Last month I said we are now getting some sanity back regarding which alternate fuels and feedstock sources will be utilized in the U. S. marketplace. Well, it’s not over yet!

Arnold Schwarzenegger, governor of Calif., is pushing for a state fuel standard that requires a 10 percent reduction in the carbon content of gasoline and diesel fuel by 2020 to reduce CO2 emissions. Ill. Senator, Barack Obama, and Tom Harkin, senator from Iowa, have introduced similar legislation proposing that this become the new national fuel standard. Several states are poised to follow Calif.’s lead on this legislation.

And don’t forget we have President Bush on one side ordering the U. S. EPA, the U. S. Department of Trans-portation, the U. S. Department of Energy (DOE), and the U. S. Department of Agriculture to propose and finalize a new regulation by year-end 2008. Bush’s proposal includes reducing fuel consumption 20 percent and forcing the use of 35 billion gallons of “renewable and other alternate fuels” by 2017 as a starting point. One might wonder how that many government agencies can possibly react that quickly?

Nancy Pelosi, Democratic speaker of the House, says Bush’s proposal is inadequate and too late. Pelosi said that Bush’s proposal does nothing to reduce our energy dependence. She stated the House is working to develop alternate energy dependence and global warming legislation.

At the recent SAE government/in-dustry conference last month, Dick Penna (a D.C.-based environmental law specialist) told the attendees that all the various state and Federal legislative proposals are driving the U.S. to a CO2 policy mess. Penna stated that Congress needs to act quickly before the states have time to create a boondoggle.

Out of all this mess, diesel fuel just keeps looking better and better. It appears that medium-duty diesel-powered vehicles will have alternate sources of biodiesel fuel and hybrid power to utilize in the near future. A study by Southwest Research Institute (SRI) indicated that minimum life-cycle CO2 emissions might be best realized by utilizing trees to produce biodiesel instead of rapeseed. The U. S. DOE has devoted significant funding for R&D into cellulosic sources of alternate fuels.

The U. S. DOE’s Idaho National Laboratory (INL) recently found that the inclusion of 30 percent biomass into the coal feed for a coal-to-liquids (CTL) diesel plant could produce a diesel fuel with life-cycle CO2 emissions significantly below current diesel fuels. The Argonne National Laboratory thinks CTL makes sense on a life-cycle CO2 basis. I’m not sure this can happen quickly, and CTL technology will be commercialized rapidly only if diesel fuel prices continue to climb.

We know many different forms of diesel-fueled hybrid vehicles are currently undergoing field testing in major fleets. Since these fleets keep asking for more vehicles to test, I’m assuming the tests are going well.

The flaw in the hybrid approach is the relatively high initial cost of hybrid vehicles as compared to diesel or gasoline-fuelled vehicles utilizing alternate fuels. Studies by such respected sources such as Ricardo (England), the U. S. DOE, National Resources Canada, and others, all conclude that the timing is right for a light-duty diesel “boom” in the U. S.

I personally think we will see a light-duty diesel boom if the following conditions are met:

1. The price of diesel fuel doesn’t increase more rapidly than gasoline.

2. Regulations force reductions in CO2 emissions and increases in corporate average fuel economy (CAFE).

3. Consumers forget about the Oldsmobile diesels of the ‘70’s.

My only worry is that the increased demand for light-duty diesels will drive the cost of diesel fuel up significantly.