PA-ERG Blog

At the NGA, Regional Interests Impact Agreement on National Energy Policies

The National Governors' Association met last weekend in Philadelphia, with Minnesota Governor Tim Gov. Pawlenty's yearlong Securing a Clean Energy Future Initiative (SCEF Initiative) serving as the focus of the meeting.

The meeting started with Pawlenty saying, "The nation's attention has becoming increasingly focused on the growing energy challenges that face us. I'm proud of what we've accomplished as part of the Securing a Clean Energy Future Initiative, but our work is just beginning. It will take continued effort and renewed dedication to ensure that our country has an energy future that is safe, secure and clean."

Governor Ed Rendell told the Governors, "There is no silver bullet available to solve this nation's energy challenges. This will be an all-hands-on-deck, all-technologies-available effort."

But by Monday afternoon, while the NGA did manage to agree that Congress should extend tax credits that encourage more wind and solar electric generation, and promote design and construction of energy-efficient buildings, the Governors in attendance could not agree on reductions of greenhouse gases or other major issues.

In this case, as is often the case in Harrisburg, the differences were not between Republicans and Democrats, but between regions, and local economic needs, a factor seen in Congressional debates over renewable energy resources and programs and a possible precursor of similar debates coming when the next Administration in Washington seeks to put its stamp on a federal energy policy.

According to the NGA, Montana Gov. Brian Schweitzer (D) told the press, "When we got down to the details, we started to act like Congress, and that's bad." He said that there was some frustration that Pawlenty's (R) "bold" energy proposal fell to the wayside.

Pawlenty conceded that while some regions are going forward with proposals to reduce greenhouse gases, "deep differences" existed among the states. "It's not something that the NGA will probably address on a consensus basis," he said.

Not surprisingly, regional and parochial interests always rear their head in renewable energy discussions. Much of our past national "renewable energy policy" has been driven by the farm lobby and Midwest farm state Congressmen seeking new or continuing markets for corn, soybeans and commodities grown in their regions. On wind issues - and a look at the new T. Boone Pickens proposal confirms this clearly - states on the prairie from Texas north through the Dakotas see dollar signs and economic opportunity. And the clean coal advocates along the Appalachian chain and in the north central states, will continue to push back on programs that exclude development of these natural resources.

At the state level, there's not much difference. Elected officials with oil refineries in their districts will support the oil industry. Legislators from hard coal and soft coal production areas will protect and promote their local resources. And as the recent discussions on the energy package clearly showed, members of the General Assembly with developing and planned energy generating companies in their districts will take the lead in seeking advantages that benefit their constituents every time.

At the NGA, Governors of both parties agreed that the country needs to rely less on foreign oil and develop more renewable energy sources, but the costs of regulating greenhouse gases worry states that produce oil and coal. Both major party presidential candidates, Senators John McCain and Barack Obama, support "cap-and-trade" proposals that allow companies to buy and sell greenhouse gas pollutant credits.

Gov. Rendell, who will serve as NGA chair for 2008-2009, said despite the frustrations, "it's time to look forward" and work with the next president on energy and other issues. "I can't recall a time when the next president is faced with problems of such magnitude," he said.

NGA also announced a new state-industry partnership between the SCEF Initiative and General Motors Corporation (GM) to help states increase availability of E-85 fueling stations. Under the partnership, states will develop a strategy for installing E-85 pumps in key locations. GM will provide technical assistance to states in developing these strategies and will leverage their relationships with the automobile and ethanol industries to help states implement the strategies. Of course, GM is also attempting to lead the pack in production and sales of flex fuel vehicles for personal use.

During the meeting, Gov. Pawlenty released four publications to help ensure the work of the SCEF Initiative continues: (Copies of all are available through links on the PA Energy Resources Group website.)

"Opportunities for States in Clean Energy Research, Development & Demonstration," outlines state roles in this area and is intended to guide states in the crucial decisions they must make about clean energy in the years ahead.

