Archive for the ‘Oil’ Category

Testimony to Congress: Oil Dependence Threatens Our Security

 

(On 6-19-12, Truman National Security Project Vice-President Mike Breen delivered the following testimony to the House Energy & Commerce Committee’s Subcommittee on Oversight and Investigations.)

Chairman Stearns, Ranking Member DeGette, members of the committee, ladies and gentlemen, I am honored to appear before you today to discuss the critical national security importance of clean energy development.

I am the Vice President of the Truman National Security Project, a former Army officer and an Iraq & Afghanistan combat veteran. I am also proud to be one of the leaders of Operation Free, a non-partisan coalition of veterans who believe that our dependence on fossil fuel poses a clear national security threat to the United States.

These men and women have walked the burning oil fields of Iraq and patrolled the mountain roads of Afghanistan – where the fully-burdened cost of fuel is $30 a gallon[i], and 1 in 24 fuel convoys ends in an American casualty.[ii] It is an established consensus in the defense community that our dependence on oil threatens our national security.

America sends over $1 billion per day overseas for oil. [iii] It should not be a surprise, then, that oil is the single largest contributor to our foreign debt, outpacing even our trade deficit with China. Worse, far too many of those dollars wind up in the hands of regimes that wish us harm.

According to the CIA, over 50% of Iran’s entire budget comes from the oil sector.[iv] For every $5 rise in the price of a barrel of crude oil, Iran receives an additional $7.9 billion annually.[v] That’s billions of dollars to build new nuclear facilities, replace centrifuges and support terrorist groups that threaten Americans and target our Israeli allies.

There is another consensus emerging in the defense community: climate change poses a serious threat to our national security.

I know not everyone in this room believes that climate change is real, but our country’s national security professionals do. The Pentagon’s Quadrennial Defense Review, the military’s most important strategic document, states that climate change is “an accelerant of instability and conflict” and that climate change and reliance on fossil fuels are “prominent military vulnerabilities” for the nation.[vi]

The CIA has established a Center on Climate Change and National Security. The Council on Foreign Relations, the Center for Strategic and International Studies, the Center for a New American Security, the CNA Military Advisory Board, the National Research Council and numerous other non-partisan organizations have all found, independently of one another, that climate change poses a serious and growing threat to our national security.

According to a recent study, over 97% of climate scientists say that man-made climate change is a reality.[vii] I’m not a climate scientist—I’m a former front-line combat leader in the US military. And as a combat leader, if 97% of my intelligence indicated that I was about to face a lethal danger that would risk the lives of my paratroopers, I would be committing unconscionable malpractice if I did not listen and act.

We see leaders acting in the same vein today in Kern County, California. Located in the high desert, Kern supplied the crude that fueled much of the mid-20th century oil boom. Kern County has always been proud to provide American energy. That’s why in the 21st century, Kern has turned to renewable sources, becoming the largest producer of wind and solar energy in California. Clean technologies are creating jobs in a place where unemployment had been 64% higher than the national average.

Two months ago, in this very building, I stood with Jeff Duff, the CEO of Air-Streams Renewables, a technical school in Kern County that trains wind turbine technicians. Air-Streams is proud that 70% of its graduates are veterans. One of Jeff’s students, a naval electrician, struggled to find work after leaving the service. He left a night job at a mortuary to join Air-Streams and graduated at the top of his class. Now, he’s serving his community by building the energy economy of the future.

As we debate clean technologies, we often ignore energy’s impact on our national security. There will be a lot of emphasis in this room today on cost. But the price of fossil fuels includes more than searching, extracting and shipping. There are security costs that we must recognize. Fossil fuels fund extremists, and breed dependency on nations that don’t share our values. We can let stories like Kern County’s be what they are today: promising, but not commonplace. Or instead, we can lead, by investing in 21st century technologies that keep America safe and prosperous.

Our Take:
QED — that is, this is solid proof — of our need to wean ourselves from fossil fuels. Biofuels and other homegrown energy represent the pathway to our energy independent future. We need to honor Breen and all those who have served and will serve by eliminating the need to protect the global flow of fossil fuels at such a high price in American lives.

