The United States can and should become energy secure and independent by 2030.

This nation faces four serious oil-related risks:

1. Excessive dependence on OPEC and on other unstable foreign oil suppliers;
   
2. Conventional oil supplies are not meeting dramatic increases in world demand;
   
3. Rapidly increasing global competition for oil from China, India, and other nations; and
   
4. Supply disruptions from natural disasters (and potential terrorism).

Tightening oil markets and near record high prices have brought America’s oil vulnerability back into focus. Hurricane Katrina recently demonstrated how quickly oil supply disruptions can impact the country. More serious supply disruptions will likely occur in the future, caused again by natural forces like Katrina, or by terrorist acts, or purposeful rationing by the OPEC cartel and rogue nations such as Iran and Venezuela.

New oil discoveries are not keeping up with oil consumption.

America faces a serious liquid transportation fuels crisis. To mitigate these unprecedented risks and to provide for future economic prosperity and national security, we must reduce our growing dependence on foreign oil suppliers by producing our own liquid fuels.

While some refer to the oil risks and challenges America faces as an “energy crisis,” this is misleading. We face the ominous prospect of crippling oil and liquid fuel shortages and soaring prices.

One goal of the SSEB study is to show how America can replace approximately five percent of U.S. imported oil each year for 20 years, beginning no later than 2010. A key to this plan will entail building multiple alternative liquid fuel plants each year. This will require an enormous effort and commitments from industry, government, and the American people. Though a very ambitious goal, it can and must be achieved.

The U.S. is endowed with quantities of alternative oil resources that rival total worldwide conventional oil reserves. Trillions of tons of American coal, oil shale, and renewable biomass resources are available to be converted to premium quality liquid fuels using existing and rapidly emerging technologies.

By producing environmentally superior transportation fuels from near-zero emissions plants (which can recycle, utilize, and/or safely sequester CO2), the United States will set an example for the world. Liquid fuels produced from coal, oil shale, and biomass have very low to zero sulfur, low particulate and NOx emissions, and higher performance characteristics than their conventional distillate counterparts. In addition, the plants that produce the liquids can be carbon-capture capable.

The SSEB study will focus primarily on the rapid development of coal/oil shale/biomass-to-liquid fuels production. Other elements of a comprehensive energy security program will be examined as well. Improving transportation fuel efficiency, especially in vehicles, sensible conservation, renewable resources, and initiatives to increase conventional and non-conventional domestic oil production must all play a part.

Commercial enhanced oil recovery successes using CO2 flooding suggest that American oil and gas production can be dramatically increased by this method. Miscible CO2 flooding can revitalize certain mature oil fields. In addition, CO2 injection into coal and oil shale deposits is an emerging technology that can increase natural gas production from these sources. At present, limited availability of CO2 supplies severely constrains this production enhancing technique. However, coal, oil shale, and biomass-to-liquids plants will produce and capture large quantities of CO2, which can be sold to oil and gas producers for such productive uses. Thus, the CO2 generated by these plants can be put to a positive use, while at the same time permanently and safely sequestering the gas in reservoirs deep beneath the earth’s surface. In addition, the petroleum residuals generated by oil and gas producers can be upgraded to liquid fuels in the new carbon-to-liquids plants.

Commercial coal-to-liquid fuels (CTL) technologies have existed for decades. Sasol, a South African company, currently provides almost 30 percent of that country’s liquid fuel needs through coal conversion. It does so, profitably, in the open market. America can and should follow the Sasol model, which clearly demonstrates that it is not only possible but also highly profitable to rapidly ramp-up production of high quality liquid fuels from domestic coal. Sasol was created with support from government to decrease dependence on foreign oil. The company quickly outgrew its need for government assistance. Sasol serves as a model for America.

Another model of success, Alberta, Canada, is now second only to Saudi Arabia in proven oil reserves and ninth in the world in annual oil production. This is the result of successful development of Canadian oil sands. Alberta is a tremendous alternative liquid fuels success story. It began with Alberta’s government deciding to promote the development of this resource, and not giving up.

America has tremendous opportunities to develop multi-source energy complexes that co-produce liquid fuels, natural gas substitutes, hydrogen, electric power, process heat, energy crops and petrochemicals. Some are calling these facilities of the future “Alternative Energy Farms” or “AEFs.” They will include various integrated combinations of alternative energy production units, including: coal-to-liquids/gas/electric/chemicals/steam, ethanol, biomass-to-/gas/electric/chemicals/steam, biodiesel, hydrogen, and oil shale-to-liquids/gas/electric/chemicals/steam. Wind, solar, fuel cell, and hydro modules are also possible. Alternative Energy Farms will more fully and efficiently utilize local natural and waste resources, process heat, infrastructure, product blends, manpower, technology, land, and capital. Resulting synergies can significantly improve resource utilization and efficiencies, thereby lowering production costs. Environmental benefits will abound.

The economic, national security, and environmental advantages of establishing a thriving domestic alternative liquid fuels industry vastly outweigh the development costs. In contrast, doing little or nothing subjects America to energy supply disruptions and to potentially severe economic consequences.

Embarking on a national mission to achieve energy security and move toward liquid fuels independence will not only reduce risk and lower oil prices and oil price volatility, it will also facilitate an industrial boom, create millions of jobs, foster new technology, enhance economic growth, help to eliminate the trade and budget deficits, insure affordable energy for our citizens and strategic fuels for our military, and establish a reliable domestic energy base on which to rebuild our domestic industries to be globally competitive.

America has the natural resources, the financial resources, and the technology to achieve U.S. energy security, freedom, and independence.

Some argue that the free markets will provide solutions. Unfortunately, the oil markets are anything but free. They are controlled by a cartel of oil producing nations (many unfriendly to the U.S.) and by the multinational oil companies. Both groups are making record profits under current market conditions. Both have tremendous market and political influence, and are using this influence to prevent competitive alternative oil and liquid fuels production from developing significant market share.

Government policies are clearly necessary to insure against market manipulation and other predatory business practices by OPEC and the multinationals. These practices create a risky business environment, and will prevent alternative oil production from developing to any significant degree.

The American Energy Security Study will support its plan with robust macroeconomic analysis. Policy tools will be analyzed in detail, with recommendations made as to which will best catalyze the rapid scale-up of an American alternative liquid fuels industry, offering the greatest effects and benefits to America.

Below are four policy initiatives that our experts believe can play a critical role in keeping America strong and competitive. Government must put incentives in place to attract the billions in private capital necessary to support this new industry.

• Extend the transportation tax credit on alternative transportation fuels.
  
• Provide for the expensing of alternative energy plants in the first year of operation for tax purposes.
  
• Establish a self sustaining government corporation similar to OPIC, to insure against predatory pricing from OPEC and others.
  
• Initiate regulatory changes that will expedite siting and permitting of production facilities, mines and necessary infrastructure.

America is at a crossroads. We can either choose to produce our own transportation fuels utilizing our vast resources, securing our own destiny. Or we can continue to rely on foreign oil from unstable sources. No subsidies are necessary at today’s oil prices, only protection from predatory imports. The choice is clear.

A recent Yale Center for Environmental Law and Policy survey shows that reducing dependence on foreign oil is a top priority for the American people (see survey result summary below). Clearly, Americans will stand behind leadership with a bold plan to eliminate our dependence imported oil. The American Energy Security Study will provide such a plan.

Please join us in supporting the American Energy Security Study and initiatives proposed by this important and timely program.