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U.S. Policies to U.S. Policies to Promote Biofuels Promote Biofuels for Transport for Transport
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U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Dec 24, 2015

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Page 1: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

U.S. Policies to Promote U.S. Policies to Promote Biofuels for TransportBiofuels for Transport

Page 2: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Biofuels are “Hot”Biofuels are “Hot” Featured in 2006 State of the Union Address as Featured in 2006 State of the Union Address as

having major potential to displace oil imports.having major potential to displace oil imports. Biofuel Targets in Energy Policy Act of 2005Biofuel Targets in Energy Policy Act of 2005 APEC Leaders endorsed Biofuels Task Force.APEC Leaders endorsed Biofuels Task Force. G8 Global Bioenergy Initiative soon to be signed.G8 Global Bioenergy Initiative soon to be signed. Today’s higher oil prices change the paradigm to Today’s higher oil prices change the paradigm to

make biofuels cost-effective.make biofuels cost-effective. Studies show cost advantage for ethanol where world Studies show cost advantage for ethanol where world

oil prices exceed $45 or $50 per barrel.oil prices exceed $45 or $50 per barrel. Energy Information Administration projects prices to Energy Information Administration projects prices to

stay above $50 per barrel for the long-term.stay above $50 per barrel for the long-term.

Page 3: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Some Key Biofuel Policy IssuesSome Key Biofuel Policy Issues

How much potential? (Why bother developing How much potential? (Why bother developing biofuel technology unless resources are large?)biofuel technology unless resources are large?) Approach: Resource AssessmentApproach: Resource Assessment

How to dispense? (Is it worth the cost of How to dispense? (Is it worth the cost of modifying gas stations to dispense E85?)modifying gas stations to dispense E85?) Approach: Infrastructure IncentivesApproach: Infrastructure Incentives

How to use? (How fast should the automobile How to use? (How fast should the automobile fleet become gasoline-E85 fuel-flexible?)fleet become gasoline-E85 fuel-flexible?) Possible Approach: Labeling RequirementsPossible Approach: Labeling Requirements

Page 4: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

NREL: Current Resource 423 MtNREL: Current Resource 423 Mt Agricultural residuesAgricultural residues

Plant-based (crop residues) Plant-based (crop residues) [157 million tons][157 million tons] Animal-based (methane from manure) [ 2 million tons]Animal-based (methane from manure) [ 2 million tons]

Wood residuesWood residues Forest residues Forest residues [ 57 million [ 57 million

tons]tons] Mill residues Mill residues [ 80 million tons][ 80 million tons] Urban wood residues Urban wood residues [ 31 million tons][ 31 million tons]

Municipal discardsMunicipal discards Methane emissions from landfillsMethane emissions from landfills [ 12 million tons][ 12 million tons] Methane from wastewater treatmentMethane from wastewater treatment

Dedicated Energy Crops (case studies)Dedicated Energy Crops (case studies) Conservation Reserve Program lands Conservation Reserve Program lands [ 84 million [ 84 million

tons]tons] Abandoned mine landsAbandoned mine lands

Page 5: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Potential Biofuels Resources: Potential Biofuels Resources: ORNL AssumptionsORNL Assumptions

Grain yields (corn, wheat) increase 50%Grain yields (corn, wheat) increase 50% Soybean residue:grain ratio up to 2:1Soybean residue:grain ratio up to 2:1 75% of crop residues recovered by harvest 75% of crop residues recovered by harvest

technology where sustainabletechnology where sustainable All cropland managed by no-till methodsAll cropland managed by no-till methods 55 M acres for perennial bioenergy crops55 M acres for perennial bioenergy crops All excess manure used for biofuelAll excess manure used for biofuel All available residues utilizedAll available residues utilized

Page 6: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

U.S. Potential Over 1.3 Billion tonsU.S. Potential Over 1.3 Billion tons

Page 7: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Enough to Displace 1/3 of Oil UseEnough to Displace 1/3 of Oil Use

Oil use about 150 billion gallons in 2010.Oil use about 150 billion gallons in 2010. 1.3 billion t would displace over 50 Bgal.1.3 billion t would displace over 50 Bgal. Does not count potential for improved Does not count potential for improved

automotive fuel efficiency (a 50% efficiency automotive fuel efficiency (a 50% efficiency improvement would mean that half of U.S. oil improvement would mean that half of U.S. oil use could be displaced).use could be displaced).

Does not count potential for grassy feedstocks Does not count potential for grassy feedstocks (such as corn stalks and switchgrass) which (such as corn stalks and switchgrass) which could grow on other lands.could grow on other lands.

