In his January 31, 2006 State of the Union Address, President Bush announced a Biofuels Initiative that will improve energy security in the United States by reducing our dependence on gasoline made from imported oil. Successful biofuels research and demonstration is already taking place around the country, however, the Biofuels Initiative will coordinate and focus these efforts to make the most of our nation's abundant domestic biomass resources. The result will be a continuous source of low-cost fuel that benefits rural economies and the environment.

President's Biofuels Initiative Goals:

1. Replace more than 75 percent of our current level of oil imports from the Middle East by 2025.
2. Fund additional research in cutting-edge methods of producing ethanol, not just from corn, but also from wood chips and stalks, or switchgrass. Our goal is to make this new kind of ethanol practical and competitive by 2012.

• increase the efficiency of all energy-intensive sectors through conservation and improved technologies;
• promote diversity of energy supply;
• decrease the dependence of the United States on foreign energy supplies;
• improve the energy security of the United States; and
• decrease the environmental impact of energy-related activities.

Promoting Diversity of Energy Supply
In addition to cost reduction targets, there must be policies in place to help diversify the energy supply. The Energy Policy Act of 2005 instituted federal renewable fuels standards which will increase the amount of biofuel (usually ethanol, which would equal 7.5 billion gallons) that must be mixed with gasoline sold in the United States by 2012. Many states are already proposing legislation for renewable fuels standards (RFS). If the initial attempts instituting an RFS are successful, other states may follow.

Decreasing Dependence on Foreign Energy Supplies
The Initiative also addresses the adverse economic impacts associated with the petroleum trade deficit. In 2004, the United States relied on imported oil to meet 58.4 percent of its crude oil needs, up from 47 percent in 1990. The U.S. balance of trade for petroleum was at a deficit of $166 billion in 2004 -- representing 24 percent of the total U.S. trade deficit.³ By targeting a 75% reduction in our fuel imports, the Biofuels Initiative will significantly benefit balance-of-trade issues.

Improving Energy Security
The Persian Gulf accounted for 24 percent of imported oil in 2005.⁴ As the U.S. diversifies its energy supply and decreases its dependence on foreign sources of energy, it will also improve its energy security. In addition, diversifying energy from petroleum to biomass will create a feedstock available in every region of the U.S. and will encourage the refining of biomass in those regions. This will greatly reduce our vulnerability to natural disasters like hurricanes, droughts, and forest fires as well as dependence on foreign energy sources.

Rural Development
The Biofuels Initiative will deliver economic benefits to rural America. In 2004, the ethanol industry supported creation of more than 147,000 jobs in all economic sectors. It also boosted U.S. household income by 4.4 billion through increased economic activity and new jobs. The ethanol industry also generated $1.3 billion and $1.2 billion of tax revenue for federal and state/local governments, respectively. A 40 million gallon per year dry mill ethanol plant can expand the local economic base by $110 million annually and create approximately 41 new jobs at the plant. It can also add nearly $20 million to annual household income in the surrounding community. Furthermore a plant can contribute approximately $1.2 million annually to state and local tax revenue. According to the USDA, ethanol production increases the price a farmer receives for corn by $0.25-50 per bushel.⁵

Decreasing Environmental Impact of Energy-Related Activity
The United States will reap the positive environmental benefits associated with renewable fuels. Biofuels have far less net greenhouse gas (CO₂, CH₄, NO₂) emissions and overall less toxicity to the environment. Ethanol is one of the best tools we have to fight air pollution from vehicles. Ethanol contains 35% oxygen. Adding oxygen to fuel results in more complete fuel combustion, thus reducing harmful tailpipe emissions. Ethanol also displaces the use of toxic gasoline components such as benzene, a carcinogen. Ethanol is non-toxic, water soluble and quickly biodegradable.⁶ Exhaust emissions of carbon monoxide from biodiesel are on average 48 percent lower than carbon monoxide from diesel. The exhaust emissions of particulate matter from biodiesel are about 47 percent lower than overall particulate matter emissions from diesel.⁷ Since biofuels are made from plant matter of recent biological origin the carbon-cycle is shorter and results in less net carbon emissions in the atmosphere (Carbon Cycle).

Implementing The President's Biofuels Initiative
One of the President's main goals is to reduce our dependence on oil from the Middle East. The other is to reduce the cost of producing cellulosic ethanol (ethanol from alternative feedstocks such as wood chips, switchgrass, and corn stover) will require a significant increase in effort from DOE and its national labs which are currently mapping technical plans to meet the President's aggressive targets. Research under the Biofuels Initiative will begin in earnest in FY 2007. OBP has set a 2012 goal to reduce cellulosic ethanol production to $1.07 per gallon. It also has a goal of displacing 30 percent of current gasoline consumption by 2030. Other federal agencies such as USDA, EPA, and DOT will perform biofuel-related work in a joint effort to achieve the President's Biofuels Initiative.

¹USDA. Ethanol Update. Office of the Chief Economist. March 2, 2006.
²IA. Petroleum Navigator. U.S. Total Gasoline Bulk Sales (Price) by All R&G (Cents per gallon).
³Source: DOE/EIA Monthly Energy Review, October 2005, Tables 1.1, 1.5 and 1.7.
⁴U.S. Department of Energy, Energy Information Administration, http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm
⁵Estimated by applying RIMS II multipliers (U.S. Department of Commerce, Bureau of Economic Analysis) to plant expenditures.
⁶Renewable Fuels Association. Position Papers. Ethanol's Positive Energy Balance. January 20, 2005.http://www.ethanolrfa.org/resource/papers/view.php?id=4
⁷National Biodiesel Board. Fact Sheets. Biodiesel Emissions.
http://www.biodiesel.org/pdf_files/fuelfactsheets/emissions.pdf