"A Governor's Guide to Clean Power Generation and Energy Efficiency," offers guidance for states to engage in enhanced electricity planning efforts and policies that can drive greater investment in and adoption of efficiency and cleaner power sources.

"Clean and Secure State Energy Actions - 2008," catalogs what all 55 states and territories are doing to advance a cleaner, more secure energy future, highlighting existing policy models other states can replicate.

A new Issue Brief, "Greening State Government: 'Lead by Example' Initiatives," examines current efforts across a range of state government operations to increase energy efficiency and support the use of clean and renewable energy.

Infrastructure Support Critical to Biofuels Industry

Sometimes lost amid the debate over mandates and incentives for the biofuels industry is the fact that the state does not have the infrastructure in place to accommodate blending, distribution and sales of these products.

Even with many small biodiesel producers temporarily out of business, the state is producing on a pace for between 45 and 50 million gallons of biodiesel in 2008. But producers like Lake Erie Biofuels, who are manufacturing 125,000 gallons per day, have been unable to get its product into the mass consumer market in the state because the terminal, storage and blending system is not currently capable of meeting the market needs. Today, product from Lake Erie is being sold in half the state's counties, but on a limited basis - oil trucks for companies wanting to sell biodiesel blends are now driving as much as 350 miles from SE Pennsylvania to Erie to load up with 6,500 gallons and return to their home region for distribution.

Last summer, the State House passed HB 1202, which would have required all diesel fuel sold in Pennsylvania to be biodiesel blends of from two to 20 percent as certain production triggers were reached, starting at 30 million gallons per year. And last December, the Pennsylvania State Senate passed Special Session Senate Bill 36, with similar requirements, but with triggers starting at 60 million gallons per year.

A state mandate for use of B2 blends alone would create demand for more than 60 million gallons of biodiesel for transportation and home heating oil use across the state. Today, such a mandate could not be met simply because the distribution system is not in place to provide the fuel to end consumers.

Recognizing this, the State Senate wisely included provisions in SB 36 so that the mandates would not apply until six months after DEP and PennDOT certified that there is sufficient transportation, distribution and other necessary infrastructure in this Commonwealth to meet the requirements of the act from the plant to the filling station.

Storage facilities, terminals with rail access, and blending centers are expensive propositions, but critical to widescale sales and use of biodiesel and other biobased fuels. And development of additional crushing capacity in the state to give our farmers markets is essential to reducing costs of feedstock. ERG has consistently made a case to the General Assembly and Administration that any energy security package should include a targeted infrastructure program to develop these capabilities. This program would include rail freight improvements for commercial oilseed processing, ethanol and biodiesel production facilities, and terminal distribution sites.

As an incentive to invest in this network, state funding support, either in the form of tax credits, or cash grants on a matching funds basis, would provide needed incentive. ERG has encouraged such a program be created, to include a matching funds biofuels seed capital program, and a guaranteed loan program to greatly expand the construction and expansion of these facilities.

Hopefully, as the energy package is deliberated in the coming week(s), those responsible for crafting and funding the state's energy programs will recognize this need as a top priority, and take action to support the industry.

Food (And oil) for Thought From the Commodity Markets

Are institutional investors and hedge funds driving food and energy price inflation? In the last four months, Congress has been told by billionaire George Soros, the Consumer Federation of America, farmers' organizations and hedge fund managers that the answer is an unequivocal "YES," for commodities from corn and soybeans, to oil.

Institutional investors using index speculation that creates these pressures, help drive up prices for foods and oil products, while undermining the potential for biofuels in the US.

And unless Congress or the Commodities Futures Trading Commission (CFTC) take some action to rein in this practice, food and energy prices almost HAVE to continue their upward spiral, with huge economic impacts already stressed U.S. companies and consumers - until the bubble bursts.

This week, Congressman Chris Carney (D-PA) and four other members of the US House introduced HR 594, the Prevent Unfair Manipulation of Prices (PUMP) Act. It would close the "Enron Loophole" that was included in the Commodity Futures Modernization Act of 2000, and allowed energy commodities such as crude oil, gasoline, and natural gas to play by their own rules and be traded outside of the New York Mercantile Exchange without any oversight by the Commodity Futures Trading Commission.

