The United States fuel ethanol industry should set a goal of producing 100 billion gallons of the renewable fuel by 2025, according to U.S. Sen. Richard Lugar. He announced his sweeping proposal in a keynote address at Tuesday's Richard G. Lugar-Purdue University Summit on Energy Security.

The Indiana Republican's keynote address contained several items favorable to the ethanol industry. He called on the United States to adopt a program that would make virtually every new car a flexible fuel vehicle (FFV). He also said at least one quarter of filling stations should have E85 pumps. "We should expand ethanol production to 100 billion gallons a year by 2025, a figure that could be achieved by doubling output every five years," Lugar said. "We should also create an approximate $45 per barrel price floor on oil through a variable ethanol tax credit to ensure that investments keep flowing to alternatives."

The U.S. fuel ethanol industry produced a record-breaking 9.532 million barrels in June, according to the Energy Information Administration. The current renewable fuels standard calls for 7.5 billion gallons of renewable fuel production by 2012.

Lugar also said stricter vehicle mileage standards should be enacted. He pointed to the Fuel Economy Reform Act, which seeks a 4 percent annual increase in fuel economy. Lugar co-sponsored the bill with Democratic Illinois Sen. Barack Obama. "The plan I am proposing today would achieve the replacement of 6.5 million barrels of oil per day by volume—the rough equivalent of one third of the oil used in America and one half of our current oil imports," he said.

The fuel ethanol industry has yet to weigh in on the proposal. Renewable Fuels Association (RFA) spokesman Matt Hartwig hadn't seen Lugar's proposal as of Wednesday and withheld comment. The RFA is the ethanol industry's trade association. American Coalition for Ethanol Vice President Brian Jennings was unavailable for comment.

The National Ethanol Vehicle Coalition (NEVC), which has assisted in the opening of more than 600 E85 pumps this year, cast a doubt on the possibility of having one quarter of the nation's filling stations feature an E85 pump. "That would be wonderful if we could get that to happen," said Michelle Hauck, NEVC's director of communications. "But with the funding from the federal government we don't see that happening any time in the near future."

Earlier this week it was announced that the U.S. Department of Energy wouldn't be awarding the NEVC with some of the $3.1 million in funding directed to increase the usage and access of E85.

Hauck said the NEVC has assisted with the opening of 35 E85 facilities in Lugar's home state since the beginning of 2005. Assistance comes in the form of funding, educational and/or staff support, she said.

Lugar detailed the role cellulosic ethanol development would play in reaching 100 billion gallons per year. "The addition of cellulosic ethanol has the potential to substantially reduce the overall production cost of ethanol, while greatly expanding the volume produced," Lugar said. "Although scientists and technicians are confident of the possibilities for cellulosic research, efforts at commercialization have lagged behind basic research."

Lugar detailed the current national "energy dilemma" as a six-pronged threat to national security. He said oil supplies are vulnerable to natural disasters, wars and terrorist attacks. Secondly, large industrializing nations such as China and India are seeking more energy supplies. Third, adversarial regimes from Venezuela, Iran and Russia are using energy supplies as leverage against their neighbors.

Lugar also said the revenues flowing to authoritarian regimes often increase corruption in those countries and allow them to insulate themselves from international pressure and the democratic inspirations of their own peoples. Fifth, the threat of climate change has been made worse by unclean non-renewable energy. Finally, Lugar said much of the developing world is being hit hard by rising energy costs, which often cancel the benefits of our foreign assistance.

"Each of these six threats from energy dependence is becoming more acute as time passes," Lugar said. "Any of them could be a source of catastrophe for the United States and the world."

Full text of Lugar's speech is available here

Posted: 10:18 a.m. CDT Thursday, August 31, 2006