Fuels Security Act of 2005 Introduced

Legislation has been introduced in the U.S. Senate which would double the demand for ethanol and biodiesel over the next seven years.

The Fuels Security Act of 2005 (S.650) was introduced by U.S. Senators Richard Lugar (R-IN), Ben Nelson (D-NE) and Tim Johnson (D-SD).

The bill would establish a phased in annual requirement for renewable fuels like ethanol and biodiesel beginning in 2006 and reaching 8 billion gallons in 2012. More than 20 Senators signed on as original cosponsors of the legislation.

"The biggest threat to our security is our reliance on fossil fuels and foreign oil," said Co-Chairman Senator Nelson. "The Fuels Security Act will boost the domestic production of renewable fuels, drive down gas prices, create biofuels jobs, and protect our economic security by reducing our dependence on foreign oil."

"This legislation would play a vital role in increasing America’s security because renewable fuels are a key component to energy independence for our country," Lugar said. "Ethanol and biodiesel are premier, high performance fuels that have tremendous environmental benefits. This increase in production would significantly improve rural economies not only in my home state of Indiana, but also in all 50 states and around the world. In addition, it will spur investment in valuable infrastructure which is critical to the viability to a national renewable fuels system."

The legislation would create a flexible credit and trading program allowing refiners to meet the renewable requirement directly or working with others who will be marketing this fuel. It would eliminate the requirement for oxygenates like ethanol to be in federal reformulated gasoline, which is something the petroleum industry has requested. It does not prohibit the use of oxygenates, and many experts expect ethanol to continue to be used widely in reformulated gasoline across the country. The legislation would also incentivize further development of non-grain feedstocks such as urban wastes and a range of cellulosic biomass products by increasing their value in the credit trading program.