A U.S. Senate committee has approved a requirement that refiners use more corn-based ethanol and other renewable fuels in gasoline. The measure could double ethanol production over the next seven years.
The Renewable Fuels Standard amendment would raise the demand for ethanol from 4 billion to 8 billion gallons per year by requiring that gasoline contain higher quantities of the corn-derived fuel.
Demand for bio-diesel, which is made from soybeans, also would increase. The Senate energy committee added the provision to the massive energy bill, which still needs full Senate approval.
A House-passed energy bill would limit the requirement to 5 billion gallons. Supporters of the higher number argued that use of ethanol as a 10 percent blend in gasoline would replace 5% of the gasoline by volume beginning in 2012 and reduce U.S. need for oil imports.
Sen. Pete Domenici, (R-N.M.), who is chairman of the Energy and Natural Resources Committee, said there is no doubt an ethanol mandate will be a key to getting energy legislation through the Senate. The full Senate is expected to take up the measure in late June.
But the oil industry said expanding the mandate from 5 billion to 8 billion gallons would require ethanol use in regions where it is not economical and increase fuel costs while providing "negligible reductions in oil imports." The ethanol industry countered, arguing that 8 billions gallons of ethanol would replace 2 billion barrels of crude oil and trigger $6 billion in new investment in ethanol production.
