December 19, 2007 1:42 PM PST

FAQ: New Energy Act gets green light

FAQ: New Energy Act gets green light
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President Bush on Thursday morning signed into law legislation that sets higher fuel efficiency standards and boosts production of domestic biofuels.

Known officially as the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007, it introduces the first increase in mileage standards since 1975, when mandates were first instituted.

It calls for ethanol production--both from corn and other sources, such as woodchips and switchgrass--to increase nearly fivefold over the next 15 years. And it sets higher standards for efficiency of lighting and household appliances, with a goal of phasing out incandescent bulbs in 10 years.

What didn't make the legislation is notable as well. Tax incentives and utility mandates for renewable power generation were cut by the Senate under the threat of a White House veto.

Here's a look at the new law and how it could affect consumers and the energy industry.

What are the highlights in numbers?
• The Corporate Average Fuel Economy, or CAFE, standards are increased to a fleet-wide average of 35 miles per gallon by 2020. Beginning with 2011 models, the National Highway Traffic Safety Administration will increase the CAFE standard annually for cars and light trucks.

• The mandate for U.S.-grown biofuels is 36 million gallons per year by 2022, with 20 billion coming from non-corn-based, or "advanced," biofuels. The requirement is 9 billion gallons for 2008 and 15.2 billion gallons in 2011, up from the current level of about 6 billion gallons. Ethanol is used primarily as an additive to gasoline.

• The law calls for higher efficiency standards for consumer appliances, from lighting to home heating and cooling systems. There are also research and development funds earmarked for lighting efficiency, smart grid technologies, and advanced transportation and batteries.

For more details, click here.

What got cut?
The Senate stripped out an extension to an investment tax credit for renewable power generation from solar, wind, and biomass. Also taken out was a renewable portfolio standard that would have mandated that utilities get 15 percent of their power from renewable sources.

Representatives from the solar and wind industries said losing the investment tax credit will delay growth of the renewable energy industry. When Congress resumes next year, expect lobbyists to push for an extension to the tax investment incentives, which are set to conclude at the end of 2008.

The oil industry opposed the renewable energy provisions. That's because they would have been paid for by taking away existing tax incentives for oil companies, according to John Felmy, the chief economist for the American Petroleum Institute. If the tax package had gone through, consumers would have paid higher prices for transportation fuels, he argued.

How will the new law affect consumers?
There are provisions meant to protect consumers from price gouging of oil-based products sold at "unconscionably excessive prices" during a period of energy emergency declared by the president.

The efficiency standards and research should yield more energy-efficient appliances, lighting, and heating and cooling. Those changes will save consumers $400 billion through 2030, according to the law's sponsors. Dishwashers will have to cut water usage by 20 percent and clothes washers by 40 percent, saving consumers money.

But in the near term, the major facets of the law won't likely have immediate impact on average consumers. The fuel efficiency mandates for cars and trucks will start to be phased in over the coming years. And because those standards are measured fleetwide, there could be a wide range of fuel efficiency available from a given manufacturer, including cars and trucks with low gas mileage. Detractors argue that the higher CAFE standards will mean higher prices for cars and trucks. Efficiency advocates point out consumers already have options for buying fuel-efficient cars and trucks.

In theory, consumers also stand to benefit from research and development grants (if they are in fact funded) into solar, wind, geothermal, and other renewable sources. But these changes, like the efficiency mandates, could take years to make their way into commercial products.

How will the Energy Act impact the clean-tech industry?
The area of biofuels has been one of the most active in clean-tech investments over the past two years and the increased mandates pave the way for more. In particular, the act calls for increased production of cellulosic ethanol, made from agricultural wastes, grasses, or woodchips. Companies investing in cellulosic ethanol now have assurances that the demand will be there as they try to make advanced biofuels more cost-competitive with corn ethanol.

In a statement, Don Endres, the CEO of ethanol producer VeraSun Energy, said the biofuels targets provide the incentives for continued investment.

"The Renewable Fuels Standard underpins the growth of the industry by providing a clear and positive market signal for investment in new technologies, production, distribution, and storage infrastructure," Endres said in a statement.

Companies investing in energy-efficient lighting and home appliances also should benefit from the law, as there are higher standards and dollars allocated for research, although Congress still has to appropriate such funds.

Not surprisingly, the failure to pass the tax package that included incentives for renewable power generations was a major disappointment to investors in the field.

