Fueling the Future

“The fuel of the future is going to come from fruit like that sumach out by the road, or from apples, weeds, sawdust -- almost anything. There is fuel in every bit of vegetable matter that can be fermented. There's enough alcohol in one year's yield of an acre of potatoes to drive the machinery necessary to cultivate the fields for a hundred years.”

* * *

This prescient vision of an America where homegrown biofuels replace oil as our primary source of energy wasn't uttered by a scientist or an environmentalist. It wasn't offered by some politician or interest group advocate.

It was the vision of an automaker. His name was Henry Ford, and the year was 1925.

Even then, during the earliest days of the auto industry, there was a widespread belief within the business that the cars we drive could be powered by the food we grow. Ford went so far as to build his first Model T so that it could run on ethanol. As oil soon became the nation's dominant fuel, however, this visionary auto was scrapped -- and with it, Ford's dream of an oil-free future.

More than 80 years later, America's addiction to oil makes it clear that we have to go back to that future. Doing so won't just free us from our dependence on a dangerous and finite fossil fuel, it will also rejuvenate an industry desperate for another chance.

Henry Ford's corporation now finds itself struggling to survive under stiff competition, rising health-care costs, and the consumer skittishness that comes from volatile oil prices. Together, GM and Ford recently announced plans to lay off up to 60,000 workers.

Across the globe, other countries and their auto industries are realizing the enormous potential of a post-oil economy. Toyota is doubling production of the popular hybrid Prius, and it's readying a new production plant in China. Waiting lists for these foreign hybrids in our own country are months long, but U.S. automakers lag far behind.

There is now no doubt that cars that use less oil represent the future of the auto industry. If U.S. car companies hope to be a part of that future -- if they hope to survive -- they must start building more of these cars. And we must help them do it.

Right now, one of the biggest costs facing auto manufacturers is health care. Last year, retiree health care alone cost the Big 3 automakers nearly $6.7 billion. No wonder they're having trouble finding the money to invest in fuel-efficient cars.

I believe we should make a deal with the auto companies to solve this problem. Legislation I've introduced called “Health Care for Hybrids” would allow the federal government to pick up part of the tab for the automakers' retiree health-care costs. In exchange, the companies would use some of that savings to build and invest in more fuel-efficient cars. It's a win-win proposal: Their retirees will be taken care of, they'll save dramatically on health costs, and they'll be free to invest in the fuel-efficient cars that are key to their competitive future.

* * *

But building cars that use less oil is only one side of the equation. The other involves replacing that oil with the homegrown biofuels Henry Ford spoke of long ago.

Already, hundreds of fueling stations use a blend of ethanol and gasoline known as E85, and there are millions of cars on the road with the flexible-fuel tanks necessary to use this fuel -- including my own. But the challenge we face is getting biofuels out of the labs, out of the farms, and into the wider commercial market.

Washington can help in important ways. First, we can reduce the risk of investing by providing loan guarantees and venture capital to entrepreneurs with the best plans to develop and sell biofuels on a commercial market.

Next, we tell the private sector there will always be a market for renewable fuels. Let's ramp up the renewable fuel standard and create an alternative diesel standard so that by 2025, 65 billion gallons of alternative fuels a year will be blended into the petroleum supply.

Third, every automobile the government purchases -- starting right now -- should be a flexible-fuel vehicle. When it becomes possible in the coming years, we should also mandate that every government car is the type of hybrid that you can plug in to an outlet and recharge.

More broadly, we should then ensure that, within a decade, every new car sold in America can run on flexible fuel. We can advance this goal by offering manufacturers a $100 tax credit for every flexible-fuel tank they install before the decade is up.

As my friend Tom Daschle details in this report, millions of people driving flexible-fuel vehicles don't even know it. The auto companies shouldn't get CAFE credit for making these cars if they don't let buyers know about them, so the entire auto industry should follow GM's lead and put a yellow gas cap on all flexible fuel vehicles, and notify consumers in writing as well.

We have a choice in this country. We can continue down our path of oil dependence and watch as foreign competition kills our auto industry. Or we can help the industry transform itself back into the giant it once was. Eighty years later, Henry Ford's dream of a future without oil is not only possible, it's essential. For our environment, our security, and our economy, it's finally time for America to pursue it.

Barack Obama, a Democrat, is the junior U.S. Senator from Illinois.