Monday, January 21, 2008

Ah, yes - the fine print...

As focused as I was on the biofuels mandates portion of the Energy Bill, I missed some of the interesting little tidbits that are only adding to the biofuel optimism.
But, wait, that’s not all. Car companies in America get a fuel-economy credit for every flex-fuel vehicle they sell. The government rates the fuel economy of flex-fuel vehicles at about 165% the miles per gallon (mpg) they would get on straight petrol. In reality, vehicles running on E85 get 25-30% fewer mpg than their petrol equivalents.

As it costs only $200 to turn a conventional car or light truck into a flex-fuel vehicle, the industry can save itself billions in potential fines that would otherwise accrue for failing to meet the government’s CAFE (corporate average fuel economy) requirements. CAFE is the sales-weighted average mpg figure for all the cars or light trucks a manufacturer sells in any given model year.

The current CAFE of 27.5 mpg for cars and 21.6 mpg for light trucks is set to rise to a combined 35 mpg by 2020. Subsidised corn-based ethanol is therefore a nifty way of meeting America’s mandatory fuel-economy requirements without having to invest billions in new technology. Between them, General Motors, Ford and Chrysler now offer over three dozen models that can run on E85 as well as petrol. [More][my emphasis]
While I have serious reservations about being able in the long run to mandate market forces to obey political will, the wide spread of regulatory tools deployed to push biofuels consumption seems to be working [from a corn farmer's point of view].

My fear is we may later, and at length regret having so cavalierly run rough-shod over the market rights of our customers.

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