Energy market analysts and policy makers widely agree that the Energy Independence and Security Act of 2007 will not only provide relief at the pump, but will enhance competition in the fuels marketplace and reduce climate change emissions.

The bill’s renewable fuels standard (RFS) requires that 36 billion gallons of alternative fuels must be sold each year in the U.S. by 2022. Of that amount, 21 billion gallons must be “advanced” biofuels, such as cellulosic ethanol, meeting minimum greenhouse gas (GHG) reduction targets. And, for the first time in over 30 years, the bill establishes tougher fuel economy standards by requiring vehicle fleets to average 35 miles per gallon by 2020. This 40 percent increase in average mileage is expected to save individual consumers up to $1,000 a year in reduced gasoline spending.

“The RFS is critical to encouraging the research and development, production and use of clean-burning, renewable fuels,” said Brooke Coleman, executive director of the New Fuels Alliance. “Liquid fuel markets are currently dominated by Big Oil, and this legislation will provide market security for dozens of companies located in California and elsewhere that are working to diversify our fuel options.”

Duncan McFetridge, director of the California Renewable Fuels Partnership, believes that California is well positioned to drive the next generation of biofuel production, as several R&D leaders in ethanol and biodiesel production are currently headquartered in the state. Moreover, feedstock for second generation (cellulosic) ethanol and biodiesel could be grown or harvested in California and surrounding states.

“Sixty percent of the renewable fuel gallons required under the new RFS will be advanced biofuels,” McFetridge said, “and California companies are critical to making this vision a reality.”

The bill also targets market parity by exempting biofuels from fuel “exclusivity contracts,” which are agreements between fuel providers and fuel retailers where the retailer agrees to sell only the product supplied by the particular fuel supplier. These types of contracts have been used to dissuade fuel retailers from offering renewable fuels such as ethanol and biodiesel. These contracts are anti-competitive, inhibit biofuel market growth and fuel diversification, and will be prohibited by the Act.

Also included in the bill is more than $700 million in grants for advanced biofuels production and infrastructure.

The California Renewable Fuels Partnership is a nonprofit coalition dedicated to advancing sensible policies to promote the use of biofuels in the region’s energy sector. The Partnership is an affiliate of the New Fuels Alliance, a national organization dedicated to promoting a more economically and environmentally sustainable fuel energy sector in the United States.