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US Congress ends default threat, Obama signs debt bill
US Congress ends default threat, Obama signs debt bill (Reuters) / 17 October 2013 Another budget showdown could loom next year WASHINGTON – The US Congress on Wednesday approved an 11 th -hour deal to end a partial government shutdown and pull the world’s biggest economy back from the brink of a historic debt default that could have threatened financial calamity. Capping weeks of political brinkmanship that had unnerved global markets, President Barack Obama quickly signed the spending measure, which passed the Senate and House of Representatives after Republicans dropped efforts to use the legislation to force changes in his signature healthcare law. Govt employees ordered back to work on Thursday The White House moved quickly early on Thursday to get the US government back up and running after a 16-day shutdown, directing hundreds of thousands of workers to return to work. The White House budget director, Sylvia Mathews Burwell, issued a directive to employees minutes after President Barack Obama signed legislation that ended the shutdown and raised the U.S. debt ceiling. Her message: Get back to work on the next regularly scheduled work day, which for most workers is Thursday. “All employees who were on furlough due to the absence of appropriations may now return to work. You should reopen offices in a prompt and orderly manner,” she said. Burwell said that in the days ahead the White House would work closely with departments and agencies to make the transition back to full operating status as smooth as possible. The White House budget office told hundreds of thousands of federal workers, the bulk of whom had been idle for the past 16 days, to be ready to return to work on Thursday. The down-to-the-wire deal, however, offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until Jan. 15 and raises the debt ceiling until Feb. 7, so Americans face the possibility of another bitter budget fight and another government shutdown early next year. With the deadlock broken just a day before the US Treasury said it would exhaust its ability to borrow new funds, US stocks surged on Wednesday, nearing an all-time high. Share markets in Asia also cheered the deal. Taking the podium in the White House briefing room on Wednesday night, Obama said that with final congressional passage, “We can begin to lift this cloud of uncertainty and unease from our businesses and from the American people.” “Hopefully next time it won’t be in the 11 th hour. We’ve got to get out of the habit of governing by crisis,” Obama said. He outmanoeuvred Republicans by holding firm in defence of “Obamacare” to win agreement, with few strings attached, to end the 16-day shutdown. World Bank President Jim Yong Kim said “the global economy dodged a potential catastrophe” with congressional approval of the deal to raise the $16.7 trillion US debt ceiling. The standoff between Republicans and the White House over funding the government forced the temporary lay-off of hundreds of thousands of federal workers from Oct. 1 and created concern that crisis-driven politics was the “new normal” in Washington. While essential functions like defence and air traffic control continued during the crisis, national parks and agencies like the Environmental Protection Agency have been largely closed. Senator John McCain, whose fellow Republicans triggered the crisis with demands that the Democratic president’s “Obamacare” healthcare reform law be defunded, said earlier on Wednesday the deal marked the “end of an agonizing odyssey” for Americans. “It is one of the most shameful chapters I have seen in the years I’ve spent in the Senate,” said McCain, who had warned Republicans not to link their demands for Obamacare changes to the debt limit or government spending bill. Polls showed Republicans took a hit in public opinion over the standoff. In the end, the Democratic-led Senate overwhelmingly passed the measure on a 81-18 vote, and the Republican-controlled House followed suit 285 to 144. Obama signed the 35-page bill just after midnight. Political dysfunction Although the deal would only extend US borrowing authority until the first week of February, the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if Congress failed to act early next year. But such techniques eventually run out. In addition to lifting the federal debt limit, the deal calls for creating a House-Senate bipartisan commission to try to come up with long-term deficit-reduction ideas that would have to be approved by the full Congress. Their work would have to be completed by Dec. 13, but some lawmakers say the panel faces an extremely difficult task. The agreement also includes some income verification procedures for those seeking subsidies under the 2010 healthcare law. But it was only a