"While I do support the energy-efficiency provisions of the bill, the abdication of any responsibility for pushing the U.S. towards further adoption of renewable energy for power generation--in the face of compelling needs for economic development, enhanced energy security, and reduced carbon emissions that can be provided by renewable energy--is quite galling," wrote Richard Stuebi, an energy entrepreneur and consultant in a blog on Monday.

What other technologies might get a lift?
Transportation and energy storage technologies stand to receive research and development funding. That includes advanced materials to make lighter, more fuel-efficient vehicles as well as electric cars.

Other nascent technologies expected to receive funding include wave power and the capture and storage of greenhouse gas emissions.

Green building technologies are also favored with mandates to make government-owned buildings use efficient lighting. The Department of Energy building is set to be fitted for photovoltaic panels.

Now that this law is in place, will the U.S. remain "addicted to oil?"
Yes. The biofuels incentives are meant to reduce dependence on oil and increase energy security through domestic production. But even with the higher mandates, petroleum is not going away.

Even if the U.S. converted 100 percent of farmland to making cellulosic ethanol, it would produce 100 billion gallons a year, while the U.S. consumes 140 billion gallons per year for gasoline alone, according to Felmy from the American Petroleum Institute. "When I hear XYX politician say we're going to grow our way out of imports, they just don't know the facts. It's like a mantra," he said.

But the picture isn't all bad when it comes to biofuels and the environment. The legislation introduces a method of measuring greenhouse gas emissions over the lifecycle of production, according to said Nathanael Greene, senior policy analyst at the National Resources Defense Council.

"While additional safeguards are needed for biofuels (and all agriculture) to protect and preserve soil and water quality, the language in this bill takes a big step towards recognizing the broad range of impacts that biofuels can have if done carelessly," Greene wrote in his blog on Monday.

Reuters contributed to this report.

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Will the U.S. remain addicted to Oil? No!
It's not just about BioFuelks. First, with biofules. we are not just using grown crops but wasts from agriculture and possible from garbage that will soon all be converted to fuel.
Next, what about the other ways of powerr like Nuclear and solar wind etc. I felt the last paragraph was misleading unless I missed a certain point.
Also what about hydrogen which will be completelyt in pl;ace in Southern California with Honda's new car next summer.

By By Oil!!!
Posted by Blito (436 comments )
Reply Link Flag
Hope your right,
we've let the dependency go on way too long. The only real problem I have with this bill, is the mandates that aren't funded. Most of our ethanol is still made by corn. Waste products, I'm all for it. Corn isn't the way to go. The price of corn is way up as a result of this. Wheat also. The rest of the crops will be too. I'm also concerned that we don't really have an infrastructure in place to support our new reliance on ethanol. How is it going to be put in place and who's going to pay for it? I can see the costs of ethanol sky-rocketing. Additionally, we could have opened up more oil to be drilled here, eased some of the restrictions on refineries to allow more to be built. This is one of the reasons we pay so much at the pump. It isn't the scarcity of oil, but the lack of refineries. Today we can't refine enough to keep up with demand. If we included this with the legislation, price would be kept low because of the availability of alternative fuels. I agree, hydrogen and nuclear fuels should be vigorously pursued. Well, here's to hoping congress got this right.
Posted by suyts2 (152 comments )
Link Flag
very true
The author is missing the point that its not just biofuels in picture. That in combination with improved milage and plug in hybrids/h2 cars will significatly reduce dependency on forign oil. And not all 140 billion need to get replaced, only the amount US imports.
Posted by FutureGuy (742 comments )
Link Flag
Hope you are right, but I don't think you are
Yes, there are indeed new, renewable energy sources for cars, but most of them require the purchase of new vehicles to be taken advantage of. Last time I checked, most people aren't able to shell out cash for a new car that they don't absolutely need. Yes, its great that the options are there, but that doesn't mean that everyone will have access to them, unless the government pays for everyone to get a new friendly fuel car.

As for powering everything else, coal and oil remain the cheapest sources and the most widely used. They have been used for the longest period of time, and will continue to be used as far as I can see. I don't like it, but this bill doesn't go far enough to get rid of fossil fuel usage.

