The Great Lakes Zephyr - Wind Energy & Hydrogen Journal

Another day of Alt Power Digest:

There are 4 messages in this issue.

Topics in this digest:

1. Republicans Say Hair-Breadth From Energy Plan
From: AP@alternatepower.com (Alternate Power)
2. Energy Bill Held Up by Tax Package Dispute
From: AP@alternatepower.com (Alternate Power)
3. Smooth Gasoline Switch Expected in California
From: AP@alternatepower.com (Alternate Power)
4. China To Put Corn Into Gas Tanks To Clean Up
From: AP@alternatepower.com (Alternate Power)


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Message: 1
Date: Mon, 20 Oct 2003 00:02:38 -0700 (PDT)
From: AP@alternatepower.com (Alternate Power)
Subject: Republicans Say Hair-Breadth From Energy Plan

http://www.planetark.org/dailynewsstory.cfm/newsid/22590/story.htm

(REUTERS) USA: October 20, 2003:
WASHINGTON - Despite urgings from their House and Senate leaders, the Republicans negotiators overhauling U.S. energy policy were stymied last week by disagreements over modernizing the electric grid and the future of the gasoline additive MTBE.

Nor did they agree on $16 billion in tax breaks and incentives to encourage building of power plants, development of alternative energy sources and construction of an Alaska natural gas pipeline. Nonetheless, the Energy Committee chairman from each chamber said the high-level discussions - limited to party leaders and committee chairmen - were close to wrapping up the bill. Louisiana Republican Billy Tauzin, chairman of the House panel, said agreement was "a hairs-breadth" away. "We're still hopeful we can get it done tomorrow," he said. "It is fair to say we are within two items," said New Mexico Republican Pete Domenici, chairman of the Senate Energy Committee. But he declined to say which items had been locked up or if negotiators had deleted a White House-backed proposal to allow oil and gas drilling in an Alaskan wildlife refuge.

A Senate aide tabbed electricity and renewable fuels as the sticking points for the negotiators. A Senate Finance Committee staff worker said there was no agreement on the tax portion of the bill. Tauzin and Domenici met privately for nearly an hour after a session with House Speaker Dennis Hastert and Senate Majority Leader Bill Frist. Earlier this week, the leaders told the chairmen they wanted them to produce a bill by late Thursday so it could be taken to a floor vote next week.

DEMOCRATS NOT INVITED

Democrats, who have complained about being locked out of the bill-writing process by Republicans, were not invited to this week's meetings. They probably will not get a chance to work on the bill until a formal meeting of negotiators is called, preparatory to sending the bill to full Senate and House.
No amendments are allowed when a so-called conference report is called for a floor vote.

Three issues in particular have split Republicans and stopped the bill in its tracks during the past month.
Virtually all lawmakers agree on the need for stricter standards of power transmission reliability since the August blackout, but Southern Republicans want the bill to prohibit federal regulators from requiring all utilities to join regional grids. The Southerners view the Federal Energy Regulatory Commission's grid rule as usurping state authority. The proposed ban of gasoline additive MTBE, a suspected carcinogen blamed for groundwater pollution, is another source of disagreement. Delay opposes a ban and wants language that would protect MTBE producers from liability lawsuits.

Senate Minority Leader Tom Daschle - who backs corn-based ethanol as a substitute for MTBE, as do many Midwestern lawmakers - said earlier this week he had not decided whether to support a filibuster if the final version of the bill protects MTBE manufacturers from lawsuits. Another dispute centers on Domenici's opposition to a tax credit guaranteeing a minimum price for natural gas that would be shipped through a proposed $20 billion pipeline from Alaska to the lower 48 states.
Alaska's Republican senators say the tax credit is crucial for construction, but House lawmakers and the Bush administration say it would distort markets and discourage gas development in other parts of the country.

Story by Chuck Abbott and Tom Doggett

REUTERS NEWS SERVICE
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Message: 2
Date: Mon, 20 Oct 2003 00:03:01 -0700 (PDT)
From: AP@alternatepower.com (Alternate Power)
Subject: Energy Bill Held Up by Tax Package Dispute

http://www.planetark.org/dailynewsstory.cfm/newsid/22586/story.htm

USA: (REUTERS) October 20, 2003:
WASHINGTON - Disputes over a $16 billion package of energy tax credits and incentives prevented Republican negotiators from finalizing sweeping U.S. energy legislation on the weekend, but they hope to wrap up their work on Sunday, according to congressional sources. Negotiators are racing against the clock to finish a bill that would overhaul U.S. energy policy for the first time in a decade, and then present it to a joint Senate-House conference committee for a vote that is tentatively scheduled for mid-day on Monday. Senate and House Republican staff, who spent most of Saturday in their Capitol Hill offices trying to hammer out the bill, informed their Democratic colleagues late in the day there was no final legislative language for them to review.