Carney and the co-sponsors presented a report from the Energy Information Administration that showed 2008 gasoline supplies are abundant relative to 2007, yet the price for gas has skyrocketed. A hearing on the proposed legislation is scheduled in the Oversight and Investigations Subcommittee for the House Energy and Commerce Committee on June 23.

The US Senate Committee on Homeland Security and Governmental Affairs, the Committee, chaired by Senators Joseph Lieberman (D-CT) and Susan Collins (R-ME) held a hearing in late May on speculation in the commodity markets. Michael W. Masters, Managing Member and Portfolio Manager of Masters Capital Management, LLC told the committee institutional investors may be the primary factor affecting commodity prices, and called for immediate legislative action to correct this. Click here for his full testimony.

Masters said that Institutional Investors, including Corporate and Government Pension Funds, Sovereign Wealth Funds and University Endowments now account on average for a larger share of commodities futures contracts than any other market participant. And these investors don't behave like the speculators that have traditionally traded in these markets.

Speculators provide liquidity by both buying and selling futures. But Index Speculators buy futures with no incentive to ever sell, consuming liquidity while providing no benefit to the futures markets…and undermining farmers abilities to manage risk. Tom Buis, president of the National Farmers Union told the panel that these huge long term holdings make it difficult to impossible for farmers and agribusinesses to contract or manage risk for more than 60 days out.

Institutional Investors pour billions of dollars into the commodities futures markets, and that demand actually increases when prices increase. Masters calculated that Index Speculators flooded the markets with $55 billion in just the first 52 trading days of this year. That's an increase of more than $1 billion per trading day.

According to Masters, the net result is that these Index Speculators have an interest in 35% of corn, 41% of cotton, 32% of soybean oil, 42 % of soybeans, 64% of wheat futures. On the oil side, he projects these same Index Speculators have 31% of the crude oil, 47% of heating oil and 39% of gasoline futures.

The explanation given most often for rising oil prices is the increased demand for oil from China. DOE has cited an increase in Chinese demand for petroleum of 920 million barrels since 2003. But over the same five-year period, Index Speculators purchases of petroleum futures has increased by 848 million barrels - almost equal to the increase in demand from China.

These investors now control the equivalent of 1.1 billion barrels of petroleum, adding eight times more oil to their own portfolio stockpiles as the United States has added to the Strategic Petroleum Reserve (SPR) over the last five years. That total is 50 percent more than the entire US SPR.

While one popular notion is that ethanol production is driving up corn prices, we can't remember ever reading about the fact that Institutional Investors have bought more than two billion bushels of corn futures in the last five years. These investors have stockpiled enough corn futures to fuel the entire United States ethanol industry for a year.

And it's not just corn. The current wheat futures stockpile held by Institutional Investors, 1.3 billion bushels, is enough to supply every American citizen with all the bread, pasta and baked goods they can eat for the next two years. That's control of five times as much as the total US stockpiles. And similar numbers are there for soybeans, cotton, and soy oil.

Traditional Speculators, hedgers and agribusinesses have provided liquidity in the markets, using them as both trading and risk management tools, buying and selling futures. But Index Speculators buy futures with no plans to sell, countering market liquidity. Index Speculators' strategies are a form of hoarding through the futures markets, buying up essential items that exist in limited quantities for the sole purpose of reaping profits.

The CFTC has already granted Wall Street banks an exemption from speculative position limits when they are hedging swaps transactions. If a hedge fund wants to take a position in soybean beyond their legal limits it can now enter into a swap with a Wall Street bank, which will buy the soybean futures.

At the same time, the CFTC has proposed that Index Speculators be exempt from all position limits. The CFTC has even gone so far as to issue press releases on their website touting studies they commissioned showing that commodities futures make good additions to Institutional Investors' portfolios.

