Gov. Rendell this week also signed legislation that will help spur the development of homegrown biofuels in Pennsylvania by establishing new requirements that every gallon of gasoline and diesel fuel contain a percentage of ethanol and biodiesel.

The mandates and incentives were included in House Bill 1202 (Gerber-D-Montgomery) establishing a state mandate for biodiesel and cellulosic ethanol use based on in-state biofuel production capacity and Special Session Senate Bill 22 (Tomlinson-R-Bucks) providing for biodiesel production incentives of 75 cents per gallon for three years ($5.3 million annually) and creating a nitrogen tire inflation system grant program

"Pennsylvanians are struggling with higher fuels costs," said Gov. Rendell, who signed House Bill 1202 and Special Session Senate Bill 22 into law at the National Armory in Montgomery County. "Record-high fuel prices are straining family budgets and pinching the bottom lines of our businesses. We need to reduce our dependence on foreign oil and keep our energy dollars in Pennsylvania, to invest in our economy and create jobs."

The biofuel percentage requirements established under the new law will go into effect once in-state production reaches certain levels.

The requirements—which include what is believed to be the nation's first state-specific cellulosic ethanol mandate—will also spur new economic development in renewable biofuels by directing that more of the money spent each year by Pennsylvanians on imported fuels stay in the state.

"These bills will position Pennsylvania to emerge as a national leader in the development and deployment of biofuels, including the next generation alternative cellulosic ethanol, which promises to be better for our environment than conventional fuels."

PA Farm Bureau President Carl T. Shaffer said, “The incentive will help kick-start Pennsylvania’s struggling biodiesel industry, which has had difficulty competing with subsidized biodiesel producers from other states. Renewable fuels play a key role in efforts to reduce our dependence on foreign energy sources, boost our economy and protect our environment.

“Higher energy costs are directly affecting the cost of food in grocery stores. Transportation, processing and packaging costs are big factors in higher food bills. Increased production of biodiesel, ethanol, wind power and other alternative sources of energy will help combat some of those costs in the future,” concluded Shaffer.

"These mandates will ensure Pennsylvania carries its weight in helping to make America more energy independent, will result in our burning cleaner fuel and will make Pennsylvania a leader in the emerging green energy economy," said Rep. Mike Gerber (D-Montgomery), prime sponsor of House Bill 1202, said. "Also, with fast-rising gas prices, Pennsylvanians could benefit from affordable, homegrown, renewable fuel sources.

"I am particularly proud that Pennsylvania is now the only state that has a cellulosic-specific mandate and is the first state to respond to the federal legislation passed in December that calls for greater investment in cellulosic technologies," Rep. Gerber added.

Sen. Robert Tomlinson (R-Bucks), prime sponsor of Special Session Senate Bill 22, said, "With rising gas prices and concern for the environment, consumers are demanding alternatives to oil. These changes will make the fund even more effective in helping consumers to afford alternative fuel vehicles and other renewable energy efficient products.

"Encouraging the use of these fuels will not only help to clean up our environment but also make us stronger economically to produce our own fuel," Sen. Tomlinson added. "I'm very pleased that the Governor and General Assembly worked together to pass this very important environmental initiative."

Under House Bill 1202, as much as 1 billion gallons of biofuels will be added to the state's fuel supply. The law establishes the following for ethanol and biodiesel production and consumption:

All diesel fuel sold at retail must contain:

· 2 percent biodiesel, once in-state production reaches 40 million gallons;

· 5 percent biodiesel, once in-state production reaches 100 million gallons;

· 10 percent biodiesel, once in-state production reaches 200 million gallons; and

· 20 percent biodiesel, once in-state production reaches 400 million gallons.

All gasoline sold at retail must contain 10 percent ethanol, once in-state cellulosic ethanol production reaches 350 million gallons.

In addition, the use of renewable fuels results in a significant reduction in lifecycle greenhouse gas emissions compared to the petroleum fuel that is displaced. Biodiesel reduces greenhouse gas emissions by about 50 percent, while cellulosic ethanol could reduce greenhouse-gas emissions up to 86 percent, according to the U.S. Department of Energy.

Because of controversy over the environmental and climate change impacts of biofuels, Special Session Senate Bill 22 requires a comprehensive study of the air quality impacts of biofuels.

Pennsylvania already has an in-state biodiesel production capacity of approximately 60 million gallons per year. There are no cellulosic ethanol plants in Pennsylvania or the United States.

The state's first large-scale ethanol plant—a 100-million-gallons-per-year operation—is under construction in Clearfield County, although the production capacity is based on corn-based ethanol with a promise, in the future, to change the plant to produce cellulosic ethanol. Another cellulosic demonstration facility is planned for Madison, Westmoreland County.

Most independent observers believe production capacity will not meet even the threshold production triggers in the legislation for many years to come. In addition, the new federal biofuels mandate adopted at the end of 2007 will require a six-fold increase in the use of biofuels nationwide. (See 12/24/2007 Pa Environment Digest)

"Pennsylvania can be to cellulosic ethanol what corn-based ethanol was to Iowa and the Midwest," said Gov. Rendell. "Pennsylvania has an abundant supply of cellulosic ethanol feedstocks, including switchgrass, woodchips, municipal waste and agricultural waste. This alternative fuel law ensures that Pennsylvania farmers and businesses will fully realize the benefits of these resources."

Special Session Senate Bill 22 is now Special Session Act 2 of 2008 and House Bill 1202 is now Act 78 of 2008.

Link: Federal Biofuels Mandate Will Eclipse Need for State Mandate

Biofuels Could Nearly Double Greenhouse Gas Emissions

7/11/2008