Houston Chronicle: Perry makes alternative energy a priority

Governor sees need for commercially viable biofuels; gives support to research, $5 million to Texas A&M efforts

By BRETT CLANTON
Copyright 2007 Houston Chronicle

The state will make the development of alternative energy and biofuels a bigger priority under a new strategy outlined Monday by Gov. Rick Perry.

The initiative is focused on creating commercially viable products — especially non-corn-based ethanol — to help Texas keep pace with its rising energy needs and ensure its position as a world energy capital.

To that end, Perry said he is calling for more collaboration among state agencies, increased support for research programs at Texas universities and better use of the state’s natural and economic assets.

“As a state that grows by 1,000 new residents each day, Texas must take a more innovative approach to developing new methods and research in the field of energy,” Perry said during a news conference at the Greater Houston Partnership offices downtown.

As part of the effort, Perry announced a $5 million grant to Texas A&M University, his alma mater, for research and marketing of the “next generation” of biofuels. The university has a four-year partnership with Chevron Corp. to encourage biofuels research, he said.

Beyond the award, however, the state’s new bioenergy strategy is short on specifics. State officials Monday were vague as to whether the program includes bioenergy production targets, timelines or investment commitments.

The briefing Monday, which included a posse of state government leaders, university officials and oil executives, was as much a discussion of what the state has already achieved as it was the launch of a new program.

Texas is the top producer of wind power among the states. It ranks second in solar power production. It has the fourth-highest number of biodiesel fuel pumps in the nation. And it is making progress in developing bioenergy and fuel sources from plant cells, compost and fertilizers, Perry said.

But the state can do more, he said: “We have a distinct opportunity to further develop and leverage more of our state’s resources to develop a variety of bioproducts.”

That may be truest in bio- fuels, including ethanol and biodiesel.

But biofuel production must not come in conflict with the state’s cattle industry, which depends heavily on corn and other feedstocks used in biofuels, Perry said.

“Finding that balance is what this is all about,” he said. “We don’t want to be put in the place of having to decide whether we are going to feed cattle or fuel vehicles.”

Alternative fuels such as ethanol and biodiesel have been touted as a way to reduce the nation’s dependence on foreign oil, cut harmful tailpipe emissions and support struggling U.S. farmers.

But there are concerns that supplies of corn and other crops often used to make biofuels are limited, and major scientific breakthroughs are needed to make the fuels economically viable on a wide scale.

Research is under way to develop the fuels from agricultural waste and other non-food crops like switchgrass.

But John Hofmeister, head of Royal Dutch Shell’s U.S. arm, said such breakthroughs could be 10 to 15 years away.

Shell supports biofuels climbing to 10 percent of the nation’s fuel supply. “Then we’ll see what happens,” he said.

The U.S. Senate recently approved a renewable fuels standard, calling for the production of 36 billion gallons of ethanol by 2022, with more than half coming from plants other than corn — which creates a product called cellulosic ethanol.

The standard marks a six-fold jump from current production and nearly a five-fold increase from the 7.5 billion gallon production sought by 2012.

By 2025, Texas will have the potential to produce 3.76 billion gallons of biofuels and 144.5 billion kilowatt hours of electricity from renewable sources, including wind and solar power — more than 20 times 2003 levels, according to a study released last month by the University of Tennessee’s Department of Agricultural Economics.

If that target is achieved, Texas would be the nation’s biggest producer of renewable energy and generate nearly $23 billion each year in new economic activity, said the Texas State 25 x 25 Alliance, citing the university’s figures. The group is a coalition of farming and government representatives who support a goal of meeting 25 percent of U.S. energy needs with renewables by 2025.

In June 2006, the Texas Department of Agriculture began offering an incentive to encourage biofuel production. The program allows for biofuel producers to receive 20 cents per gallon of fuel they produce. Through the end of February, the program paid out $8.1 million, said department spokesman Bryan Black.

But the state Legislature recently decided to cut funding for the program for the next two fiscal years.

Beginning Sept. 1 the incentive payments will cease, he said.

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July 9, 2007, 11:54PM

http://www.chron.com/disp/story.mpl/business/4955048.html