Masters noted, if these same Wall Street firms developed a scheme to buy large amounts of pharmaceutical drugs and medical devices in order to profit from the resulting increase in prices, making these essential items unaffordable to sick and dying people, society would be justly outraged. But for some reason, there's been no outrage over the fact that Americans must pay drastically more to feed their families, fuel their cars, and heat their homes from similar activity in the commodity markets.

In his testimony, Masters laid out three actions that would immediately reduce Index Speculation and put the market back into the commodity markets:

• He proposed that Congress prohibit commodity index replication strategies as unsuitable pension investments because of the damage that they do to the commodities futures markets and to Americans as a whole.
• Congress should act immediately to close the Swaps Loophole that allows these funds to exceed speculative limits by acting through investment banks. This would curtail Index Speculation and it would force ALL Speculators to face position limits.
• Congress should further compel the CFTC to break down the positions of Wall Street banks based on their OTC swaps counter-party into "Bona Fide" Physical Hedgers and Speculators.

These actions could help restore the structural integrity of the futures markets, virtually eliminating Index Speculator demand and putting downward pressure on grain, food and energy prices.

Pennsylvania Should Take Note of Iowa’s Renewable Fuels Infrastructure Act

Much has been heard in Harrisburg for more than a year about what Iowa's legislation does for biodiesel and ethanol producers - and much of that information has been wrong. But legislation signed last week by Iowa Gov. Chet Culver is right, and should be considered by the Rendell Administration and the General Assembly as they formalize state policy on biofuels here.

ERG has noted previously that the infrastructure for distribution of biodiesel in Pennsylvania is virtually nonexistent. While biodiesel is now being sold at retail in more than one-third of the state's counties, supplies from regional producers face an often long and expensive trip from the producer to the retail outlet. Recently, one south central Pennsylvania company had to send an individual tank truck more than 600 miles for a single 6,500 gallon load to meet its contracted obligations because storage, terminal and blending facilities are not readily available. Lake Erie Biofuels, based in Erie Pennsylvania, has a fleet of more than 200 tank cars capable of delivering biodiesel to suppliers, but terminal facilities don't have the rail access nor the storage and blending capabilities.

Governor Rendell's proposed PennSecurity Fuels Initiative has a 30 million gallon per year production trigger to mandate sales of B2 at retail outlets, and Lake Erie Biofuels, producing 45 million gallons per year, would by itself trigger that mandate. But there's simply no way the state's oil and gas retailers could comply with that mandate today.

ERG has been consistent in advising public officials here that any energy security or energy independence initiative should include infrastructure funding for rail and terminal improvements. And it appears that those officials are listening. Still, other states have begun ACTING, to make similar improvements in their own capabilities.

Last week, Iowa passed a new law that expands renewable fuels infrastructure funding to include blender pumps, and eliminates a restriction that limits funding for either E85 or biodiesel, but not both, at retail locations. The law also increases state funding support for biodiesel terminals to $100,000.

The measure also encourages state and local government fleets to use biodiesel when commercially available; and builds upon a long standing public/private partnership that Iowa has developed to increase access and usage of renewable fuels. The Iowa bill can be found by clicking here.

Iowa's equivalent to Pennsylvania's Alternative Fuels Incentive Grant program was adopted in 2006. Since then, the program has leveraged $17 million in private investment for infrastructure, helped put 20,000 more flex-fuel vehicles on the market.

Pennsylvania could well use a similar program to kick-start the infrastructure improvements that will be necessary in the future, whether or not a statewide mandate becomes law. PA-ERG will continue to work with public officials to seek that investment in the state's energy future.

Green Energy Fueling Jobs and Careers – Part 2

On the economic and financing side of the alternative energy equation, jobs are being created in the areas of agribusiness, finance and venture capital. And government regulatory and support agencies will need to fill positions with those who have interests in environmental and energy policy fields.