We would add America’s Corn Belt to the list with Kern County–these locations and their visionary leaders are the source for America’s renewable energy future.

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The unconventional (oil) non-solution

First, we know that tight oil production, like that in the Bakken Formation of North Dakota, is a treadmill. The constant drumbeat of highly-placed editorials about incipient U.S. energy independence is strictly political fodder, with no sound basis in data. Yes, in theory, it’s possible that we could double the output from the Canadian tar sands and the deepwater Gulf of Mexico, quintuple the number of wells that have been sunk in the Bakken so far, and pull off some biofuel miracles. But local resistance to that drilling program will be fierce in some areas, and its cost will eventually prove prohibitive. And it won’t end there; to maintain that level of output, we’ll have to keep drilling like hell, with increasing risks to the environment and public tranquility.

In reality, despite the technological achievements that have enabled production from these difficult resources, the world is losing the race against the depletion of mature conventional oil fields. And the pace of that depletion is accelerating: it’s now an estimated 5 to 6 percent per year for OPEC, and 8 to 9 percent for non-OPEC. Unconventional oil cannot compensate for a drag of that magnitude for very long…

http://www.energybulletin.net/stories/2012-06-14/peak-oil-june-14?utm_source=dlvr.it&utm_medium=twitter

Our Take:
The drum beat for energy independence is real, and it’s important–self reliance in key areas like energy and food production keep America’s economy strong and her borders secure.

That said, we agree with “Peak Oil” author Chris Nelder that fracking alone can’t deliver energy independence as some folks who want to dismantle RFS argue.

We also don’t see the outcome as a “biofuels miracle.” Steadfast adherence to RFSII and further support for alternative fuels will lead to amazing advances in farm-based energy. Steel is going in the ground at this very moment–the construction of the first half-dozen cellulose-based ethanol plants across the country, we learned at the recent Fuel Ethanol Workshop in Minneapolis.

To keep the powerhouse ethanol industry going strong, and maintain the strength in commodities markets that results from it, RFS should not only be maintained, but growth in both grain-based and bio-based fuels should be indexed to growth of yield the corn and other crops demonstrate year-in and year-out. Because ethanol production also yields high quality animal feed, and because the ethanol industry is so important to the strength of crop production, the growth of grain ethanol is essential to growing the capacity to feed the world. We won’t see 300 bushel per acre corn without a strong and growing grain ethanol industry.

Imagine a future gallon of fuel with no fossil component–only ethanol, isobutanol, or other bio-based energy sources. It’s going to happen, and it’s no miracle. It’s the hard work and determination of farmers and ethanol makers that’s going to make this a reality.

This can be done while preserving environment–strong commodity prices and rural energy production generates some of the wealth that allows the set-aside of marginal and sensitive lands for the “environmental and wildlife habitat services” they provide.

The next big revenue stream for biorefineries–carbon dioxide?

Written by Jonathan Eisenthal

From the very start ethanol companies have produced co-products that are essential to the bottom-line. It began with distillers grains, which has grown to a major animal feed industry in its own right. Lately, many ethanol plants have retrofitted equipment to extract corn oil from the distillers grains, for use as a value added feed, industrial or energy product. On the horizon, a new market is developing that could turn one of ethanol’s waste products–one that is accounted a liability by some ethanol critics–and turn it into a new source of cash: carbon dioxide.

A white paper from the National EOR Initiative–a joint effort of Minnesota’s Great Plains Institute and Washington DC-based Center for Climate and Energy Solutions–makes the argument for an incentive to help build an industry around the capture of carbon dioxide for use in what is known as enhanced oil recovery. The gas can be injected into geological formations that hold oil that cannot be captured by conventional well drilling technology. The EOR Initiative brought in oil and coal industry representatives, ethanol producers, electric generation utilities, labor and environmental groups–who all see a win-win in the use of industrial waste carbon dioxide for enhanced oil recovery.

“The best estimate I’ve seen is that 26 to 61 billion barrels of oil could be economically recovered with today’s EOR technology,” said Brendan Jordan, director of Bioenergy and Transportation Programs for Great Plains Institute. “That would more than double America’s proved reserves. Next generation EOR technology could bring that up to between 67 to 137 billion barrels of oil.