modest concession to Republicans, who surrendered on their latest attempt to delay or gut the healthcare package or include major changes, including the elimination of a medical device tax. The congressional vote signalled a temporary ceasefire between Republicans and the White House in the latest struggle over spending and deficits that has at times paralyzed both decision-making and basic functions of government. The political dysfunction has worried US allies and creditors such as China, the biggest foreign holder of US debt, and raised questions about the impact on America’s prestige. The Treasury has said it risks hurting the country’s reputation as a safe haven and stable financial centre. Senate Majority Leader Harry Reid and Republican leader Mitch McConnell announced the fiscal agreement on the Senate floor earlier on Wednesday, and its passage was eased when the main Republican critic of the deal, Senator Ted Cruz of Texas, said he would not use procedural moves to delay a vote. The agreement stacked up as a political achievement for Obama, who refused to negotiate on changes to the healthcare law, and a defeat for Republicans, who were driven by Tea Party conservatives in their ranks and suffered a backlash in public opinion polls. There was no immediate sign that House Speaker John Boehner’s leadership position was at risk despite having conceded defeat in the budget battle. Several Republican lawmakers suggested he may have strengthened his standing among the rank-and-file, who gave him a standing ovation at an afternoon meeting. But Cruz, a Tea Party-backed senator with 2016 presidential aspirations, denounced the fiscal accord as a “terrible deal” and accused fellow Republicans of giving in too easily in their bid to derail Obamacare. Obama’s Democrats avoided claims of victory. “The bottom line is, millions suffered, millions didn’t get pay checks, the economy was dragged down,” said Senator Charles Schumer. “This is not a happy day, it is a sombre day.” The fight over Obamacare rapidly grew into a brawl over the debt ceiling, threatening a default that global financial organisations warned could throw the United States back into recession and cause a global economic disaster. Fitch Ratings had warned on Tuesday that it could cut the US sovereign credit rating from AAA, citing the political brinkmanship over raising the debt ceiling. A resolution to the crisis cannot come soon enough for many companies. American consumers have put away their wallets, at least temporarily, instead of spending on big-ticket items like cars and recreational vehicles. “We’re sort of ‘crises-ed’ out,” said Tammy Darvish, vice president of DARCARS Automotive Group, a family-run company that owns 21 auto dealerships in the greater Washington area. Continue reading
Next-Generation Biofuels Are Inching Towards Reality, Gallon by Gallon
Advanced biofuels have been on the cusp of commercialization for years, but high prices and technological challenges have held them back. Is that starting to change? By Bryan Walsh @bryanrwalshOct. 11, 2013 Photo courtesy Novozymes Novozymes’ new plant in Italy is the world’s first advanced biofuels facility Whatever happened to next-generation biofuels? Made from sources like corn stalks or what straw that don’t compete with food, unlike current biofuels, next-generation biofuels were going to be greener and more efficient than corn-based ethanol, which is still the dominant source of biofuel in the U.S. When Congress passed the 2007 energy bill, it expected the country to be producing over 1 billion gallons of next-generation biofuels by 2013. But the advanced biofuel industry has developed far more slowly than lawmakers predicted, leading the Environmental Protection Agency (EPA) to cut the 2013 mandae for cellulosic biofuels to just 4 million gallons—and even that target could be difficult to meet, given that only 142,000 gallons are available now. It’s not that companies don’t know how to make cellulosic ethanol or biofuel from algae. It’s that they’ve struggled to do so cheaply and at a scale large enough to compete with oil. “The technology just hasn’t matured yet,” says Peder Holk Nielsen, the CEO of the Danish biotech company Novozymes, which has been involved in next-generation biofuel research and development for years. “It’s simply been too expensive.” But if the race to create workable next-generation biofuels has slowed, it’s far from over—and there may still be a few surprises. First Novozymes, which has been developing enzymes for industrial use since the 1920s. Earlier this week Novozymes, in partnership with the Italian biofuels company Beta Renewables, announced the opening of the world’s largest advanced biofuels facility. Built in northern Italy, the plant is the first in the world to be designed and built to produce bioethanol from agricultural residues and energy crops