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To: Jim Bishop who wrote (85175)	5/27/2001 2:26:23 PM
From: Jim Bishop	Respond to of 150070

dailynews.yahoo.com Keep Ethanol Tax Credit, Encourage Biomass-W.House Audio/Video President Bush Outlines New Energy Plan - (ABCNews.com) By Charles Abbott WASHINGTON (Reuters) - President Bush (news - web sites)'s energy package, unveiled on Thursday, encourages use of ``biomass'' fuels, made from crops, trees or even landfill gases, and the retention of a tax break for ethanol, the best-known of the so-called biofuels. Biomass is organic matter that can be broken down into chemical building blocks and used as an energy source to produce heat, fuel or electricity. Farm state lawmakers and grower groups are eager to see more crops used for fuel to help offset low grain prices. While the Bush administration's energy task force report suggested ways to spur development and use of renewable fuels, it set no targets for their future contribution to the U.S. energy mix. ``They can provide a reliable source of energy at a stable price, and they can also generate income for farmers, landowners, and others who harness them,'' the 163-page report said. Renewable energy, excluding hydropower, now provides 4 percent of U.S. energy, split evenly between electric generation and transportation fuels. The lumber and paper industries already use wood scraps to heat buildings and fuel boilers to produce steam for manufacturing. As an inducement to develop the home-grown fuel, ethanol already has an excise tax exemption worth 5.3 cents a gallon at the pump. Ethanol is distilled from corn and used in a 9-to-1 blend with gasoline. The White House report suggested a tax credit for use of methane gas from landfills. It also proposed extension and expansion of the 1.7 cents-per-kilowatt tax credit for electricity generated by wind or biomass, and use of $1.2 billion from oil and gas drilling in the Arctic National Wildlife Refuge to pay for research into alternative and renewable energy sources including wind, biomass, solar and geothermal. The two most common biofuels, the report said, were ethanol and biodiesel, a diesel-engine fuel that can be made from vegetable oils, animal fat or algae. ``Ethanol is the most widely used biofuel and its production has increased sharply since 1980, rising from 200 million gallons a year to 1.9 billion gallons,'' the report said. ``Today, many states are considering phasing out the use of MTBE (methyl tertiary butyl ether), an oxygenate additive for gasoline. If they do so, that will likely spur greater reliance on ethanol,'' it said. Backers say ethanol can play a useful role by increasing the oxygen content of fuels and reducing harmful carbon monoxide emissions. Critics say it can add to ozone pollution. Earlier this week, Sen. Tom Harkin (news - bio - voting record), Iowa Democrat, introduced a bill to phase out MTBE in three years and maintain the federal requirement to use oxygenated fuels in smoggy areas. California officials have asked for a waiver from the requirement to use oxygenated fuels because of problems with MTBE. At present, there are 450,000 alternative-fuel vehicles in the United States and more than 1.5 million so-called flexible-fuel vehicles, which can use gasoline or gasoline blends. Ethanol plants consume more than 650 million bushels of corn a year, a tiny percentage of the nearly 10 billion bushels of corn grown by American farmers. The task force report also recommended a temporary income-tax credit for people who purchase new hybrid or fuel-cell vehicles from 2002-07. Sen. Richard Lugar (news - bio - voting record), an Indiana Republican who chairs the Senate Agriculture Committee, has backed legislation that would spend $49 million annually on biofuels research for a six-year period.