Page 8: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

How About Biofuel Resources How About Biofuel Resources Around the World?Around the World?

Could cooperate on similar resource Could cooperate on similar resource assessments in China and India through APP.assessments in China and India through APP.

Would like to know about resources in other Would like to know about resources in other APP countries too (Korea, Japan, Australia).APP countries too (Korea, Japan, Australia).

Proposing a survey of biomass resource Proposing a survey of biomass resource assessment capability through APEC EWG.assessment capability through APEC EWG.

May propose biomass resource assessments May propose biomass resource assessments through G8 Global Bioenergy Initiative.through G8 Global Bioenergy Initiative.

Page 9: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Ethanol Infrastructure Ethanol Infrastructure IncentivesIncentives

Energy Policy Act of 2005 provides up to a Energy Policy Act of 2005 provides up to a $30,000 tax credit for an E85 fueling station.$30,000 tax credit for an E85 fueling station.

State Infrastructure Programs are diverse:State Infrastructure Programs are diverse: New York State Thruway will have renewable fuel New York State Thruway will have renewable fuel

pumps (ethanol or biodiesel) at all 27 service areas.pumps (ethanol or biodiesel) at all 27 service areas. Illinois program yielded 100 new E85 stations for Illinois program yielded 100 new E85 stations for

just $500,000, or $5,000 per station (plus $2,000 just $500,000, or $5,000 per station (plus $2,000 private contribution for $7,000 per station total)private contribution for $7,000 per station total)

Iowa and Minnesota also very active (corn states).Iowa and Minnesota also very active (corn states). Now have 600 stations (1/3 of 1% of 180,000).Now have 600 stations (1/3 of 1% of 180,000). Will be interesting to see EPAct credit impact.Will be interesting to see EPAct credit impact.

Page 10: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Fuel-Flexible VehiclesFuel-Flexible Vehicles

Perhaps up to 5 million on the road, most not Perhaps up to 5 million on the road, most not labeled: proposals to require FFVs be labeled.labeled: proposals to require FFVs be labeled.

U.S. auto industry promoting actively, with U.S. auto industry promoting actively, with full-page print ads and TV commercials.full-page print ads and TV commercials.

Some senators have suggested requiring that Some senators have suggested requiring that all new vehicles be fuel-flexible after allowing all new vehicles be fuel-flexible after allowing a period for assembly line retooling.a period for assembly line retooling.

But FFVs cost just $30 extra and are easy to But FFVs cost just $30 extra and are easy to sell, so they may enter the market voluntarily.sell, so they may enter the market voluntarily.

Page 11: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

EPAct Biofuel TargetsEPAct Biofuel Targets The Environmental Protection Agency will The Environmental Protection Agency will

issue regulations to ensure that gasoline sold issue regulations to ensure that gasoline sold contains at least a certain amount of renewable contains at least a certain amount of renewable fuels each year, which will gradually increase.fuels each year, which will gradually increase.

4 billion gallons (0.26 million bpd) in 2006.4 billion gallons (0.26 million bpd) in 2006. 7.5 billion gallons (0.49 million bpd) in 2012. 7.5 billion gallons (0.49 million bpd) in 2012. Amounts thereafter set by EPA, in consultation Amounts thereafter set by EPA, in consultation

with Departments of Energy and Agriculture. with Departments of Energy and Agriculture. Assisted by phase-out of MTBE as octane Assisted by phase-out of MTBE as octane

booster, for which ethanol is a fine substitute.booster, for which ethanol is a fine substitute.

Page 12: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Environmental Regulations Boost Environmental Regulations Boost Ethanol as an Oxygenate in Fuel Ethanol as an Oxygenate in Fuel

Carbon Monoxide: 1990 Amendments to Clean Air Carbon Monoxide: 1990 Amendments to Clean Air Act require regions with high levels of CO to use Act require regions with high levels of CO to use oxygenated fuels – such as ethanol blends – in the oxygenated fuels – such as ethanol blends – in the winter. The regulation affects 16 regions in 10 states.winter. The regulation affects 16 regions in 10 states.

Smog and Ground-Level Ozone: Clean Air Act Smog and Ground-Level Ozone: Clean Air Act Amendments require reformulated gasoline to Amendments require reformulated gasoline to minimize ozone production in about 30% of gasoline minimize ozone production in about 30% of gasoline sold. In 2001, 87% of RFG used methyl tertiary butyl sold. In 2001, 87% of RFG used methyl tertiary butyl ether (MBTE), but it contaminates groundwater and ether (MBTE), but it contaminates groundwater and will be banned. Ethanol can substitute for MBTE. will be banned. Ethanol can substitute for MBTE.