Just a few of the jobs being created by alternative energy in various segments of the industry:

Wind: The wind industry is hiring professional and skilled workers, as new projects create jobs in business, meteorology and engineering, and technician positions to operate and maintain wind turbines. The industry, academia and research companies are hiring mechanical, electrical, and aeronautical engineers with advanced degrees, as well as experienced technicians, in turbine installation and maintenance. On the small wind side, installers and technicians are in great demand.

Solar: Solar and PV companies are hiring a wide variety of engineers, architects, research scientists and technicians, largely due to the great diversity of the solar industry. Growth of the solar power industry creates high-wage, skilled jobs throughout the country for individuals with many different types of training. Individuals employed in solar R&D generally have professional degrees in electrical, mechanical, and chemical engineering; materials science, and/or physics. Many of the people involved with technologies that are still under development, such as parabolic dish systems, focus on R&D.

As each technology progresses from the R&D phase toward full-scale commercialization, an increasing number of both professional and skilled workers are needed to sell, manufacture, design, install, and maintain equipment. The PV and solar hot water industries currently employ the majority of these workers, including electricians, engineers, technicians, and technical managers. The passive solar industry involves many of these professions as well, but also employs architects and builders. solar applications engineering manager, electrical foreman and sales consultant.

Bioenergy: Engineers and construction workers are needed to design and build biofuels and energy plants, while electrical/electronic and mechanical technicians, engineers (mechanical, electrical, and chemical), mechanics, and equipment operators are needed to run and maintain these plants. Some may even require individuals cross-trained in areas such as engineering and biology, or chemistry and agriculture. Jobs in bioenergy today cut across a wide spectrum of specialties and skills. As bioenergy projects become more commercially profitable, ERG expects to see a dramatic increase in the number of bioenergy-related jobs. And these plants already are creating opportunities for farmers, foresters, trucking and rail freight, as well as engineers and technicians at the facilities.

Hydrogen Fuel Cells: Fuel cells and hydrogen are a huge challenge to engineers with R&D firms looking for research scientists. The high tech fuel cell industry is hiring for positions ranging from mechanical assemblers to electrochemists.

Geothermal: The geothermal industry employs both skilled workers and those with professional degrees. Developing hot water reservoirs requires geologists, geochemists, geophysicists, hydrologists, reservoir engineers, mud loggers, hydraulic engineers, and drillers to locate, assess, and access the reservoirs. Environmental scientists prepare environmental impact studies, and permit and leasing specialists obtain the land rights.

Geothermal direct-use technologies create jobs for heating engineers, and in the building and agricultural industries. For electricity production, engineers (electrical and mechanical) and construction workers - along with electrical technicians, electricians, electrical machinists, welders, riggers, and mechanics - are needed to design and construct power plants. Mechanical engineers, geologists, drilling crews, and heating, ventilation, and air conditioning contractors are needed to manufacture and install GHPs. In addition, mechanical and electronic engineers, geologists, chemists, and materials scientists are required for ongoing R&D.

Government Jobs in Alternative Energy: "The Department of Energy has specific programs in biomass, geothermal, hydropower solar, wind and nuclear," says John Palguta, vice president for policy and research at the Partnership for Public Service. "Much of the work is actually carried out in laboratories owned by the federal government but operated by private contractors." But federal employees such as program managers and budget analysts are still needed to oversee these research and development efforts. The research jobs include roles for engineers, physical scientists, geophysicists and hydrologists. And opportunities for regulators and attorneys with specialization in energy are only now coming to the fore, similar to the environmental movement in the 1970's which produced thousands of career oriented public employees who moved into government to help promote the idea of green living.

There's no question - the jobs will come. The only questions are how many, and how soon, and for many young adults, "How do I prepare for one?"

Green Energy Fueling Jobs and Careers – Part 1

Bloomberg News Service has noted that while Hillary Clinton and Barack Obama both pledge to spend $150 billion to clean up the environment, lower energy use, help build subways - and in the process create 5 million so-called green-collar jobs, many experts are saying the promises are inflated, and the employment projections overstated, because jobs will be lost as companies convert to renewable energy and reduce carbon emissions.

