have pushed for, instead backing new technologies to cut the amount of gasoline used in the

United States.

 

Environmentalists said Bush had failed to recognize the seriousness of climate change and his comments were driven by U.S. fears about oil supplies.

 

In his speech, Bush called on Americans to cut their gasoline use by 20 percent over a decade, mostly through a nearly five-fold increase in use of home-grown fuels such as ethanol, and urged tighter vehicle fuel efficiency standards.

 

"It is a good step, but we need to take many more," Duke Energy chief executive James Rogers said on the sidelines of the World Economic Forum meeting, where climate change is dominating talks among some 2,400 global movers and shakers.

 

Alcoa chief executive Alain Belda said it was untenable for the U.S. climate change agenda to be set by individual states.

 

"I think the country needs one rule," he told a climate change panel at Davos, noting such a standard could reduce the risks for companies of adopting emissions-cutting technologies.

 

He said strong leadership from the United States, the top global source of greenhouse gases, could spur other less wealthy countries to tighten their emissions rules.

 

OIL FEARS

 

"President Bush barely mentioned climate change in his speech. The few measures he did announce were about improving fuel use efficiency and developing alternative fuels, driven by fear about U.S. energy security," Australian Greens Senator Christine Milne said.

 

About 60 percent of U.S. petroleum supplies are imported.

"There was no mention of emissions trading, carbon taxes or promoting public transport," she said.

 

Her comments matched concerns in India, where some scientists say climate change will have a major impact.

 

"He is diluting the issue by talking in terms of cutting the United States' oil dependency, rather than in terms of the serious environmental consequences," said K. Srinivas, campaigner for climate change and energy for Greenpeace India.

 

Australian Conservation Foundation executive director Don Henry said: "The president's proposed actions to tackle climate change are extremely weak."

 

Australia, along with the United States, has refused to ratify the Kyoto Protocol and its targets to cut greenhouse gas emissions, widely blamed for global warming.

 

The head of the U.N. Climate Change Secretariat, Yvo de Boer, said Bush's statement was "very encouraging."

 

"He did not talk in his State of the Union address about international cooperation on climate change. But at the same time, he did put his remarks in the context of the need for global response," de Boer told reporters in Tokyo.

 

The head of a Singapore-based biofuels producer was cautious about Bush's call to ramp up ethanol production from corn and other sources, such as wood chips and grasses.

 

"It will not take effect, this is just a policy," said Georges Mercadal, director at CMS Resources.

 

The speech also failed to impress grain markets. Chicago Board of Trade grain futures turned lower on Wednesday, with corn leading the way.

 

Bush calls for increase in renewable fuels

International Herald Tribune, Jan. 24, 2007

 

WASHINGTON -- President George W. Bush, vowing to reduce the thirst for foreign oil in the United States, called for a huge government-mandated increase in renewable fuels  mainly ethanol  and tougher mileage standards for cars and light trucks.

 

It was the second year in a row that Bush made "energy security" a focal point of his State of the Union address, but his proposals on Tuesday were modest, and perhaps less achievable, than those he made a year ago when he said the nation was "addicted to oil."

 

The centerpiece of Bush's proposal, which he said would cut the projected use of gasoline by 20 percent over the next decade, was a nearly fivefold mandatory increase in the production of ethanol and other alternative fuels for cars and trucks. The most obvious beneficiaries would be makers of ethanol and other biofuels, but it could also promote the production of liquefied coal.

 

Bush called for a requirement that makers of fuel produce 35 billion gallons of alternative fuels a year by 2017, replacing about 15 percent of the projected gasoline use in that year.

 

A second major plank of Bush's energy proposal calls for increasing fuel- efficiency standards of cars and trucks by 4 percent a year  about one mile per gallon  starting in 2010 for cars and 2012 for trucks.

 

That was a significant change from Bush's approach last year, when he called for "reform" of the so-called CAFE rules for corporate average fuel economy but avoided suggesting specific mileage requirements.

 

In a third proposal, Bush called for doubling the amount of oil in the Strategic Petroleum Reserve to about 1.5 billion barrels of oil.

The doubling would take place at a snail's pace over the next 20 years. Even so, advance word of the idea helped push up oil prices by $2.46 a barrel on Tuesday to $55.04.

 

"It's a big change that the president has endorsed these new fuel-efficiency standards," said Frederick Smith, the chief executive of the American air freight company FedEx and a co-chairman of the Energy Security Leadership Council, a group of executive and retired military officers. But the proposals face an array of obstacles, both practical and political. On a practical level, skeptics noted that Bush's goal for ethanol would require big advances in cellulosic ethanol, made from plants like switchgrass, that has yet to be produced at anything close to competitive prices. It could also require up to 40 million additional acres devoted to growing the plant material involved as well as a sprawling new infrastructure for transforming the feedstock into fuel.

 

On a political level, Bush faces a Congress that is now controlled by Democrats, some of whom criticized him on Tuesday for proposing little to reduce the production of greenhouse gases implicated in global warming.

 

"I am disappointed," said Senator Jeff Bingaman, Democrat of New Mexico and chairman of the Senate Energy Committee. He said Bush was "completely silent" on energy efficiency and reduction of carbon dioxide from electric power plants, which contribute 40 percent of these emissions.

 

Cars and trucks account for about one-third of greenhouse gases that result from burning fossil fuels. Electric utilities and other "smokestack" sources were not addressed.

 

"If this was a real effort to solve the climate problem, it would include large stationary sources and utilities," said Eileen Claussen, president of the Pew Center on Global Climate Change, a nonpartisan policy research group.

 

Many supporters of ethanol and other renewable fuels praised Bush's proposals. The Union of Concerned Scientists estimated that the mileage requirement could save 550,000 barrels of oil per day in 2017, and reduce emissions equivalent to "taking 14 million of today's cars and trucks off the road."

 

But many cautioned that the goals would be difficult to attain, might do little to reduce greenhouse gases and could lead to higher food prices as farmers cater to energy demand rather than food production.

 

Philip Clapp, president of the National Environmental Trust, said, "The big numbers may sound impressive, but this is nothing more than stay-the- course on global warming." The proposal, he said, represents a 1.5 percent cut in carbon emissions a decade hence. "They will still go up by 14 percent over the next decade."

 

Bush called for increasing the federal requirement for annual production of alternative fuels to 35 billion gallons a year. That would almost quintuple the current mandate of producing 7.5 billion gallons of ethanol by 2012. Spurred by tax breaks and soaring oil prices, ethanol production has climbed rapidly and is expected to hit 6 billion gallons this year.

 

But energy analysts say that corn- based ethanol, which accounts for virtually all of today's production, will not be able to produce more than about half as much alternative fuel as Bush envisions by 2017.