Oil companies are already paying cash on the barrel to major CO2 producers to capture, purify and pipeline the gas to oil fields where it can be used in EOR.

“From an environmental perspective, where there’s concern about an industry’s carbon footprint, all of the CO2 used in EOR remains permanently sequestered deep underground in a properly managed project,” said Jordan.

This has implications for ethanol opening markets where carbon intensity of fuel is a factor. California’s low carbon fuel standard has been suspended, pending a court case, but British Columbia and European Union both have rules in place that either require reduced carbon intensity or pay a premium for fuel produced with less net carbon released to the atmosphere.

“The ethanol industry’s interest in minimizing its environmental impact has always gone hand-in-hand with a natural interest in efficiency and profitability,” said Greg Schwarz, chairman of Minnesota Corn Growers Association. He is a corn, soybeans and turkey producer as well as a longtime investor/leader in farmer-owned ethanol production. “The CO2 market may not be economical for Minnesota ethanol producers to participate in next year, but it’s possible that the transportation infrastructure could develop quickly, and when it does, it will be one more way that our homegrown energy production companies can contribute to Minnesota’s economy and help the environment at the same time.”

According to Jordan the limiting factor for ethanol companies’ participation in this emerging industry is the economics of developing a pipeline over any distance in order to get the CO2 to market. Electric generation utilities produce enough CO2 to justify the expense, but ethanol companies produce far smaller quantities of CO2.

Currently, one ethanol company, Arkalon Energy in Kansas, has installed carbon capture and transport infrastructure. Its location fairly close to Oklahoma oil fields makes the move economical. Jordan observed that as the industry develops, particularly if an incentive is put in place, major CO2 producers will have major pipelines crossing territories close enough to ethanol plants to justify building trunk lines between the ethanol plants and the main CO2 pipeline, in a set up somewhat analogous to how electricity and natural gas are transported.

“We were able to organize a bipartisan press conference in Washington announcing the recommendation of the National EOR Initiative–a bipartisan press conference is a rare thing these days, so we were proud to get to that point,” said Jordan.

Senators Max Baucus, Kent Conrad, John Hoeven, Richard Lugar, and Congressman Rick Berg, Congressman Michael Conaway all issued statements of support for the concept. The National EOR Initiative is now working on introducing a bill to create the incentive.

“(Using CO2 for EOR) is great from an environmental perspective, but it is also great from the perspective of increased domestic oil production–that’s why the concept attracted broad support and we are hopeful that we can create a policy around this use for carbon dioxide which succeeds both economically and environmentally.”

Planning ahead for the overnight success of E15

(An excerpt from “Retailers Won’t Sell E15 Without Liability Protection” published by Convenience Store News)       

GRAND FORKS, N.D. — Although the Environmental Protection Agency (EPA) recently approved the required health effects and emissions testing of ethanol/gasoline blend E15, a number of barriers still must be overcome before petroleum retailers will sell the fuel for vehicles made 2001 and later, Ethanol Producer Magazine reported….

“Retailers must obtain the appropriate storage tanks and dispensers to sell the product, and this can be a very expensive investment,” said Jeff Lenard, vice president of industry advocacy for NACS. “In order to justify such an investment, a certain level of consumer demand must exist. Given the opposition of the auto manufacturing industry to E15 and their concerns about the use of the fuel in current vehicles, it is very difficult to evaluate potential consumer demand.”

Lenard added that the organization is pursuing legislation to legally protect retailers who comply with an EPA-approved program in the event of a driver adding E15 to a non-approved vehicle.

Iowa may become the first state to permit E15 sales to 2001 and newer vehicles, due to E15’s existing presence in blender pumps for flex-fuel vehicles. The state also has a renewable fuel standard in place, and incentives are available to retailers who sell mid-level ethanol blends.

“We have been looking at state policies and have modified the necessary policies and requirements to be in a position to offer E15 fairly soon after it goes through the formal approval process and all of the registration and other requirements have been met,” said Lucy Norton, managing director of the Iowa Renewable Fuels Association. “We have moved forward very quickly to put the pieces together here to enable retailers to put E15 in this market so consumers have additional fuel choices.”

