New Energy Bill Signed

President George W. Bush recently signed into law an energy bill that will have a larger long-term impact on U.S. agriculture than the pending farm bill, says a Purdue University expert.

By increasing the Renewable Fuels Standard (RFS) to 36 billion gallons by 2022, the bill provides a road map for the production of renewable fuels from U.S. farms and forests.

"This is not market driven," says Chris Hurt, Purdue Extension agricultural economist. "It’s policy driven with billions of dollars and it’s really going to change America. If you step back and look at it, thats called leadership. Congress has a vision. This new energy bill is going to have huge impacts for agriculture and foresty. It’s not like throwing a pebble in a pond and having a few ripples. This is a boulder and it’s going to create mega waves."

Hurt highlights the most important facts from the energy bill.

Cornstarch ethanol will contribute 15 billion gallons per year of the total.

About 13.5 billion gallons of this capacity per year will be in place by the end of 2008.

Cellulosic ethanol will be the dominant portion of the industry to grow after 2010. Total cellulosic ethanol is expected to grow from zero to 21 billion gallons by 2022.

 In the Midwest, existing cornstarch-based ethanol plants will focus on adding cellulosic ethanol production to their capacity at existing sites. The cellulosic portion of the plant will use cornstalks or other crop residues.

Implications from the energy bill are numerous, explained by Hurt.

More than likely, it will not be until 2009 before U.S. corn producers can meet the demands of the rapidly expanding corn ethanol plants.

A much slower growth rate in cornstarch ethanol may occur from 2010 to 2015 with annual growth rates of 2 percent to 3 percent per year.

Grazing lands will be targeted to shift to fuel crops such as prairie grasses, which may develop in areas such as the mid-South and the western portion of the Great Plains.

Conservation Reserve Program (CRP) acres may largely shift toward cellulosic energy crops in areas of the country.

Forests and woodlands may be shifted to energy crops in portions of the country.

A large search for new energy crops will be under way. Some of these may be nontraditional crops such as sweet sorghums or tropical maize, or advancements of crops such as sugar cane.

A large amount of research, development, and experimentation will occur to discover the most economic ways to produce, store, and transport these new cellulosic energy crops.

Most of the crops will be land and natural resource based which means agriculture will be called upon to meet these enormous challenges and to also reap the potential rewards.

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