at a commercial scale. The facility will produce over 20 million gallons of cellulosic ethanol a year. “This plant was built with the purpose of demonstrating that the technology is possible,” says Nielsen. “Once we’ve built it, we can optimize it.” Cellulosic ethanol has been difficult to produce for the same reason that it’s impossible for the human stomach to digest cellulose, the material that makes up the tough cell walls of green plants. It takes specialized enzymes to break down cellulose into simple plant sugars, which can then be converted into fuel. (Humans lack those stomach enzymes, unlike cows, which is what allows them to digest grass.) Novozymes’ role is providing the industrial enzymes needed to break down the tough wheat straw, rice straw and arundo donax—a high-yielding energy crop grown on marginal land—that the Italian plant will be using. Those enzymes aren’t cheap—Nielsen notes that while the enzymes used to make corn ethanol cost 3 to 7 cents per gallons, those used for cellulosic ethanol run 30 to 40 cents a gallon. Bringing down the cost of those enzymes will be key to making cellulosic ethanol more than just a lab experiment. “We’re convinced that over time, it will be cheaper than gasoline,” says Nielsen. Novozymes isn’t the only company opening up a cellulosic ethanol facility. In 2014 plants from the ethanol company POET, Dupont and the Spanish firm Abengoa will begin producing next-generation ethanol, and the startup KiOR is already running a commercial plant in Mississippi that turns woody biomass into drop-in fuel. Still, next-generation biofuels companies will face daunting technological and market challenges, as a recent Economist article pointed out: Some observers doubt whether even the most sophisticated biofuels can compete with fossil fuels in the near future. Daniel Klein-Marcuschamer, a researcher at the Australian Institute for Bioengineering and Nanotechnology, conducted a comprehensive analysis of renewable aviation fuels. He concluded that producing first-generation bio-jet fuel from sugarcane would require oil prices of at least $168 a barrel to be competitive, and that some second-generation algae technologies would require crude oil to soar above $1,000 a barrel (the current price is around $110) to break even. Mr Klein-Marcuschamer has made his model open-source in an effort to help the industry find ways to make biofuels more competitive. Even if second-generation processes can be economically scaled up, however, that might in turn highlight a further problem. To make a significant dent in the 2,500m litres of conventional oil that American refineries churn through each day, biofuel factories would have to be able to get hold of a staggering quantity of feedstock. That’s one reason why some next-generation biofuel startups have looked to find new markets for their technology. California-based Solazyme uses custom-built algae to develop better biofuels, and it has sold thousands of gallons of its product to the Navy for use in its ships. But while the company has a 30 million gallon facility in Brazil that should be producing algal biofuel by the end of the year, Solazyme has also branched into making oils for higher profit products like cosmetics, food and petrochemicals. “We view ourselves as a company that makes and tailors oils,” says Jonathan Wolfson, Solazyme’s CEO. “We don’t define ourselves as only a biofuels company.” To that end, late last month Solazyme announced a deal to supply roughly 3 million gallons of algae-produced oil to the consumer products giant Unilever over the next 12 to 18 months, beginning at the start of next year. Unilever has said it will only use sustainable agricultural raw materials by 2020, and Solazyme’s algal oils fit perfectly into that strategy. “We follow the technology in Silicon Valley,” says Wolfson. “We didn’t know what the technology was capable of, and now we can tailor oils we never would have envisioned.” Next-generation biofuels still face an uphill battle—and one where uncertain government policy remains a decisive force. Biofuels that are cheap—and don’t compete with food—could still play a major role in helping the world reduce the carbon footprint of transportation. But as smart companies like Solazyme and Novozymes show, biofuels could just be the beginning for this technology. Read more: http://science.time…./#ixzz2ht6emRoS Continue reading
Renewable Fuel Standard Needs to Be Modified, Not Repealed, Experts Say
