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22/1/07 (AP)   -  In his 2007 State of the Union address, US President George W. Bush unveiled a plan to reduce the country's use of gasoline by 20 percent in the next decade, by promoting alternative fuel sources and increased fuel efficiency standards for automobiles. Critics argue that the plan focuses too much on fuel alternatives of debatable value, and too little on conservation.

Strongly focused on energy security, the "Twenty by Ten" strategy seeks first to increase the supply of renewable and alternative fuels by setting a mandatory fuels standard of 132.5 billion litres (35 billion gallons) in 2017. This represents a substantial increase over the current target of 28.4 billion litres (7.5 billion gallons) in 2012.

It also aims to raise federal fuel economy standards for cars and trucks by 4 percent each year. This is projected to reduce annual gasoline use by up to 32.2 billion litres (8.5 billion gallons) by 2017.

The third prong of the strategy would double the US Strategic Petroleum Reserves (SPR) to 1.5 billion barrels by 2027, roughly equivalent to about 97 days' worth of imports in case of a major supply interruption, compared to the current 55. In comparison, EU rules require member states to have a 90-day cushion.

Biofuel focus questioned

Much of the projected reduction in gasoline use is supposed to come from a five-fold increase in the production of ethanol and other alternative fuels. This is tied to expectations for expanded support to ethanol producers -- a reason why the new strategy has been well received by the US farm lobby, since most ethanol in the country is produced from corn. Washington's 2008 budget provides USD 179 million for the president's biofuels initiative, a 19 percent increase from 2007.

According to the White House, the administration's proposals for future agriculture spending under the next farm bill will include more than USD 1.6 billion of additional new funding over ten years for energy innovation, including bio-energy research, and energy efficiency grants. A further USD 2 billion are expected in loans for cellulosic ethanol plants.

An October 2006 report by the Global Subsidies Initiative of the International Institute for Sustainable Development estimates US subsidies to ethanol and biodiesel to be between USD 5.5 billion and 7.3 billion a year. Those figures are expected to grow significantly if current policies remain in place, as the bulk of biofuels subsidies are tied to output and output is increasing at double-digit rates of growth. Furthermore, the study noted that subsidies to corn-based ethanol were not a particularly cost-effective way of either replacing fossil fuel use or reducing greenhouse gas emissions. This is primarily because gasoline, natural gas, and even coal are used in the production of corn, as well as in the plants that convert it into ethanol.

US corn subsidies are already contentious at the WTO. Canada recently launched a formal complaint against US corn and other agricultural subsidies, and has been joined by countries including Argentina, Australia, Brazil, the EU, Guatemala, Thailand and Uruguay. As the world's leading ethanol producer, Brazil, where the gasoline substitute is made from sugar, is concerned about the US's growing production of ethanol from subsidised corn (see BRIDGES Weekly, 24 January 2007). Incidentally, in the ongoing WTO agriculture negotiations, subsidies to biofuel crops are not exempt from reductions to payments that clearly distort production and trade.

No caps on carbon dioxide emissions

Although it refers to climate change as a "serious challenge," the new plan stops short of calling for mandatory caps on US emissions of carbon dioxide. It also leaves aside any measures to deal with emissions from power plants and factories, focusing instead on the development of new technologies to address climate change.

The soft approach on emissions came in spite of a call for stricter limits from some of the US' largest corporations on the eve of the State of the Union address. Chief executives of ten major corporations, including Alcoa Inc., BP America Inc., DuPont Co., Caterpillar Inc., General Electric Co., and Duke Energy Corp., urged Congress to require hard emissions limits on greenhouse gases (GHG), contending that voluntary efforts to combat climate change are inadequate. They called for the adoption of an economy-wide emissions cap-and-trade system. Such a mechanism would place a mandatory total limit on GHG emissions , but would allow companies to trade emission credits to reduce the cost. Companies whose emissions surpass cap could purchase credits from whose did not, or in some cases, from a government auction.

Talking to reporters in Tokyo, Yvo de Boer, the UN's chief on climate change, described Bush's attention to climate change as "very encouraging". He added that "it makes no sense whatsoever in trying to address the question of climate change without the active participation from the United States."

Several environmental groups, however, called the speech's proposed response to climate change weak and disappointing, in spite of the acknowledgement that the issue was a serious challenge. "There was a lot of anticipation on the president's speech, but he fails to seize a last chance to do something meaningful. There is nothing new in this plan which does not address US emissions of greenhouse gases, and the plan is not likely to have an impact on climate change" said John Coequyt, Energy Policy Specialist at Greenpeace in Washington.

ICTSD reporting; "Bush wants to cut U.S. gasoline use by 20 percent," REUTERS, 23 January 2007; "Bush critics seek more energy action," BBC NEWS, 23 January 2007; "UN climate chief calls Bush energy plan 'encouraging'," AGENCE FRANCE PRESSE, 24 January 2007; "Bush Climate Speech Fails to Impress Down Under," REUTERS, 24 January 2007; "CEOs plead for mandatory emissions caps,"

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