Maybe I'm being overly pessimistic, but I highly doubt that we will kick our oil addiction until there isn't any more oil to feed it.
Posted by shldvebnacwby (37 comments )
Link Flag
Jump start clean energy
I think the energy problem is like most of our problems. There is too much naysaying. "there will always be starvation", there will always be war" "oil will continue to control the game" etc.
We can do much with technology we already have.
The tax credits for alternatives that got left out of the energy bill is badly needed to jump start some of our clean energy industries.
Political will is what's lacking, so lets change that. When people compare the price of alternatives to fossil fuels, especially oil and it's fuel products, they are not comparing apples to apples. Some estimates of the hidden costs of oil are up to $800 billion annually in the U.S.
Subsidies and tax credits of up to $80 billion, military protection costs of up to $100 billion, hundreds of billions in added health and environmental costs, etc. Oil contributes over $300 billion to our trade imbalance. And we have wars in the mideast. If the higher estimate of hidden costs of gasoline were paid at the pump, it would be close to $12 a gallon.

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An ambitious proposal to convert our electric grid to 69% solar by 2050 would need about $400 billion in public money over about 30-40 years.
By then we would have given oil companies up to $3.2 trillion at the current rate. The hidden costs altogether? $800 billion times 40 years=
$32 trillion.
Oil is not only ruining the environment, but our economy also.

Scientific American A Solar Grand Plan
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Here's what's happening in California with solar thermal power plants.
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Abengoa Solar's 280 MW parabolic trough project with 6-hour molten salt storage for the investor-owned utility Arizona Public Service will be designed to supply the late afternoon and evening electric load of the Arizona summer.

Ausra has just signed a power purchase agreement with Northern California's PG&#38;E to build the world's first CLFR plant at 177 MW in California's Central Valley.

Solel is to construct a 553 MW complex of parabolic trough power plants in the Mojave Desert to fulfill a 25-year power purchase agreement with PG&#38;E.

BrightSource Energy plans a 400 MW power tower plant in California.

In Spain, 800 MW are online, currently under construction or planned.

"Solar energy only works in the daytime, and it can't provide the reliable power we need."
Solar thermal power plants can store energy during daylight hours and generate power when it's needed. Ausra's power plants collect the sun's energy as heat; Ausra is developing thermal energy storage systems which can store enough heat to run the power plant for up to 20 hours during dark or cloudy periods."

"Solar thermal power plants such as Ausra's generate electricity by driving steam turbines with sunshine. Ausra's solar concentrators boil water with focused sunlight, and produce electricity at prices directly competitive with gas- and coal-fired electric power."

"Solar is one the most land-efficient sources of clean power we have, using a fraction of the area needed by hydro or wind projects of comparable output. All of America's needs for electric power ? the entire US grid, night and day ? can be generated with Ausra's current technology using a square parcel of land 92 miles on a side. For comparison, this is less than 1% of America's deserts, less land than currently in use in the U.S. for coal mines."
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from Green Wombat
"The United States could lose more than 116,000 green collar jobs and forgo $19 billion in green tech investment in 2009 if Congress fails to extend two tax credits crucial to the renewable energy industry, according to a new study."

"In recent months, PG&#38;E has signed deals for more than a gigawatt of electricity ? enough to light more than 750,000 homes ? with solar power plant developers. Such power purchase agreements can take more than a year to hammer out and the permitting and construction of a solar power station can take another three to five years."

"The solar thermal industry is in its infancy but utilities like PG&#38;E (PCG), Southern California Edison (EIX) and San Diego Gas &#38; Electric (SRE) have signed several contracts for solar power plants and negotiations for gigawatts more of solar electricity are ongoing."

One gigawatt will power San Francisco.

"The same acre can produce 10 times as much energy from wind as it can from corn ethanol, 180,000 miles per acre per year. But both corn ethanol and wind power pale in comparison with solar photovoltaic, which can produce more than 2 million miles worth of transport per acre per year." <a class="jive-link-external" href="" target="_newWindow"></a>

Wind and biomass like manure to methane have big potential too. People need to be educated about what we can do and less about what we can't do.

Here's an example of manure to methane power.

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"Wild Rose Dairy in Webster Township, WI is home to an innovative renewable energy facility powered by cow manure and other organic waste. The farm is home to 900 dairy cows, and an on-site anaerobic digester creates methane-rich biogas from their waste, which is used to generate 750 kilowatts of electricity per hour?enough to power 600 local homes 24/7."

"Environmental Power?s Huckabay Ridge is the largest renewable natural gas plant in North America, if not the world. Huckabay Ridge generates methane-rich biogas from manure and other agricultural waste, conditions it to natural gas standards and distributes it through a commercial pipeline. The purified biogas, called RNGĀ®, is generated by Environmental Power?s subsidiary, Microgy, and is a branded, renewable, pipeline quality methane product."

