US biofuels makers dismayed by Obama oil drilling plan

31 March 2010 16:37  [Source: ICIS news]

Obama to expand drillingHOUSTON (ICIS news)--Reports on Wednesday that President Barack Obama would end a longstanding moratorium on US east coast oil and natural gas drilling came to the chagrin of the ethanol industry, which argued that policymakers should focus on alternative energy sources.

“Relying on 20th century energy sources to address 21st century challenges will not solve the problem,” Renewable Fuels Association (RFA) president Bob Dinneen said.

Oil and other fossil fuels are finite resources,” he added. “While we cannot ignore their contributions, neither can we ignore the reality that reliance on them is simply unsustainable.”

According to press reports, Obama would open to oil and natural gas exploration a stretch of the Atlantic from Delaware to the central coast of Florida covering 167m acres of ocean. In addition, areas in the eastern Gulf of Mexico and off the northern coast of Alaska would also be opened, the reports said.

The coastline from New Jersey northward would remain closed to all oil and gas drilling, as would the entire Pacific coast.

Obama’s proposal was intended to lower dependence on oil imports, produce revenue from offshore leases and potentially gather Republican support for the administration’s upcoming energy and climate change legislation, reports said.

However, in doing so, Wednesday’s proposal may frustrate groups that were previously his political allies.

America’s energy policy must be focused on renewable sources that have great potential for innovation and improvement,” Dinneen said. “Renewable fuels, such as ethanol produced from a variety of feedstocks, hold great promise to reduce our need for imported oil, address climate change concerns, and create enduring economic opportunity.”

The RFA noted that ethanol production was already contributing to US energy security, with more than 10.6bn gal used in 2009 serving to reduce oil imports by 364m barrels. That production helped support nearly 400,000 American jobs, Dinneen added.

“The continued expansion of ethanol production along with the commercialisation of new technologies will only improve on these benefits,” the RFA said.

The RFA said the Obama administration needed to take several concrete steps to ensure the future of the biofuels industry, including the allowance for up to 15% ethanol to be blended into gasoline, urging Congressional action to extend renewable fuel tax incentives, and improving loan guarantee programmes for cellulosic and next-generation biofuel technologies.

US environmental group Sierra Club also voiced its displeasure with the plan, arguing that potential oil spills could destroy a coastal tourism economy and jobs that depend on it.

"There's no reason to drill our coasts," said Sierra Club executive director Michael Brune. "We can achieve real energy independence and economic vitality by investing in clean energy like wind and solar and efficiency. This kind of power creates good, lasting American jobs and positions our nation to become a global leader in the new clean energy economy."

The American Chemistry Council (ACC) and National Petrochemical & Refiners Association (NPRA) did not immediately respond to requests for comment on the proposal.

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