Ford Motor Co’s vice-president of environmental and safety engineering, Sue Cischke, told the US Senate Energy and Natural Resources Committee that it needed to “act with urgency” to help establish a viable domestic renewable fuels industry.

Cischke said that the major oil companies were going to need to become more involved in renewable fuels to create an effective solution for meeting future US energy demands.

“It is clear the solution to America's energy challenges will need to come from advances in fuels and vehicle technology. The fact is, without the whole-hearted involvement of the oil industry, we cannot move forward far enough and fast enough," she said.

But help is not likely to be forthcoming from oil companies such as Exxon Mobil, which reported a record $US36 billion in profits for 2005 as a result of the rising cost of oil.

Speaking to Bloomberg journalists, Exxon Mobil chairman and chief executive Rex Tillerson said the fact that subsidies were necessary could be seen as proof that renewable fuels such as ethanol were not viable alternatives to oil-based fuels, and the Government’s current subsidies framework existed largely to support domestic farming industries.

Tillerson has rejected claims that Exxon Mobil has been profiteering from the high price of oil, saying the company will responsibly reinvest its profits in order to increase production at its refineries to meet future energy needs.

In a Wall Street briefing, Tillerson said Exxon Mobil will invest $US15 billion annually over the next five years to produce more oil and gas, in addition to $US5 billion during 2006 for upgrades to its refineries, chemical plants and gas stations.

Tillerson said the company had spent $712 million on the research and development of new technologies to extract oil from resources previously considered uneconomically viable in order to meet growing demand.

He also defended the company’s record profits, saying that its investments in new oil extraction techniques and increased production capacity may be the only way to protect consumers from oil prices rising even higher.

Automotive manufacturers such as Ford have already adapted a more flexible approach towards fuel demand, designing vehicles that are able to run on a variety of fuel blends, including E85, fuel with an 85% ethanol content.

These vehicles are currently not available in the Australian market, as they do not comply with Australian engineering specifications, which are harmonised with European and Japanese standards.

According to Cischke, Ford believes the US Government must develop policies to support an aggressive, integrated approach to the development of renewable fuels and advanced technology vehicles to overcome the nation's future energy needs.

“We need national research efforts to pursue producing ethanol from more energy-efficient cellulosic materials like rice straw, corn stover, switch grass, woodchips or forest residue," she said.

Advocating an integrated approach between government and industry stakeholders, Cischke called for an expanded role for federal and state government, including tax credits for research and development and tax incentives for consumers and businesses to use renewable fuels.

EnergyReview.net