People need to be educated about what we can do and less about what we can't do. And how much it is costing them to continue doing what we are doing.
Posted by frflyer (5 comments )
Link Flag
Fat americans
Come on it is stupid to to suggest to produce more oil. Americans have to realize that they have to stop using oil. They have to stop driving trucks, they have to stop eating like pigs and there are other millions of ways that america has to catch up with Europe.
And americans still think that they pay a lot for gasoline? Cost of gasoline is probably twice more in Europe. So you fat americans, that consume most of world resources should be paying $10 for a gallon. Maybe then your thirst for oil will not ruin the whole planet.
Posted by alenas (181 comments )
Reply Link Flag
LOL at you,
You stated, "that america has to catch up with Europe." First of all, it is America, not america. Secondly, you stated "Fat americans" and "stupid" while referencing Americans. Then you go on to say
"Cost of gasoline is probably twice more in Europe." I ask you, who is stupid? The ones that pay less for more or the ones who pay more for less? rotflmao at you.
Posted by suyts2 (152 comments )
Link Flag
On a diet
Or we soon will be, once the full effects of the biofuel increase
mandate hits. Of course, while we get thinner, a lot of folks
elsewhere in the world will starve. Or so says the U.N., anyway.

Then you can come crying to us about that, too.
Posted by billmosby (536 comments )
Link Flag
Fat bodies
What we should do instead of burying all these fat Americans is to render the corpses. I bet we can get a ton of oil that way!
Posted by wangbang (155 comments )
Link Flag
People dying to get in the United States
USA Isnt perfect.

However the fact is hundreds of thousands of people are immigating from other countries to the Untied States. The list below are just the legal ones!

2006 Yearbook of Immigration Statistics
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Posted by kieranmullen (1070 comments )
Reply Link Flag
Once again we punish the auto-makers and let the oil companies continue to detroy the environment. I will no longer be able to purchase a Ferrari, Lamborghini and Bugati, park them in my garage and walk to work and the grocery store. But I will be able to buy a Honda Civic and needlessly drive it hundreds of miles a week destroying the environment with green-house gases. Tax fuels that destroy the environment and subsidize those that don't before we lose this planet!
Posted by Joe Ippolito (1 comment )
Reply Link Flag
New Energy Bill = Ho Hum
Yet another worthless bill coming out of washington. Is it just me or 35MPG by 2020 seem more like a joke? Both my parents had cars in the early 90's that got 30MPG highway, so what! GM, Ford &#38; Chrysler have done nothing for milage in over 15 years!
Posted by mlinder69-21063211865664677784 (36 comments )
Reply Link Flag
Chasing after the "Wrong Technologies"
In order to save our World called the Planet Earth from further Global Warming and resultant adversed climatic changes causing all the unprecedented incremental Natural Disasters globally, we must go after the Best Technologies already available long ago despite the suppression of which by selfish vested interests of Fossil Oils' Companies.

Nikola Tesla the Greatest Inventor of the last century had invented the Technologies to run cars &#38; power stations without fuel one Century ago and these technologies might still be classified top secret immediately after his death. It is time to resurrect Nikola Tesla's life-works to produce electrical power without fuel and sharing them as it was intended by the Greatest Inventor himself.

Stanley Meyer had invented the Technology to turn Water into unlimited amount of fuel for making Unlimited Power Supply, but unfortunately he was murdered. He had about more than 40 patents in this Technology. No one Car/Technology Company has pursued this technology further by buying up his technology and put them to good use to save our this planet Earth from Global Warming causing adversed climatic changes and disasters and hardships all over the world, owing to unlimited and unrestrained use of Fossil Oils and Fuels, thus releasing &#38; emitting enormous quantities of green house gases into the atmosphere. I think some company like Google should buy this Patented Technologies from Stanley Meyer's family and make this open source technology for the world to improve on and make good use of this Technology to save our world call Planet Earth.