Page 13: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Federal Excise Tax Exemption Federal Excise Tax Exemption Encourages Ethanol BlendsEncourages Ethanol Blends

Since 1979, federal government has exempted Since 1979, federal government has exempted 5.3 cents per gallon of 10% ethanol blend 5.3 cents per gallon of 10% ethanol blend (equivalent to 53 cents/gallon of ethanol) of (equivalent to 53 cents/gallon of ethanol) of the 18.3 cent per gallon excise tax on gasoline.the 18.3 cent per gallon excise tax on gasoline.

Cost may be more than offset by reduced Cost may be more than offset by reduced agricultural support payments; Department of agricultural support payments; Department of Agriculture estimated in 2001 that sale of corn Agriculture estimated in 2001 that sale of corn for ethanol production boosted corn prices by for ethanol production boosted corn prices by $0.25 to $0.30 per bushel (about 12 percent).$0.25 to $0.30 per bushel (about 12 percent).

Page 14: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

State Production Credits (2001)State Production Credits (2001)

N. Dakota, Wyoming: $0.40/gallon ethanolN. Dakota, Wyoming: $0.40/gallon ethanol Montana: $0.30/gallon ethanolMontana: $0.30/gallon ethanol Minnesota, Missouri, Oklahoma, Wisconsin: Minnesota, Missouri, Oklahoma, Wisconsin:

$0.20/ gallon ethanol$0.20/ gallon ethanol Nebraska: $0.18/gallon ethanol for new Nebraska: $0.18/gallon ethanol for new

capacity, $0.075/gallon for expanded capacity.capacity, $0.075/gallon for expanded capacity. Kansas: $0.075/gallon for new capacity, Kansas: $0.075/gallon for new capacity,

$0.05/gallon for existing capacity.$0.05/gallon for existing capacity.

Page 15: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

EPAct Biofuels R&DEPAct Biofuels R&D

Substantial R&D Appropriations for Biofuels:Substantial R&D Appropriations for Biofuels: $213 million for FY2007$213 million for FY2007 $251 million for FY 2008$251 million for FY 2008 $274 million for FY 2009$274 million for FY 2009

Of which about half is for biorefineries:Of which about half is for biorefineries: $100 million in FY2007$100 million in FY2007 $125 million in FY 2008$125 million in FY 2008 $150 million on FY 2009$150 million on FY 2009

Plus $45 million annually for biofuels sciencePlus $45 million annually for biofuels science

Page 16: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Demonstration of Cellulosic Ethanol Demonstration of Cellulosic Ethanol Key to Meeting Resource PotentialKey to Meeting Resource Potential

Breakeven at about $80 per barrel of oil today, but Breakeven at about $80 per barrel of oil today, but technology rapidly evolving to bring costs down.technology rapidly evolving to bring costs down.

EPAct authorizes $650 million in loan guarantees. EPAct authorizes $650 million in loan guarantees.

DOE would issue loan guarantees for up to 4 projects DOE would issue loan guarantees for up to 4 projects to demonstrate commercial feasibility of producing to demonstrate commercial feasibility of producing ethanol from sucrose or cellulosic biomass or MSW. ethanol from sucrose or cellulosic biomass or MSW.

Each project would produce at least 30 million Each project would produce at least 30 million gallons of ethanol per year and could receive a loan gallons of ethanol per year and could receive a loan guarantee for up to 80% of its cost or $250 million.guarantee for up to 80% of its cost or $250 million.

Page 17: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Integrated BiorefineriesIntegrated Biorefineries

Biorefinery projects up to $100 million each to Biorefinery projects up to $100 million each to demonstrate enzyme-based processing systems demonstrate enzyme-based processing systems for a wide variety of lignocellulosic feedstocks. for a wide variety of lignocellulosic feedstocks.

Encourage a wide variety of uses, including:Encourage a wide variety of uses, including: Liquid transportation fuelsLiquid transportation fuels High-value biobased chemicalsHigh-value biobased chemicals Substitutes for oil-based feedstocks and products Substitutes for oil-based feedstocks and products

(such as plastics and polymers)(such as plastics and polymers) Energy as electricity or heatEnergy as electricity or heat

Page 18: U.S. Policies to Promote Biofuels for Transport. Biofuels are “Hot” Featured in 2006 State of the Union Address as having major potential to displace.

Can we grow our way out of oil?Can we grow our way out of oil?