A new study by the National Research Council estimates that up to 2 million hydrogen-fueled vehicles could be on American roads by 2020, with that number potentially rising to 25 million a decade later. However, getting there requires getting past a number of hurdles first. The cost of fuel cells must drop and fueling infrastructure must be put in place. That will take substantial subsidies on the part of both government and manufacturers. The study authors estimate that about $200 billion would be required over the next 15 years to make this happen with $55 billion of that coming from governments and the rest from private industry. That total includes costs for vehicle development and deployment, research and development and infrastructure deployment. In contrast, US ethanol subsidies will reach about $15 billion annually by 2020. Beyond 2023, the costs are expected to drop to the point where the lifetime cost of fuel cell vehicles the fuel to propel them would be competitive with conventional vehicles, making subsidies unnecessary.


[Source: National Research Council, via Green Fuels Forecast]

Recently we told you about oil execs explaining to congress how $123 billion in profits should entitle them to an additional $18 billion in the form of subsidies. I realize many of you out there have a lot of sympathy for their position and have spent the intervening time hounding your Congresspersons on their behalf. I mean, this is America and that means energy corporations have the right to do whatever they want - and if we don't like it we can buy a bicycle (I recommend a bicycle regardless. They are great for your health). One of the reasons these companys' hands are out-stretched beggar-like is because (they claim) they need money for further exploration and development. I don't know why they didn't have this part of the equation in their business model to begin with but hey, everyone makes mistakes. Year after year after etc. etc..

How my eyebrows did raise then when reading this article about Exxon (XOM) not increasing oil production so as to keep their record profits high, on Business Week. It is common practice now for oil companies to simply trade any capitol invested in new projects for the equivalent in oil so the countries are paying them to drill directly from their oil reserves. So why do they need our money again?

I know this may sound like a direct quote from Captain Obvious but oil companies like Exxon don't really care if Americans are struggling to keep their houses and buy food because of their desire to see higher profits which is reason number 643 why I intend my next new car to be electric. End rant.

[Source: Business Week]

The Times Republican, which is edited in Iowa, has an article written by David Kruse which explains why ethanol should be subsidized, and then have an additional tariff when being imported. A mess? Let me try to explain his point of view a little bit.

First of all, all ethanol blended with gasoline in the U.S. has a tax credit of 51 cents per gallon. This, for WTO regulations, means that any blended ethanol is qualified, either if it's made stateside or it's imported from a third country. But, there is a 54-cents-per-gallon tariff on imported ethanol created to offset the previous credit. This protects U.S. ethanol against imports (and allows the claimed benefits of reducing foreign dependency on oil, job creation, etc.) and avoids foreign ethanol from being actually subsidized by the U.S.

Kruse tells a similar story about biodiesel in the EU, which actually has triggered a few complaints in the Old Continent. Europe subsidizes importation of U.S. biodiesel, which already qualifies for a $1/gallon tax credit. Kruse thinks that this is bad for the U.S., because it means less biodiesel is available for Americans.

So, definitely, Mr. Kruse is positioning himself to keep the imported ethanol tariff and the subsides on ethanol. What's your opinion on this?

Related:

• Video: Ron Paul on ethanol subsidies "I don't think we should do that"
• Could ethanol become a classroom political issue?
• European biodiesel manufacturers against US biodiesel imports (again)

[Source: Times Republican]

What does Ron Paul think about ethanol subsidies? Ron thinks they are unconstitutional and that allowing farmers to raise hemp is the right solution. Here is Ron's full response, as you can see in the video above, to the question "What are your views and policies on subsidizing ethanol farmers?":

What is my view on subsidizing ethanol and farmers? Under the constitution, there is no authority to take money from one group of people and give it to another group of people for so called economic benefits. So, no, I don't think we should do that. Besides, bureaucrats and the politicians don't know how to invest money. Then that money gets invested for political reasons rather than for economic reasons. I think there is a chance you might get more ethanol if you raised hemp but hemp is illegal in this country. So, in my idea of a free society, you'd be, a farmer would be allowed to raise hemp and not only would that be a good product, possibly to make ethanol, there might be a whole lot of other products you can make with hemp like Canadians do it. So, I am looking to legalize freedom, not more subsidizes and more direction of investments through the federal government because they are incapable of knowing the best investment to make.

What do you think, readers?

Related:

• You put your weed in here - the Mercedes Hempcar on YouTube

[Source: YouTube]

The Japanese Trade Ministry is going to provide $1.7 billion in assistance to local carmakers over the next five years to help them develop cleaner cars. They will kick in about $42 million a year toward developing better cheaper batteries for electric cars. The target is to get the retail price of electric cars down under $25,000 by 2010 and under $16,500 by 2020.