Their plans call for investment in alternative energy, funded partially by a federal carbon cap-and-trade system that would limit greenhouse-gas emissions and auction off pollution credits. But industry representatives say the promise of a green-collar workforce also masks job losses that would be created by the higher cost of renewable energy and the expense of carbon reduction. Some studies of cap-and-trade systems predict big job losses because of the increased cost of energy and of reducing carbon emissions. A March 14 study by the Environmental Protection Agency predicted that a cap-and-trade system under consideration in the Senate would likely cut into the economy's growth and raise electricity costs.

Partly because of the recent primary in Pennsylvania, both Obama and Clinton use the state as an example, citing Gamesa Corporation's move here in 2005, when the company hired 1,300 people to build turbines, including 900 union workers earning $12 to $18 an hour. Pennsylvania helped Gamesa finance the move, providing as much as $25 million in state grants, low-cost loans and other incentives. Gamesa also found Pennsylvania had provided guaranteed customers for the wind energy, in the state's electric utilities which have to purchase an increasing amount of renewable energy under the state's AEPS program. Other alternative energy companies are creating jobs daily in construction, engineering, operations, and the transportation industries.

One thing is certain - the move to alternative and renewable energy sources will create jobs. The change is driving demands for people to fill much needed positions in the rapidly growing energy workplace. This fact comes as no surprise to PA-ERG, which is working with companies that are currently planning to create thousands of Pennsylvania based jobs.

Just recently Erie Renewable Energy, LLC, announced agreements with the Great Lakes Building and Construction Trades Council and the Booker T. Washington Center in Erie to create a recruitment, training and hiring program aimed at filling as many as 100 jobs for minorities and urban residents in that community. The plant will create 200 construction jobs, 60 full time jobs at an average of $50,000 per job, and another 140-150 jobs in the community in spin off and supply businesses. This is just one example of real job creation through renewable energy projects.

Alternative energy is generating tremendous growth opportunities in terms of careers. Students pursuing an education in a variety of scientific and business related specialties can position themselves to be at the forefront of these new technologies. Some alternative sources such as wind power, biodiesel and corn-derived ethanol are here today. But others likely will take decades to develop and perfect - requiring the next generation of trained scientists.

This was underscored by many speakers at the spring WIREC 2008 Conference attended by ERG's partners. Vinod Khosla, Sun Microsystems founder and renewable energy investor addressed the potential for technologies that none of us can accurately predict, noting, "Many of the forecasts are wrong. My forecast is probably wrong. Today's unimaginable is tomorrow's conventional wisdom."

As an example, the expected move toward cellulosic ethanol from new feedstocks such as trees and switchgrass will create a need for experience in agronomy, silviculture and plant sciences to grow these biofuel feedstocks. These advanced biofuels processes are already creating demand for microbiologists and biochemists to develop new enzymes and industrial organisms to transform these crops into ethanol and other transportation fuels. These processing technologies will then create a need for chemical, biological, environmental and agricultural engineers.

Senate Recognizes Need to Support Agriculture for Biofuels Production

Senator Mike Waugh (R, York) and the Senate Agriculture and Rural Affairs Committee have voted out the Pennsylvania Farms to Fuels Initiatives Act (SB 1317.) The bill is the first piece of legislation in the two-year energy debate which takes state action to provide incentives to farmers for production of bioenergy crops in the Commonwealth.

Pennsylvania farmers and agribusinesses should be supported in building more capacity alternative crops - and for oilseed crushing and production. ERG has been recommending farm and agribusiness incentives as part of the energy independence debate since early February last year. Pennsylvania farmers and forest owners can become a key part of the development of new biofuels feedstocks, and for development of both cellulosic ethanol and other advanced biofuels.