Oct. 15, 2013 — Congress should minimally modify — and not, as petroleum-related interests have increasingly lobbied for, repeal — the Renewable Fuel Standard, the most comprehensive renewable energy policy in the U.S., according to a new paper from two University of Illinois researchers. In the study, U. of I. law professor Jay P. Kesan and Timothy A. Slating, a regulatory associate with the Energy Biosciences Institute, argue that RFS mandates merely ought to be adjusted to reflect current and predicted biofuel commercialization realities. “The RFS is the first and only federal policy that directly mandates the use of renewable energy in the worthwhile effort to displace the use of fossil fuels for our energy needs,” said Kesan, who also is the principal investigator for the Biofuel Law and Regulation project at the institute. “As with any pioneering regulatory regime, unforeseen implementation issues will arise,” Kesan said. “But this does not justify throwing out the baby with the bath water. Every effort should be made to keep the RFS in place, but efforts should also be made to revise its regulatory regime to make it operate as efficiently as possible.” In the paper, Kesan and Slating contend that the RFS can serve as a “model policy instrument” for the federal support of all types of socially beneficial renewable energy technologies. “By mandating a market for emerging biofuels, it sends a clear signal that if they are produced, they will be effectively commercialized,” said Slating, who also is an adjunct professor in the law school. “This, in turn, provides the necessary certainty to free up credit constraints and incentivize investment in the socially beneficial biofuels industry. Additionally, it does so with very little impact on the federal budget because regulated parties bear its costs.” “While the federal government has traditionally incentivized renewable energy development through tax credits and funding R&D grants, these approaches are more costly than simply mandating a market,” said Kesan, who also holds U. of I. appointments in the College of Business, the Institute for Genomic Biology, the department of electrical and computer engineering, and the department of agricultural and consumer economics. The researchers also contend that the biofuel categories of the RFS ought to be expanded to encompass all emerging biofuel technologies, as well as having its biomass sourcing constraints relaxed. But while the current RFS policy is by no means flawless, and some of the current implementation issues would necessitate statutory changes, the authors say it would be more efficient for these changes to be made by the Environmental Protection Agency, as opposed to Congress. “We recommend that Congress simply amend the RFS’ statutory provisions to grant the EPA the authority to address its implementation issues via the regulatory rulemaking process,” Kesan said. “For example, the RFS’s volumetric mandates need to be adjusted to reflect current biofuel production realities. But since Congress has demonstrated an inability to properly set these mandates in the past, it would be more efficient for the EPA to set the RFS mandates for future years through a formal rulemaking process with input from all affected stakeholders.” “It’s clearly a step in the right direction that the EPA has finally initiated rulemaking to address the issue of RIN fraud and help promote liquidity in the RIN market,” Slating said. RIN stands for renewable identification number, a number assigned to a given amount of biofuel by the EPA so that its production, use and trading can be tracked. Although the biggest issue with traditional biofuels usually can be reduced to the food vs. fuel argument, the researchers stress that if the RFS is successful in achieving its goals, it will usher in the use of emerging biofuels that will have significantly less impact on food-related markets. “The ultimate goal of the RFS is to incentivize the increased commercialization of second-generation biofuels, such as cellulosic biofuels that do not rely on food-related feedstocks for their production,” Slating said. “But in order to efficiently accomplish this goal, the RFS also must continue to incentivize the use of first-generation biofuels like corn ethanol.” “In the short-term, if any food vs. fuel tradeoffs result from the RFS’ implementation, they will likely be minimal and probably justified in order to effectuate the long-term goal of facilitating the widespread adoption of second-generation biofuels.” Kesan and Slating’s study also notes that the RFS has only been fully implemented in its current form for three years, and legislatively revising it in an overly reactionary manner would be ill advised at this point. “Stakeholders and markets must be given time to adjust to the existing regime before serious and informed discussion about significantly altering the RFS, beyond what we propose, can be had,” Kesan said. “Likewise, you’ve got to allow some time for the maturation of this pioneering and socially beneficial renewable energy policy.” The research will be published in a forthcoming issue of the New York University Environmental Law Journal. The Energy Biosciences Institute, supported in part by BP, funded the study. Continue reading