In a big win to win for environmental groups, controversial plans to open the Arctic National Wildlife Refuge to oil drilling are set to be dropped from the final bill. "I don't think it's going to be in the bill," Republican negotiator Sen. Trent Lott of Mississippi told reporters late last week, when asked about ANWR drilling.
Holding up the bill are multi-billion-dollar tax provisions, with disagreement among Senate and House negotiators in particular on separate incentives to build an Alaskan natural gas pipeline and provide a fuel tax break for ethanol-blended gasoline, the congressional sources said. "The two tax packages don't match up very well," said one congressional aide.

Nonetheless, Republican staffers are shooting to finish the bill on Sunday and send the legislation to the House floor as early as Tuesday, after it is voted on by the conference committee. A vote in the Senate would soon follow.

The wide-ranging bill would also modernize the U.S. electrical grid, promote oil and natural gas drilling and encourage the development of alternative energy sources.

But the final bill will not contain a requirement that the government conduct an inventory of oil and natural gas reserves in offshore U.S. waters where drilling is banned, Republican Sen. Pete Domenici of New Mexico, who is steering the energy bill through Congress, said last week.

The Bush administration made drilling in the Arctic refuge a key part of its national energy plan and argued ANWR's potential 16 billion barrels of crude was needed to help reduce U.S. dependence on foreign oil imports. However, Republicans feared a threatened Democratic filibuster against ANWR drilling would kill the bill.

Story by Tom Doggett

REUTERS NEWS SERVICE
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Message: 3
Date: Mon, 20 Oct 2003 00:03:33 -0700 (PDT)
From: AP@alternatepower.com (Alternate Power)
Subject: Smooth Gasoline Switch Expected in California

http://www.planetark.org/dailynewsstory.cfm/newsid/22584/story.htm

USA: (REUTERS) October 20, 2003:
HOUSTON - Refiners, regulators and analysts said last week that as California finishes its switch to a new clean-burning gasoline over the next few weeks they don't expect price spikes like those seen since spring.

State officials set Dec. 31 as the deadline for refiners to begin adding ethanol, an alcohol, to gasoline to reduce tailpipe emissions. Ethanol replaces methyl tertiary butyl ether (MTBE), a petrochemical, found to pollute groundwater.

Most refiners switched to making the new ethonol-blend gasoline, called by its acronym CARBOB, last year, but Tesoro Petroleum Corp. (TSO.N: Quote, Profile, Research) and Valero Energy Corp. (VLO.N: Quote, Profile, Research) are both still phasing out MTBE. They make about 20 percent of the 1 million gallons produced each day in the state with MTBE, but should be fully converted to ethanol by Nov. 1, according to the companies and the California Energy Commission. Since March, West Coast gasoline spot market prices have shot up as much 80 cents on at least two occasions as several refineries suffered breakdowns that caused cuts in gasoline production. But Valero and Tesoro said they do not expect market-moving production cuts as they complete the conversion. "We will not experience a noticeable change in production volumes," said Valero spokeswoman Mary Rose Brown. Valero operates two California refineries with a combined throughput of 320,000 barrels per day (bpd). "We've been preparing for this for the past two years," said Doug Miller, Tesoro's California region business manager. Tesoro runs a 168,000 bpd refinery in Martinez, California. If production levels are maintained as expected, seasonality should favor stable prices, too, because fall and winter are usually calmer times for gasoline prices in California, said Dave Hackett, president of the California consulting firm Stillwater Associates. There is less driving and environmental regulations are easier to meet. "Other than what's driven by the price of crude oil, there's generally very little in terms of price spikes even if there is a refinery problem," Hackett said.
He said that having all the state's 14 refineries making the same gasoline blend also should help stabilize supply in the future and perhaps limit price spikes.

The Energy Commission expects MTBE to be out of the state's gasoline supply by mid-November.

