By Andrzej Zwaniecki
USINFO Staff Writer

Washington - New vehicle fuels and related technologies offer the greatest potential for large reductions in gasoline use and the U.S. economy’s dependence on petroleum, a White House report says.

The transportation sector alone accounts for two-thirds of the oil consumed in the United States because only a small fraction of vehicles now are powered by more energy-efficient alternative fuels, according to the 2007 Economic Report of the President.

However, private-sector investment combined with government policies is expected to increase the reliance of the transportation sector on renewable and alternative fuels such as biofuels and hydrogen, flex-fuel, hybrid and other advanced technology vehicles, the report sent to Congress February 12 said.

Annual sales of such vehicles are projected to triple in 2012; by 2030, they are expected to make up more than 25 percent of all light-duty vehicles sold in the United States, according to the Energy Department.

Ethanol, the only biofuel currently used any significant quantities in the U.S. market, is added to gasoline to increase its octane content and to help it burn more completely, thus reducing emissions of carbon monoxide and other pollutants. Many states require gasoline sold at fuel stations to contain between 2 percent and 10 percent ethanol. Under the law passed by Congress in 2005, gasoline producers are obliged to increase gradually use of ethanol and other alternative fuels from 15 billion liters per year in 2006 to 28.4 billion liters per year in 2012.

President Bush recently proposed to go beyond this goal and require 132.5 billion liters of alternative and renewable fuels by 2017 as part of his plan to reduce gasoline use by 20 percent over 10 years from what the Department of Energy has projected would be consumed if no further action were taken. Another element of the plan is the reform of the federal fuel economy standards. (See related article.)

The Democratic chairman of the Senate Energy Committee, Jeff Bingaman, questioned the feasibility of the fuel component of the president’s plan. During February 7 hearings, he said that based on experts’ opinions, U.S. producers are unlikely to exceed 95 billion liters by the specified date.

Energy Secretary Samuel Bodman, who testified before the committee, defended the president’s plan. He told senators that it also encompasses renewable and alternative fuels other than ethanol such as buthanol and biodiesel. Based on his conversations with industry representatives, he said, the president’s goal is achievable.

Under the congressional renewable fuel standard and the president’s plan, fuel imports also would contribute to achieving respective goals, according to the report. Major foreign producers of ethanol, such as Brazil, are looking forward to 2009 when U.S. tariffs on ethanol exports will expire unless Congress decides to renew them.

The Bush administration “desires for this [ethanol] industry in the United States to be able to stand on its own feet and not need the protection of tariff,” Under Secretary of Energy Clay Sell said February 1. But whether the administration will support the expiration of the current tariffs will depend on how U.S. ethanol business is “maturing,” he said at an industry forum.

The feasibility of the alternative fuel initiative as well as its environmental benefits will depend to a large degree on technological progress and the composition of the alternative fuel portfolio, particularly on the sources of ethanol, according to experts. Most U.S. ethanol is derived from maize through a process that is relatively costly and whose energy and environmental benefits are relatively small. Converting more maize into ethanol also is likely to drive up the prices of the commodity. Experts view cellulosic ethanol derived from switch grass, farm waste and other cellulosic materials as much more promising because it has higher energy value and greater potential to reduce greenhouse gas emissions.

However, cellulosic ethanol, like other advanced vehicle technologies such as hydrogen fuel cells, is not a “proven commercial technology at this point,” according to David Greene of the engineering science and technology division at Oak Ridge National Laboratory.

That is why in his budget proposal for the fiscal year that begins October 1, the president called for a 22 percent increase over the 2006 budget request in annual funding for alternative energy research. Since 2001, the federal government has spent close to $10 billion on such research, according to the report.

For more information on U.S. policies, see Environment.

A fact sheet  on and the full text of the Economic Report of the President are available on the White House Web site.