Earlier this month, the Iowa Renewable Fuels Association submitted a mitigation plan to the EPA that could serve as a model plan for retailers to follow to demonstrate regulatory compliance in the future, according to the report. However, CHS Inc., parent company to the Cenex brand of convenience stores, is just one fuel supplier that has refused to sell E15 until concerns about liability issues for vehicles and equipment, potential gasoline compatibility issues related to Reid Vapor Pressure levels, state and local fuel regulations are resolved.

Valero Energy Corp. also has no plans to offer E15 for sale. “Because E15 has not been approved for use in all engines and hasn’t received warranty protection from engine manufacturers, we can’t guarantee its performance and we won’t sell a product we can’t guarantee,” said Bill Day, executive director of media relations for Valero.

Our Take:
Big oil won’t sell higher blends of ethanol. The auto manufacturers won’t warrantee vehicles running on E15. Convenience stores want liability protection. Sounds like a recipe for status quo.

If America wants to end its oil addiction on its own terms (instead of waiting until $5 gas shuts down the economy), then the government needs to stop dithering, and the EPA needs to stop spinning its fantasy of an all-electric car future–and get busy with the solution that’s available now and is the most economical solution around.

If ethanol opponents thought 50 cents a gallon incentive for ethanol was a boondoggle (and look at Ethanol carrying on, despite the disappearance of that incentive) wait until they see how much of an incentive they’d have to give car owners to buy battery-electrics–$10,000 per. And then there’s building 50 new nuclear power plants or coal-fired power plants (what happens to carbon emissions then?) to keep up with the new electricity demand.

By comparison, the ethanol solution is economical and ready to go. Increasing ethanol production and adopting the technology (a hundred dollar part in a car’s fuel system), and the infrastructure (a blender pump in every station) and the legal framework (liability protection) will cost a lot less than the battery-powered electric scenario. And did we mention ten to 20 hours to recharge the car so it can go 50 or 100 miles?

Iowa is forging ahead and we applaud their leadership on the issue. Minnesota should pay close attention and help carry this ball into the end zone.

Ethanol demand, like oil demand, likely to last

(from an article “Is Ethanol Sitting on A Bubble?” By Christine Stebbins, published by Reuters news service)

Grain farmers in the Midwest may want to pinch themselves.

In recent years they have been buoyed by a dream scenario. Record high prices. Record high profits. Record high farmland values. Near record production. Farm debts paid off.

“Historically agriculture has been asset rich, cash flow poor, profit poor. This time we are asset rich and profit rich. That makes for a very combustible brew,” said David Kohl, professor emeritus of agricultural economics at Virginia Tech.

“It’s a super cycle. It’s only happened four times in the past 100 years,” Kohl told U.S. agricultural bankers at their annual meeting this month.

But can it last?

Analysts often cite the rise of China and India as the main driver of the boom, with their hundreds of millions of hungry and wealthier consumers lining up at the table for grain from the United States, the largest food exporter in the world.

But the single biggest consumer which has changed the game in farm country in recent years is closer to home: ethanol.

The alcohol-based fuel has, in less than a decade, gone from consuming less than 10 percent to currently 40 percent of the giant U.S. corn crop.

That enormous slice of the pie — which exporters and starch makers and food processors and livestock feeders must also still fight for — is the key to the recent farm boom.

“That is a huge factor” and likely the single biggest cause behind the surge in corn prices and farm income, according to Leland Strom, chief executive of the Farm Credit Administration, regulator of the government-linked Farm Credit System, the largest real estate lender to American farmers.

The dynamic has been simple. The 2007 U.S. energy bill mandated that a total of 15 billion gallons of renewable ethanol must be produced by 2015 for energy independence. Almost all that fuel is “blended” with gasoline.

Demand for corn skyrocketed, with prices of corn and then corn land following it up. Other grain prices have risen just to assure that farmers don’t all switch to corn. Farmers have reaped the benefits, as have their suppliers from John Deere to Monsanto to fertilizer producers to land auctioneers.

“There are a lot of people betting a lot of money on land right now. Land wouldn’t be going for $9,000, $10,000 an acre in the Corn Belt unless people were convinced that corn prices were going to stay strong,” said Bruce Babcock, director of Iowa State University’s biobased industry center.

