February 12, 2008

US Assistant Secretary for Energy calls “well funded opposition and media campaigns gaining traction” the biggest issue facing biofuels in 2008

The Assistant Secretary for Energy Efficiency and Renewable Energy said that “well funded opposition and media campaigns gaining traction” are the biggest issues facing biofuels in 2008.

Andrew Karsner was responding to a question posed on LinkedIn, a popular social networking site for businesspeople. The question asked “What is the single biggest issue facing biofuels in 2008? Is it production costs, project funding, legislation, adoption, or perhaps something else?”

In September, Business Week ran a stinging article on the efforts of oil companies to slow the spread of E85. The article pointed out that, as fuel blinders, it is the oil industry that receives the 51 cent per gallon tax credit for ethanol, but the industry - which did not request the subsidy - has been funding anti-biofuel studies, stimulating a food vs. fuel debate by suggesting that biofuels are driving up the price of food, and not launching E85 through their own brands, forcing eE85 to be distributed through independents.

The Business Week article said that the opposition from biofuels advocates was expected, but that Big Oil has earned the enmity of US automakers, who are pushing E85 for among other reasons, the potential of E85 to relieve them of a $100 billion investment in reaching tough CAFE emission standards. The article quoted Mark N. Cooper, research director at the Consumer Federation of America, in saying that Big Oil has “reacted aggressively against the expansion of ethanol production, suggesting that it perceives the growth of biofuels as an independent, competitive threat to its market power in refining and gasoline marketing.”

The food vs. fuel debate picked up in June on the heels of a report released by the American Petroleum Institute that concluded that consumers would pay “$12 billion-plus a year more for food as corn prices rise to meet ethanol demand.”

Global Insights, which authored the report for API, said that the fact that API paid Global Insights to prepare the anti-ethanol report did not influence Global Insights’ decision to reach anti-ethanol conclusions.

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