Letter to Harry Reid Senate Majority Leader and Nancy Pelosi Speaker for the House

Letter

U.S. Senator Barack Obama (D-IL) today sent the following letter to Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, calling on them to increase Corporate Average Fuel Economy (CAFE) standards and expand Renewable Fuels Standard (RFS) in the comprehensive energy bill currently being negotiated in the House and Senate. The leaders have said they will send an energy bill to President Bush by the end of this year.

In October, Obama joined Senator Tom Harkin (D-IA) to introduce legislation to immediately update the RFS to require the production of 18 billion gallons of renewable fuels by 2016 including 3 billion gallons of advanced biofuels, such as cellulosic ethanol. This legislation recognizes the need for prompt action to update these renewable fuel requirements to provide market certainty to small, local, and farmer-owned ethanol producers. Obama has also been a leader in the Senate in pushing for higher CAFE standards, introducing bipartisan bills in both 2006 and 2007.

The text of the letter is below:

Dear Leader Reid and Speaker Pelosi:

I strongly support your joint efforts to send a comprehensive energy bill to the President before the end of the year. As oil prices edge toward $100 a barrel and the potentially catastrophic effects of climate change become more evident every day, your leadership on this issue is needed and greatly appreciated.

Both chambers passed energy bills earlier this year that would decrease our nation's dependence on imported oil and reduce the carbon emissions that contribute to global climate change. Of particular importance are the enactment of a meaningful increase in Corporate Average Fuel Economy (CAFE) standards and an extension and update of the Renewable Fuels Standard (RFS) which, together, constitute an essential foundation for the achievement of these critical national objectives. Stricter fuel efficiency standards will result in the reduction of carbon emissions. And the promotion of biofuels usage will allow us to meet those standards quicker and with clean burning, renewable, home-grown fuel.

With regard to CAFE, raising those fuel efficiency standards by 4% annually up to 40 mpg by 2020 could save Americans a total of 549 billion gallons of gasoline, while cutting warming pollution by 6,094 million metric tons of carbon dioxide equivalent gases by 2028. That analysis provides some perspective on the progress that can be made if Congress summons the political will to act boldly.

As for the RFS, the Energy Policy Act of 2005 mandated the use of 7.5 billion gallons of renewable fuels in the national gasoline supply by 2012. Two years later, production is now projected to reach 12 billion gallons by the end of 2008. But as ethanol usage passes the congressionally-mandated, annual RFS targets, the major oil companies lose any incentive to use more renewable fuels in their supplies or to make higher ethanol blends like E85 available at their service stations. As a result of the renewable fuels industry's productivity and the petroleum industry's intransigence, the average national ethanol price on the spot market has plunged 30% in the last six months.

The consequences of this development for our dual goals of reducing carbon emissions and displacing fossil fuels are severe. The ethanol industry has been suspending construction starts and facing significant cash flow problems in the face of declining prices. And large multinational corporations have responded by talking publicly about acquiring failing community-sized ethanol plants at bargain basement prices, thereby consolidating their position in the industry and increasing their ability to control prices.

This clearly hurts farmers and the rural economy. It is also not good for the environment. If current trends continue, the infant cellulosic biomass industry will likely see capital investment falter just when it is needed for the commercialization of developing, higher risk technologies. And finally, the consumer is hurt if we don't break this policy logjam, as increased availability of domestic ethanol supplies has been proven to reduce gasoline prices at the pump.

The Senate-passed energy bill anticipated this problem and updated RFS targets to 15 billion gallons by 2015 and 36 billion by 2022. Until those updated levels are enacted, we risk stalling further development of the existing biofuels industry and jeopardizing timely investment in next-generation cellulosic fuels from non-food sources.

I have always felt that higher fuel efficiency standards and the renewable fuels standard together are key to reducing the use of fossil fuels - and especially imported oil - reducing carbon emissions, and building a bridge from the use of corn ethanol to the use of cellulosic biomass ethanol. We jeopardize this potential and risk slowing down economic growth in rural America if Congress does not raise the RFS targets this year.

I share your assessment that time is of the essence in moving a meaningful energy bill that includes a CAFE increase and an RFS upgrade through Congress to the President's desk. And now that the Senate Republicans have united to block passage of the Farm Bill, we should not let a critical investment in our renewable energy future fall victim in the crossfire. I stand ready to do whatever I can to support you in this effort.

Sincerely,

Barack Obama
United States Senator

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