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Pennsylvania Governor Announces $10 million to Develop Homegrown Fuels

Governor Edward G Rendell today said Pennsylvania is reducing its dependence on fossil fuels by supporting 24 new projects that will replace nearly 95 million gallons of conventional diesel fuel with homegrown biodiesel, expand Pennsylvania's infrastructure, and spur innovation in alternative fuel technologies.

"Pennsylvania and the United States are dangerously dependent on foreign oil," said Governor Rendell. "That puts our economy and the American way of life at the mercy of nations that are often politically unstable or hostile. If we're to protect our national security and ensure our economy is not vulnerable to political upheavals or natural disasters elsewhere in the world, we must invest in the technologies and industries that will reduce this dependence."

The Governor announced $10 million in grants through the Alternative Fuels Incentive Grant program that will leverage another $108 million in private investment to expand the production and use of homegrown biofuels. The investments will support research into new potential fuel sources that will help the state meet its energy demands using domestic alternatives.

"These projects will help grow the state's economy by creating more opportunities in rapidly growing industries," the Governor said.

"This year, Pennsylvania will spend nearly $30 billion to purchase gas and liquid fuels from beyond our borders," he said. "Rather than sending that money abroad, we're making a commitment to work toward energy independence and invest that money here. That means supporting the farmers who grow the crops that create ethanol and biodiesel, the manufacturers who turn those crops into fuel and the trucking companies and railroads that ship the final product to the retailer.

"And at each step along that supply chain, there's a job for Pennsylvania's hardworking men and women," the Governor said.

The grants announced today will help Pennsylvania meet the goal Governor Rendell established under his PennSecurity Fuels Initiative -- producing and consuming nearly 1 billion gallons of biofuel by 2017. The amount is equal to what the state will import from the Persian Gulf by that time. The initiative is included in the Energy Independence Strategy Governor Rendell first unveiled in February and currently awaiting legislative action.

The PennSecurity Fuels Initiative will require that every gallon of gasoline sold in Pennsylvania include 10 percent ethanol once in-state production reaches 200 million gallons per year; and every gallon of diesel fuel will include 2 percent biodiesel once production reaches 30 million gallons per year with incremental increases up to 20 percent once annual production reaches 300 million gallons.

Governor Rendell convened a special session of the General Assembly dedicated to considering the Energy Independence Strategy, including the PennSecurity Fuels Initiative. In an address to a joint session of the General Assembly last month, the Governor said the time to act on pressing energy issues is now, and that a failure to do so will leave Pennsylvania trailing other states.

The Governor said this year's Alternative Fuels Incentive Grant, or AFIG, round was the first where the total grant amounts requested by applicants exceeded available funding; proof, he said, that companies are anxious to invest and create jobs in Pennsylvania.

A study commissioned for Citizens for Pennsylvania's Future by LECG LLC examined the benefits of offsetting 900 million gallons of petroleum-based transportation fuel with renewable and coal-derived fuels by 2017, as called for in the Governor's plan. The study concluded the following:
  • Replacing 900 million gallons of petroleum-based transportation fuel with domestically produced biofuels by 2017 will add nearly $1.5 billion to Pennsylvania's economy.
  • The increase in gross output from the production and construction of new capacity will help create as many as 25,775 new jobs in all sectors of the Pennsylvania economy by 2017.
  • The increased production of biofuels and coal-derived fuels will put an additional $6.6 billion into the pockets of Pennsylvanians over the next decade.
In addition to supporting technology advancements, the alternative fuel grants announced today also expand the market for homegrown fuels by providing financial incentives to producers. The program awards 5-cents-per-gallon to Pennsylvania biodiesel and ethanol producers, up to 12.5 million gallons in 12-month periods.

The grants also provide $1.6 million in incentives for early adopters of homegrown fuels. AFIG grants reimburse municipal and nonprofit fleet operators for the added cost of purchasing biofuels. Because there are no mechanical changes needed for vehicle fleets to operate on the cleaner-burning biodiesel, the switch to this fuel is relatively simple. It has been shown that biodiesel reduces wear on engines and helps to cut down on maintenance expenses.

Since the grant program's inception in 1992, DEP has invested nearly $42 million through AFIG for more than 1,000 projects in almost every county of the commonwealth. Those funds have leveraged more than $225 million from public and private fleet operators, fuel providers and the federal government.

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