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Gov. Bush puts clout behind use of biofuel

The governor has a "eureka idea" and urges his brother to open doors for ethanol to reduce oil imports.

By DAVID ADAMS
Published August 25, 2006


The Fueling Station blog: The latest on alternative fuel

MIAMI - Earlier this year, a report landed on the desk of Florida Gov. Jeb Bush.

It bore a less than eye-catching title. Something about "diversification" and "ethanol."

But it carried a message that hit home with the governor, conjuring up images from only a few months earlier of hurricanes and gas pumps running dry.

"This one was one of those light bulb deals for me," he said in an interview at his office in Tallahassee. "It was a eureka idea."

That report has turned Bush into one of the country's foremost advocates of a major shift in energy policy. Blending gasoline with cleaner-burning ethanol, he says, could be the answer - at least partly - to alleviating the state's dependency on imported oil. It may even provide him with a focus for his own energies once he leaves office in January, he said.

Bush is so convinced of the need for alternative fuels that he wrote to his brother urging him to implement "a comprehensive ethanol strategy for our country and our hemisphere." In the letter he proposed the controversial lifting of a heavy tariff on Brazilian ethanol.

That politically volatile proposal doesn't sit well with Midwestern corn growers who supply a fast-growing domestic ethanol market. Nor is Congress likely to review the tariff, which does not expire until 2008.

Bush is undeterred. His advocacy for ethanol has received little attention in the mainstream media, but it is causing quite a buzz in alternative energy circles. "He's joining an emerging mainstream," said Reid Detchon, of the Washington-based Energy Future Coalition, which advocates greater biofuel use. "We welcome him."

Bush said his biofuels conversion stemmed from a "convergence of thinking" over the last two years, combining climate issues, the environment and Florida's role in the hemispheric free trade debate.

It culminated last summer when hurricanes knocked out supplies of fuel to the state, sending pump prices skyward.

Florida is especially vulnerable to fuel supply disruption as it imports 98 percent of its gasoline by sea. "For us to progress we need to solve that problem," Bush said.

The paper that galvanized Bush's thinking was written by Mario Fernandez, a Key Biscayne former sugar trader. Fernandez wrote it after reading about President Bush's tempestuous reception at the Summit of the Americas in November in Argentina.

"I was angry," said Fernandez, referring to the anti-Bush rallies led by Hugo Chavez, the leftist president of oil-rich Venezuela, which supplies 11 to 13 percent of U.S. petroleum. "I felt it was time I did something."

The paper laid out a "win-win-win" case for ethanol, arguing that its use could reduce dependence on foreign oil, while benefiting the environment and helping "catapult" Florida farmers into alternative fuel production.

Ethanol could also serve as a catalyst for improved relations with Latin America, potentially re-energizing the hemispheric free trade debate, which is stalled because of Latin American frustration over protectionist U.S. agricultural policies.

Fernandez presented his paper to the Florida Free Trade Area of the Americas, a Miami nonprofit partnership between the state and private business. There were concerns the proposal might upset the state's powerful sugar growers, but the group forwarded the paper to Gov. Bush anyway.

"Bush loved it, and he called me immediately," Fernandez said.

In April, Bush wrote to his brother advocating lifting the 54 cents-per-gallon tariff on Brazilian ethanol. "In light of the challenge we face in meeting the growing demand for fuel, I believe we should reconsider the U.S. policy that taxes ethanol imports from Brazil ... while allowing other tax-free oil energy imports from Venezuela," he wrote.

He also attached a detailed nine-page position paper drawn up by Florida FTAA. It recommended an ambitious plan to pump 15-billion gallons of ethanol into the marketplace by 2015, more than twice the federally mandated goal of 7-billion gallons set by Congress last year. That would amount to about 10 percent of U.S. annual gasoline consumption.

In June the governor signed the state's first energy bill with $100-million set aside for exploring biofuels and promoting energy conservation.

That month he also invited Brazil's minister of agriculture to a meeting of the Florida FTAA in Miami.

"We are empowering new partnerships with our friends," he said at the time. "This just cries out for a coalition of the willing, if you like."

The Brazilian government invited Bush for high level talks. Last week, he sent a team headed by Florida FTAA director Brian Dean.

"This is an issue of unbelievable potential," said Dean, contacted by phone this week in Brazil. He said the creation of a 15-billion-gallon ethanol market in the United States was an "astronomical" undertaking.

While ethanol is not commercially available in Florida it is widely used by drivers in the Midwest.

Ethanol advocates point out that most U.S. cars can run on 10 percent ethanol blended gasoline (E10) without modification. Newer model vehicles can consume a higher 85 percent ethanol blend (E85).

To succeed, the Bush ethanol initiative will have to overcome strong resistance in Congress from the corn lobby, representing the 11 major corn-growing states where ethanol is king.

After struggling in recent years to make ends meet, U.S. corn growers have seen their farms return to profit thanks to federal ethanol subsidies.

"There's a lot more to this tariff issue than meets the eye," said Mindy Poldberg, director of government relations at the Iowa Corn Growers Association.

"We would encourage Gov. Bush to take a look at the full picture," she added, pointing out that the tariff is designed to offset a 51-cent tax credit for ethanol blenders. If the tariff did not exist, she said, U.S. taxpayers would end up subsidizing cheaper Brazilian imports.

But some experts say the effect on U.S. corn growers might not be so drastic. "I'm not sure there's a lot of ethanol that would come gushing into the United States," said Keith Collins, chief economist for the U.S. Department of Agriculture. Collins said Brazil has struggled lately to meet domestic and international demand.

Brazilian ethanol would be a good fit in Florida since the state produces no ethanol, some analysts say.

But Brazilian imports could hurt efforts under way to build a new industry in the state, said Bradley Krohn, president of US EnviroFuels, which plans to break ground next month in Tampa on the state's first ethanol plant.

Ethanol from Brazil would likely "stymie, if not eliminate" new investment in local production facilities.

"The (Florida ethanol) industry needs that 54-cent tariff in order to grow," Krohn said. "Otherwise we are simply shifting our dependence from the Middle East to South America and inhibiting the financial community from investing."

While Krohn welcomed Bush's "ethanol exuberance," he estimated that the U.S. ethanol industry needed another three to four years of tariff protection to stand on its own.

Bush did not discount phasing in Brazilian imports over time, but the United States needs to move fast, he said. With political uncertainty around the globe, he said, diversifying the U.S. fuel supply is a matter of national security.

"That to me is a heck of a lot more important than whether or not the corn guy in Des Moines is protected so that we continue to consume foreign sources of oil," he said.

In the end, Bush said rising global demand for ethanol would create plenty of room for both U.S. and Latin American ethanol. "I don't think it's a zero-sum game because they are both competing for a higher cost alternative."

Bush leaves office in January, but he hopes his ethanol initiative survives him. With his own future still undecided, ethanol could feature in his plans.

"I hope I am involved somehow," he said.

David Adams can be reached at dadams@sptimes.com.

[Last modified August 25, 2006, 00:38:08]


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