But will corn prices stay strong? More to the point, will ethanol prices? And if they don’t, will the bubble burst?

Confidence in ethanol is being tested in the current U.S. budget environment, where Republicans in Congress have been pushing for major cuts in spending that include long-standing subsidies and incentives for ethanol production.

A blenders tax credit and a tariff on ethanol imports are set to expire on January 1, 2012. Most experts do not expect either to be renewed given Republican-led budget pressure.

But the mandated use target remains 12.6 billion gallons of ethanol in 2011, peaking at 15 billion by 2015, or roughly 10 percent of the fuel burned by cars and light trucks.

FINE-TUNING OR PLAYING WITH FIRE?

“There is currently fine tuning going on in policy. We anticipate the blender’s credit is going away at the end of the year but the mandate is still going to exist to blend. It’s not going to change the amount of corn we’re blending,” Strom told Reuters in an interview.

“It would take a major shift away from the mandate to have a strong effect in challenging these corn prices and the demand for corn,” he said.

As for the lending stance of FCS to farmers who may be seeking loans to buy more land to plant corn?

“I’m not ready to term it an asset bubble. I think we are in an era that warrants extreme caution by those in the industry, the farmers or investors who are purchasing land,” Strom said.

If ethanol is the key to corn prices and land prices, then experts say crude oil remains the key to ethanol.

“A bubble implies it’s going to burst some time and the farm economy would go into the tank — or the ethanol bubble will burst,” Babcock said. “Demand for ethanol derives primarily from the price of crude oil. As long as crude oil is high, the demand for ethanol is going to be high and agriculture is not on a bubble.”

(Graphic: corn vs crude oil, ethanol: link.reuters.com/fuc25s)

But Babcock and others, including ethanol producers, also say $30 billion in investment and growth in ethanol in recent years has changed the outlook. Ethanol producers, for instance, now export almost 1 billion gallons a year, mostly to Brazil where sugar-based ethanol is common.

“If you let the free market work and crude oil fell substantially,” Babcock said, “you would still have a robust ethanol industry. Why they would stay in business is that the price of corn would fall. That is their number one cost.”

Kohl also sees ethanol on solid ground without subsidies: “Much of the industry could survive. If it went away four years ago it would have had a big impact. Today, much less.”

Ethanol producers cite the benefits of lower corn prices. But there is also a subtle political factor for those in Congress: corn is grown in most U.S. Congressional districts, where farmers have reaped the dream scenario of ethanol.

“The ethanol industry has rejuvenated rural America,” said Todd Becker, head of Omaha-based Green Plains Renewable Energy. “We bring high paying jobs back to small towns. It has huge impact on the local community. The brain drain out of rural America has been incredible. We’re able to bring it back with good, high paying jobs,” Becker said.

Kohl also said though lower ethanol and corn prices would hurt all those now benefiting from the farm boom, farmers would be in far better shape for a downturn now than 30 years ago when the last big farmland bubble burst in the 1980s.

“Today we have an asset bubble, we don’t have the credit bubble like we had in the 1980s,” Kohl said in an interview. “The owner has more skin in the game, has plowed their profits in. So when that corrects … they have resilience through the equity.”

Our Take:
The farm economy and energy markets have been inextricably linked for a while now, but ethanol forges that link in the strongest possible way. We have an ethanol industry that can stand on its own now, say the experts—thanks to the inherent fiscal conservatism of farming with its waste-not/want-not pragmatism.

At this point, if oil prices fall, all commodities will follow, including corn, which would help the ethanol industry to healthier margins. To the extent that corn farmers are invested in ethanol production, this will work as a hedge.

The key for farmers is to be extremely cautious about the current price of land. Since farmers have taken the profits of the last few years and invested these in land and capital equipment, they won’t face the same kind of bust from falling prices that created the credit crisis of the late 1980s. So say the experts quoted by Reuters. Knowing that all markets, including farm commodities, have always been cyclical, caution is always warranted.