Additional funds will go toward reducing the cost of hybrid systems and hydrogen powertrains in order to make them mainstream. Currently fossil fuels account for nearly one hundred percent of transportation fuels but the government has set a target of reducing that to eighty percent by 2030.

[Source: The Auto Channel]

A new European Environment Agency (EEA) report has been published that identifies transport as a major stumbling block for the European Union in trying to reach its Kyoto climate change targets. The report, 'Transport and Environment: on the way to a new common transport policy', calls for policy changes to address the massive increase in transport usage over the last twenty years. Passenger transport volumes have grown 20 percent in the EU between 1990 and 2003, and air transport volumes have virtually doubled in the same period. While other major economic sectors such as agriculture actually managed to reduce their emissions from 1990 to 2004, transport's emissions contribution has moved further into the red.

Emissions are not the only adverse effect of the surge in transport - noise pollution and air pollution related illness has also risen with the number of vehicles on European roads. In fact the report points out that almost four million life-years are lost each year due to high pollution levels.

Analysis: Extraordinary subsidies of over €100 billion per annum (US$131 billion) are paid to the road transport industry in Europe, leading to increased use of trucks and cars in favour of more efficient transport options. If such subsidies are phased, out the economic balance of efficiency should be restored which will also help the environment.

Related:

• Geneva Motor Show: Ford promises to expand ethanol/flexifuel lineup in Europe
• EU Commissioner for Science and Research likes the HyICE project's hydrogen ICE
• New European CO2 standards may force Porsche production out of the EU

[Source: Copenhagen EnviroNews]

The Biofuels Finance & Investment World was recently held in London at which one of the clearest messages is that biofuels globally are completely dependent on government subsidies. For example, ethanol is energy and monetarily competitive without subsides when oil is $60 per barrel in the US, $35 per barrel in Brazil, and $115 in Europe. The EU Commission estimates that biodiesel is monetarily competitive without subsides when oil is $65 per barrel. But currently NYMEX West Texas Intermediate crude for February delivery is running at $61 per barrel and has been as low as $55 in the last month.

Also mentioned at the conference was the need for biofuel certification criteria based on the actual feedstock used, and the impact biofuels are having on food production. It was said that sometime in 2007 world biodiesel consumption is expected to outstrip world soybean production, and also in 2007, US corn for ethanol consumption will again outstrip US corn exports.

Clearly biofuels have a lot of significant challenges in the year's to come. Although if crude oil prices were to hit $115 a barrel, biofuel producers would have a bonanza.

Related:

• Genetically modifying Jatropha for biodiesel in India
• UConn will host biofuel symposium in January

[Source: Louis Strydom / Ecoworld]

A recent study conducted by the Swiss-based group called Global Subsidies Initiative revealed the total cost of the tax breaks and subsidies that go into U.S. production of ethanol to be in the whopping range of $5.1 to $6.8 billion for 2006. It estimates that U.S. tax payers shell out about $17 per million BTUs. For comparison, a 1989 study calculated oil and natural gas subsidies at less than 40 cents per million BTUs after adjusting for inflation.

Proponents of the booming ethanol industry say that the study doesn't include either the taxes paid to the U.S. government by the emerging industry or the costs saved by the government when crop subsidies are lowered due to ethanol demand raising the price of corn. Matt Hartwig of the Renewable Fuels Association said that the operation and construction of ethanol plants generated almost $2 billion in taxes this year.

This all very interesting news in the face of waning hybrid tax credits. The U.S. government has obviously already decided which alternative road we'll be taking. Another item to note is that this article showed up in the Iowa's Des Moines Register. We just think that they should be recognized and commended for asking the tough questions when they're right in the thick of it.

[Source: Des Moines Register]

Professor Michael O'Hare came up with an intriguing concept to deal with the use of fossil fuels to develop ethanol. A common criticism of the alternative fuel is the continued use of these non-renewable resources in its creation: gasoline to power the tractors; coal to power the ethanol plants; and even using chemicals that damage the soil to grow the crops. The U.C. Berkeley professor describes the complex subsidies and import taxes currently surrounding the ethanol industry that make it virtually impossible to develop less damaging methods to the environment.

His suggestion is a "carbon charge" which is applied any time fossil fuels are used in the ethanol production process. He's careful not to call it a "tax" since its not designed to generate monies. Instead, consumers would not only see the true cost of using fossil fuels (gas prices, for example, would increase) but the monies could actually be returned to them via a refund check or even added to their Social Security funds.

What do you think of O'Hare's concept?

[Source: San Francisco Chronicle]