It only makes sense to consider programs to promote and support farmers in producing and processing crops as feedstock, because these are the single largest cost component in biofuels production. Soybean oil, for example, can make up as much as 85% of the total cost of biodiesel production. Beyond biodiesel and corn based ethanol, other crops like switchgrasses, fast growing willow and poplar, sweet sorghum, sugar beets, canola, camelina, sunflowers are all possible feedstock for this industry. And reclaimed mineland acreage can provide an environmentally sound yet fertile source necessary to grow many of these crops.

Waugh noted that the next generation of ethanol production will provide a natural conservation tool, as the grasses and fast growing woody plants that would be the feedstock can be grown with a reduction in nutrient losses - while keeping corn in the system as an animal feed.

Under SB 1317, the PA Department of Agriculture will approve energy crops to provide incentives for farmers producing these crops that not only preserve the soil, air and water, but also become the feedstock for production of cellulosic ethanol. For each acre of growing land upon which a bioenergy crop is harvested, an eligible farmer would receive a bioenergy crop transition incentive payment of $150 for the first year's harvest, $100 for the second year's harvest and $50 for the third year's harvest. No farmer could receive more than $100,000 over the three years, and ten percent of the funds would be transferred to the Conservation District Fund use in providing technical assistance as farmers implement best management plans for conservation, required under the act.

The estimated cost of Waugh's legislation is $10 million. Sen. John Wozniak(D, Cambria) this program may be better as a no interest loan that the farmer would pay off when the risk pays off. Committee Chair Mike Brubaker (R-Lancaster) noted that he is considering adding a sunset provision.

Senator Waugh said he introduced this bill anticipating budget negotiations, and hopes to get farm incentives on the table for energy/budget negotiations. Waugh said he wanted the bill to get farmers to consider switchgrass, which takes from 1 ½ to 2 years to reach maturity for harvest. Farm operators are normally reluctant to make significant changes in their crop planting decisions without significant economic advantages. He said the legislation would provide one small incentive.

Beyond the farm, serious investment must be made in the infrastructure to support the biofuels industry. Today, Pennsylvania produces only enough soybeans to produce 22 million gallons of oil - less than half the current capacity of operating biodiesel plants in the state. The state only has crushing capacity for seven million gallons a year. Introduction of new oilseed crops will create a need for increased crushing capacity, and costs for these plants are traditionally very high.

SB 1317 is one small step toward the General Assembly and the Rendell Administration considering further incentives for rural production of energy crops for biofuels - and not just ethanol.

PA-ERG commends Senator Waugh, Chairman Mike Brubaker (R, Lancaster) and the Senate Agriculture and Rural Affairs Committee for this action on SB 1317. Hopefully any final state plan to address the state's biofuels needs will provide incentives for development of the infrastructure, including harvesting, transportation, logistics and storage of these energy crops.

Welcome to POWER POLITICS

Energy Resources Group, LLC, (ERG) has developed "Power Politics" to provide insights into everyday politics and energy developments in the MidAtlantic Region.

Despite Governor Rendell's announcement of a PennSecurity Fuel Initiative in May of 2006, and of his Energy Independence Strategy in February of 2007, little has been done to move the energy agenda in the state.  A special session of the General Assembly aimed specifically at addressing needs in this sector has effectively come to a halt as the Democratic House and the Republican Senate each stare the other down, each passing their own versions of legislation and refusing to consider the others' effort.  Leadership have held conversations, but not yet found the critical mass that will force decision making.  Legislators have said they want the Governor engaged in the process, but to date, the Administration is sticking to its official position that the Governor had made his proposal and it's up to the General Assembly to determine what a final package will look like.   

Political insiders expect that some resolution of the energy independence package will come as part of the annual negotiations that are part of Pennsylvania's budget "process."

Meanwhile, we note that New Jersey has now released that state's Energy Master Plan, with associated action items.  Perhaps Pennsylvania can emulate its neighbor, and develop a master plan of its own to insure the growth of these important industries here at home.

Hopefully this blog will serve as a forum to discuss our energy obstacles and the roadmap to energy security.

For more information on PA-ERG, the Mid Atlantic's premier energy-related strategic consulting, project development and public affairs firm, visit us on the web at www.pa-erg.com.