With all these elements lined up favorably for farmers, the one major element beyond their control is public policy regarding farm-based energy. Ethanol can stand without subsidies, unlike the oil industry. But to compete with oil’s virtual lock on the transportation fuel market, the one thing ethanol needs is a guaranteed floor, a minimum required use. We are convinced that a tipping point will be reached—when say the 20 millionth flexible fuel vehicle hits the road and higher level ethanol is available at say ten percent of the nation’s fueling stations, then ethanol will be able to compete with gasoline on price alone.

Until then, Congress needs to realize that a lot of agricultural jobs and wealth are tied up in today’s renewable energy policy. To end the RFS would pull the rug out from under rural main street businesses and private family budgets across the US farm belt and beyond. People whose employment or wealth comes not only from farming, but also from equipment manufacture or agricultural tech providers like Monsanto and Pioneer—many millions of Americans would experience terrible losses without the renewable energy requirement that contributes to the value of today’s agricultural production.

We’re paying gas money for Iranians

(article “IEA warns of ballooning world fossil fuel subsidies” by Muriel Boselli, Reuters)

PARIS, (Reuters) – Global subsidies for fossil fuel consumption are set to reach $660 billion in 2020 unless reforms are passed to effectively eliminate this form of state aid, the International Energy Agency (IEA) said on last week.

“Governments and taxpayers spent about half a trillion dollars last year supporting the production and consumption of fossil fuels,” the energy watchdog to 28 industrialized countries said.

“In a period of persistently high energy prices, subsidies represent a significant economic liability,” it said in an extract of its annual World Energy Outlook, which is due to be published in full on Nov. 9.

The IEA estimated such subsidies at $409 billion in 2010, compared to $312 billion in 2009. Oil products had the largest subsidies at $193 billion in 2010 while $91 billion went to natural gas. Iran and Saudi Arabia had the biggest subsidies.

“It’s a huge amount of money,” the IEA’s Chief Economist Fatih Birol told reporters at a joint press briefing with the Organization for Economic Co-operation and Development (OECD), which also presented a report on the issue.

“Without further reform, spending on fossil fuel consumption subsidies is set to reach $660 billion in 2020, or 0.7 percent of global gross domestic product,” Birol added.

In 2010, Birol had forecast that fossil fuel subsidies would reach $600 billion as early as 2015 without further reforms. He said the slower rate of growth was partly due to efforts in certain major countries including China and India.

“This is thanks to the improvements in India, China, Russia. They have made significant efforts. We have to be fair,” he said, adding that only 8 percent of those subsidies reached the poorest population.

Leaders of the Group of 20 (G20) major economies committed in Pittsburgh in 2009 to phase out, over the medium-term, inefficient fossil fuel subsidies that encourage wasteful consumption.

OECD Secretary General Angel Gurria urged developing and rich nations to phase out the subsidies urgently.

“As they (nations) look for policy responses to the worst economic crisis of our lifetimes, phasing out subsidies is an obvious way to help governments meet their economic, environmental and social goals,” Gurria said at the press briefing.

Eliminating fossil fuel consumption subsidies by 2020 would cut global energy demand by 4 percent and considerably reduce carbon emissions growth, the IEA said on last week.       

Our Take:
While we are hearing from the Federal Reserve that our economy is in danger of faltering, the International Energy Agency reports that the Iranians subsidized their petroleum products for their own citizens to the tune of $409 billion dollars in the past year. Where did that money come from? From the Europeans and Japanese who buy the rest of the oil product Iran produces. Our dependence on OPEC helps support the highway robbery prices we must pay, no matter which pusher serves as our source.

Can we afford to be in any way helping a country that holds our citizens hostage and, in defiance of peace treaties are actively developing nuclear weapons capability (Guess where the money for that expensive hobby comes from?). Why are we buying gasoline from the country that produced the terrorists who flew into the World Trade Center and the Pentagon?

We pay through the nose so Iranians and Saudis can have cheap gasoline?

And the $660 billion figure most likely does not include the huge military expenditures made by the US, in large part to keep global sea lanes open, so everyone can enjoy a free flow of overpriced oil.

The documentary film “Freedom” estimates that America gives away $150 billion a year in oil subsidies. Congress could not summon the will to touch those subsidies even while it came close to eliminating the subsidies for ethanol, piddling in comparison, at $6 billion a year. Those subsidies come to an end on December 31, and don’t look to Congress to raise a finger to do anything to boost the job-creating renewable energy industry, while oil fat cats collect money that can’t even be called pork–it’s bacon fat. And it’s pushing our economy to the brink again.