Story by Erwin Seba

REUTERS NEWS SERVICE
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Message: 4
Date: Mon, 20 Oct 2003 00:03:57 -0700 (PDT)
From: AP@alternatepower.com (Alternate Power)
Subject: China To Put Corn Into Gas Tanks To Clean Up

http://www.planetark.org/dailynewsstory.cfm/newsid/22580/story.htm

CHINA: (REUTERS) October 20, 2003:
JILIN, China - Jilin province, home to China's first car factory and also its biggest corn producer, is putting corn and cars together in a project to ease the country's exploding pollution ahead of the 2008 Beijing Olympic Games.

Like many other agriculture giants such as Brazil, the United States, and India, the northeast province is using its huge farm surplus to make organic fuel that cuts pollution, and reduces dependency on petroleum imports at the same time.

Industry sources say China, which is the world's fastest growing car and energy market, could extend the use of ethanol gasoline throughout the country by 2005 if initial exploratory steps are successful. An Olympics shrouded in smog is not a scene China wants to show the world, but that is what it will look like, unless the traffic pollution in major cities is brought under control.

Turning grains into fuel also happens to allow the government to continue to subsidize agriculture outside its obligations under the World Trade Organization (WTO), avoiding more social unrest from farmers who are now exposed to global competition. In Jilin, not far from the provincial capital Changchun, one of the world's largest fuel ethanol plants is currently gearing up for full operation.

From October 18, all car, truck and bus drivers in the province must blend into their gasoline 10 percent of the biofuel distilled from corn. A similar policy nationwide would make a significant dent in regular gasoline consumption, which totaled more than 37 million tonnes last year.

Fuel ethanol cuts greenhouse gas emissions that are held responsible for global warming. It can be produced also from wheat, sugar, rapeseed, palm oil, cassava or even recycled food oil, such as old frying oil collected from fast food restaurants.

SUBSIDIES

Jilin Fuel plant is one of four Chinese ethanol plants under construction, including one in neighboring Heilongjiang, one in the eastern province Anhui, and another in wheat-producing Henan. "Such projects are viable only in grain-producing areas," Liu Yi, technical department manager told Reuters at the plant in the outskirts of Jilin city, from where the hills of the province's vast corn fields roll off far away and out of sight.

Jilin, which is three times the size of Austria, accounts for more than 10 percent of China's annual corn output of about 120 million tonnes, the second biggest after the United States. It takes about three tonnes of corn to produce one ton of ethanol.

Jilin Fuel will purchase corn from farmers and store it in silos at the sprawling complex. The air here is filled with a sweet smell, similar to a brewery, as it conducts test runs.

The plant cost 1.94 billion yuan (about $235 million) and is equipped with its own power generators as well as water treatment facilities, still a rarity for China.

Along with Beijing, the local government has provided favorable taxes and low-interest loans to the company. It has also promised subsidies to make up for the difference between gasoline and ethanol prices. Liu calculated ethanol to cost about 4,000 yuan ($484) per tonne, compared with gasoline at 2,700 yuan ($327) a tonne. With car sales doubling this year to over two million, the International Energy Agency forecast that China would overtake Japan next year as the second largest oil consumer after the United States. Jilin Fuel Ethanol, a joint venture between the China National Petroleum Corp (CNPC), China Resources Enterprises Ltd and Jilin Grain Group (JGG), is to convert 900,000 tonnes of corn into 300,000 tonnes of fuel ethanol each year. It plans to double its capacity to 600,000 tonnes after that.

ETHANOL EQUALS HAPPY FARMERS

China has recently been trying to pull back from grain export markets because it cannot continue to pay out the export subsidies it used to under WTO trade rules. "To help the fuel ethanol company is to help improve farmers income, restructure the old agriculture system and help maintain social stability," Hong Hu, governor of Jilin province, said. "It's a top government agenda item."

Over the past decade, China accumulated massive grains stocks as results of its policy of food security but these are now costing a fortune in storage fees, and are depressing prices of new crop, which hurts farmers. Jilin alone is estimated to have over 20 million tonnes of corn in stock.

"Maybe they are willing to say 'Okay this is in the name of fuel security and environmental protection ... we'll do this'," said one source in Beijing, who declined to be named. "And if the prices of grains go too high, that's good for the farmers."

Story by Nao Nakanishi

REUTERS NEWS SERVICE
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