On a two prong approach, also those Zero Fuel Technologies invented by Nikola Tesla should be declassified and resurrected to run cars and power-stations to save our Planet Earth from destruction and doom owing to unlimited and unrestrained use of Fossil Oils and Fuels for the last Century.
Posted by K A Cheah (241 comments )
Reply Link Flag
Check your wallet
This is just another excuse to get into our back-pockets. It will cost us more than we "save" in energy efficiency. If you don't understand why, there is no point in trying to explain it to you: ignorance is bliss.
Posted by (1 comment )
Reply Link Flag
Not so...
I don't understand why this will cost us more than it saves. I do understand that as fuel costs go up the average mpg of cars will now go with it unlike before. I do understand that technologies like LEDs will last 10 times as long and cost a fraction to operate. An 8 foot Christmas tree lit with normal lights will cost $9.00 to run for the month of December. The same tree that uses LEDs will cost 17 cents to run as last so much longer. Very big difference. We save so much in the long run. So please explain to me why this will cost us more that we save. I don't get it.
Posted by drewbyh (91 comments )
Link Flag
Someone ot paid off and it looks like it was Big Oil
This energy act will fall on its face. Improving the efficiency of cars will not make up for the increased vehicle traffic across the globe. Solar will not be held down. Sure incentives would have helped like how those incentives will help Ethanol and Big Oil but Ethanol is not the answer and will never be the answer. Just look at the photosynthesis efficiency of plants and you will see we are throwing money at a solution that is already causing more problems. Solar Transfer coming soon! Corn should be used to feed the hungry.
Posted by Manhattan2 (329 comments )
Reply Link Flag
Oil owns the politicians...
Just look at this bill! Where is the media that would rip the senators a new one? Oh, wait, the media is owned by those that favor the oil companies (that sponsor their advertising)!!!

Just like the Consumer Protection Act that really protects banks from Consumers (instead of vice versa), we once again see the hypocracy we call the US Government at work.

Instead of getting more Americans green, they want more greenbacks from the 'mercans for Oil companies.

No credits for going solar?
No credits for windmills or small turbines?

2020? Why not 2010? 2011?

Yet, the US government will relax environmental laws for the building of refineries? The very refineries that created the largest area of superfund sites our country saw in the 80's??? (that would be NJ).

Last one that leaves this falling republic, leave the lights on...the oil cos will foot that bill...
Posted by Below Meigh (249 comments )
Link Flag
It will be interesting how this impacts the future of our economy. Good coverage.
Posted by jc364 (352 comments )
Reply Link Flag
Smoke screen
The Energy Bill is a smoke screen and not a real effort to be independent from oil. Using food for fuel is a crime. Replacing incandescent light bulbs with fluorescent bulbs increases profits to the manufactures since the new bulbs cost 3x to 5x more than incandescent bulbs, with the promise to last much longer. Disposal is also a problem since every fluorescent bulb contains mercury, and based on how well PC recycling is going, most of the fluorescent bulbs are going to end up in the landfill. People are just too lazy to recycle...
Posted by treet007 (123 comments )
Reply Link Flag
EEA2007 Is A Bad Idea
One of the problems with this act are the ethanol provisions. The US corn-based ethanol plan is limited, inefficient, and expensive: (1) If all the automobiles in the United States were fueled with 100 percent ethanol, approximately 97 percent of U.S. land area would be needed to grow the corn. Corn would necessarily cover almost all of the country; (2) 131,000 BTUs are needed to make one gallon of ethanol. One gallon of ethanol has an energy value of only 77,000 BTUs, therefore, 70 percent more energy is required to produce ethanol than the energy that actually is in it. Every time you make one gallon of ethanol, there is a net energy loss of 54,000 BTUs; (3) $1 billion a year in current federal and state subsidies for ethanol production are not the only costs to consumers. Subsidized corn results in higher prices for meat, milk, and eggs because approximately 70 percent of corn grain is fed to livestock and poultry in the US. Increasing ethanol production would further inflate corn prices.
How did EEA2007 get written and signed into law? Unless a magic enzyme or process is developed, corn-based ethanol is not the solution to America's automotive fuel needs.
Sugar cane, used in the successful Brazilian process, is not the answer for the US due to the limited tropical climate zones.
Posted by gdusseau (30 comments )
Reply Link Flag
Bioplastics better idea
I think a much better use of biomass, whether it is corn or some other plant, is bioplastics.
I've seen estimates ranging from 5-15% of U.S. oil going for plasics production. Plasics are a huge pollution problem. You may have heard or seen the story about the huge sea of plastic in the Pacific Ocean, where plastic is 6 times as much as zooplankton near the surface.
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Metabolix uses genetically engineered bacteria to digest plant sugar and starch to make bioplastics that can replace over half the plastics we now use.
They have succesfully grown switchgrass plants with the plastic already in the leaves and stems. There is no genetic modifying of the plant, just the bacteria.
And they can still make biofuel from what's left.
Posted by frflyer (5 comments )
Link Flag

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