Time to wake up and switch over ASAP to cleaner burning renewable energy that will build jobs and economic opportunity in America, instead of financing the high-flying lifestyles of rogue nations like Iran and totalitarian states like Saudi Arabia.

Oil cheerleader says: Cellulosic ethanol for the military still not feasible

(A letter to the editor by ROLF WESTGARD, published by the Minnesota Daily, the student newspaper of the University of Minnesota)

In response to “Rep. Kahn on alternative fuels,” in the Sept. 29 Daily, Rep. Phyllis Kahn states that her opposition to (sic) military jet fuel made from cellulosic ethanol is misguided because we don’t have enough domestic conventional supply. Kahn is one of the few legislators who is technically qualified to discuss this subject. However, although the process to produce alcohol from cellulose was invented in 1819, we still don’t know how to produce it in large quantities. (note: it is evident the writer meant to say not “her opposition to,” but “use of” when referring to Rep. Kahn’s position)

We can produce all of the jet fuel our military needs from North American oil in North American refineries. Our ignorant Congress has required 250 million gallons of cellulose ethanol in 2011. We will struggle to make 5 million gallons in our tax-funded pilot plants.

The program, which makes the Department of Defense spend $510 million on production plants when we don’t have a production process, is another energy boondoggle.

Our Take:
We do know how to produce cellulose ethanol in mass quantities, and it is a matter of developing the financial infrastructure in order to ramp it up. Abengoa has just secured guaranteed loans to begin construction of a cellulose ethanol plant and Mascoma Corp. is going forward with a cellulose ethanol plant in Michigan without any government-guaranteed loans–the millions being spent here, both publicly and privately, are creating jobs for Americans.

Cellulose ethanol will benefit farmers, forestry producers and even local governments with yard waste or garbage to turn into energy. Its slow launch does not reflect an industry unready for prime-time–it reflects the most challenging economic circumstances since the Great Depression. By priming the pump, government stands to get a return on the investment that is many-fold what we put in. The shift to renewable energy could create 8 million jobs in local energy production–those are jobs that will not be outsourced to Mexico or India.

When we read here about “ignorant Congress,” we are reminded of the moment in the documentary film “Freedom” when Sen. Charles Schumer demands an explanation from oil executives about their statements to the effect that any critique of oil industry behavior is “un-American,” and anyone who holds that view is, in other words, not just a person who sees the issue differently, but a traitor to the country.

In the above letter, one of the patient hand-maidens of the fossil fuel industry calls Congress ignorant for setting a goal for cellulose ethanol that is above what can be achieved today, and calls the development of this industry a “boondoggle.” Setting goals and achieving what other people tell us is impossible is about the most American pursuit we can think of.

We need to remind everyone that this letter writer’s simple-minded approach to energy economics is what keeps the western nations sending a trillion dollars a year to the OPEC, while America and Europe both teeter on the brink of insolvency.

Even if we supply the oil ourselves, from North American sources, these barrels are “marginal.” That is, using a barrel of oil from anywhere decreases the world supply of oil and increases the price commanded by the OPEC nations. Holding 40 percent of the world market share, OPEC can contract production at will, like using a pincers, to squeeze the oil market and reduce the supply of oil to the world. They produce less and profit more.

How interesting that OPEC is literally flooding the market at this moment (driving gasoline down to $3.50 a gallon) — the perfect plan for someone with a motive to kill renewable energy and keep us addicted to oil. If we fail in our push to expand renewable energy we will think fondly of $3.50 per gallon gas when we pay twice as much.

The government of Kuwait has pledged to give free food to all its citizens in the coming year, thanks to oil dollars pouring into their treasury, while the United States Congress debates whether and how long it should allow Americans, whose jobs have been outsources to foreign countries, to collect unemployment support.

Renewable aviation fuel is a moral imperative, and what better place to start than in our military. The investment in the foundation of such self-reliant energy sources–ones that will not benefit oil potentates and dictators–will create millions of American jobs and lead to a more peaceful world.