It’s done. It’s signed. The 2007 Energy Bill (officially as HR 6 The Energy Independence and Security Act of 2007) has several far-reaching policies. I wanted to take a look at two important ones: the expanded renewable fuels standard (RFS) and the increased CAFE standard.
Expanded RFS
The Expanded RFS standard, if achieved, could go a long way to reducing our petroleum-based fuel demand. I ran a few numbers using the schedule included in the bill (and the Renewable Fuel Association website) to see what type of investment would be required to meet the volume capacity requirements. If we assume that capital costs for a corn ethanol facility are around $1.50/gallon of annual capacity and that advanced ethanol facility run around $2.50/gallon, we get the following investment amounts:
This is doable, from a magnitude standpoint. It would require a lot of renewed enthusiasm around the industry. It’s important to note, not surprisingly, are that corn ethanol has a limited future and that the future of the industry requires advancements in cellulosic ethanol…right now.
