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Financial Times: Bush to reclaim initiative with energy review

EXTRACT: At present the technology to make cellulosic ethanol is in its early stages but it has attracted the interest of Royal Dutch Shell, which has formed a partnership with Iogen Corporation, a Canadian biotech company.

THE ARTICLE

By Krishna Guha in Washington and Fiona Harvey in London: Published: November 10 2006 02:00 | Last updated: November 10 2006 02:00

The Bush administration is to launch a big “energy independence” initiative, likely to include renewed emphasis on biofuels, as part of an attempt to regain the political initiative following the mid-term elections.

Plans to develop technology to make fuel from plant waste could be a big beneficiary, Al Hubbard, a top White House economic adviser, has suggested.

His comments come as the White House seeks to recover from what Mr Bush called a “thumping” in Tuesday’s vote by changing its political tone and challenging Democrats to work with it on a range of practical policy issues.

Political analysts say a bold energy initiative could help Mr Bush regain political momentum, while buttressing Republican support in the farming states of the west and Midwest, where Democrats made inroads.

Mr Hubbard, director of the National Economic Council, said in an interview with the Financial Times that the White House would be able to work with the new Congress on energy and a number of other big domestic issues, including education, immigration and reform of social security, Medicare and Medicaid.

“I actually think from talking to Democrats they have the same concerns we do,” Mr Hubbard said. “They are concerned about energy and recognise that we need to accelerate our efforts to cure our addiction to foreign oil.”

He said Mr Bush wanted to ensure there were the right “incentives to invest” in alternative fuels.

Mr Hubbard said the White House was “absolutely” committed to supporting ethanol made from corn and sugar, and was also very excited about the prospects for “cellulosic ethanol” made from plant waste, which could ultimately produce five times the amount of fuel generated from corn. There was “huge opportunity” here, he said.

At present the technology to make cellulosic ethanol is in its early stages but it has attracted the interest of Royal Dutch Shell, which has formed a partnership with Iogen Corporation, a Canadian biotech company. BP is investing in an alternative biofuel called biobutanol with DuPont.

Mr Hubbard said he and other top administration officials had “spent a lot of time” at the Department of Energy evaluating cellulosic ethanol research. “We are making enormous progress at developing commercially viable cellulosic ethanol.”

Mr Hubbard said energy was one of a number of issues on which the White House hoped to find common ground with Democrats. The president was “very seriously committed” to making a fresh attempt to reform entitlement programmes, he said.

“We are very hopeful they will want to work with us to address these very significant problems.”

Education was “definitely an area where there is bipartisan agreement” on the need to improve the US schools system.

Mr Hubbard said Mr Bush would also seek to work with Democrats to pass “comprehensive” immigration reform – political code for reform that includes work permits and a path to citizenship for illegal immigrants already in the US. He said balanced immigration reform was “important to our economy”.

Asked whether the White House accepted that the Democrats had a mandate to implement their agenda, including a rise in the minimum wage and new budget rules, Mr Hubbard said: “Obviously, the Democrats won.” But while the president would support efforts to contain spending, he would continue to “resist anything that raises taxes”.

Copyright The Financial Times Limited 2006

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