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Bodman Announces Grants For Biofuels

posted on October 27, 2006

Hello, I'm Mark Pearson. It may not be Halloween yet, but fiscal policy makers got a scare this week when the government released its latest report on the U.S. economy. According to the Commerce Department, Gross Domestic Product advanced at an annualized rate of just 1.6 percent in the 3rd quarter of 2006. That's its slowest gain in more than three years. The slumping housing market weighed heavily on the economy. 3rd quarter investment in homebuilding posted its largest decline in 15 years. On Wall Street, the major stock indices trended lower on the news, since many economists had predicted more robust economic growth. Earlier in the week, the Federal Reserve opted to leave interest rates steady. The question now is whether the Fed will lower interest rates when it meets again in December. Economic matters likely will influence voters' decisions next month. And with the midterm elections less than two weeks away, the Bush administration doled out millions of dollars in grants this week aimed at easing the "pain at the pump."
Bodman Announces Grants For Biofuels U.S. Energy Secretary Samuel Bodman this week announced the creation of two research facilities to find alternative sources of energy. The budget for these high-tech facilities is $250 million spread across 5 years. Proposals for building the labs are being taken until February of 2007. Private industry and institutions of higher learning already are lining up to see if they can get a piece of the pie.

Secretary Samuel Bodman, Department of Energy: "The goal is to achieve transformational breakthroughs in basic science that will help us chart a path to biologically based production of fuels. The further goal is to get these processes developed to make it so we can produce large quantities of fuel at low cost."

That work likely will include research on cellulosic ethanol. (corn stalks blowing) The driving force behind this innovative method of fermentation is that it uses all the sugar locked up in the woodier parts of plants. This would open the door to using other products like waste paper and sawdust.

Bodman also announced it will accept applications for 16 grants totaling $8.6 million to be used for expanding the E-85 infrastructure. Of the 170,000 service stations in the United States only 1000 sell the special blend of gasoline containing 85 percent ethanol. When combined with funds from private industry there will be $25 million devoted to increasing the reach of E-85.

The idea of using ethanol as fuel for the nation's estimated 130 million cars has been around for decades, but the industry didn't really take off until tax incentives were implemented in the late 70s. In the future, Bodman sees a different subsidy structure.

Secretary Samuel Bodman, Department of Energy: "I would hope that we could continue to play a role but at some point in time phasing out the subsidies and getting an industry that is free standing and effective."

"I think what one ought do is look at an approach that encourages all bio-products, whether it's butanol, whether it's ethanol, whether it's biodiesel. And so, that's my own view, but as I said before the President will have to make a judgement."

Tags: biofuels news renewable fuels