Evolution of the RFS Revolution: Month Two
Being true to our blog mission, we wanted to keep you apprised of developments with the national Renewable Fuel Standard (RFS).
February 19, 2008 – RFS -- month two
Passage of the Energy Independence and Security Act of 2007 (EISA07) was nothing short of historic and heroic. The passage of EISA07 represents Congressional courage and their belief in the technological prowess and entrepreneurial sprit of the United States. This legislation also provides all us an insider glimpse (If-we-only-knew-what-they-really-knew-basis) of how desperate things must be on our energy front for Congress to reach such a fast bipartisan agreement that would make significant progress in fighting oil imports and greenhouse gases. With the ink hardly dry on the President’s signature (December 19, 2007) there are already new hearings (below), new anti-biofuels/ethanol studies appearing in the media, threats of throwing safety nets and hitting off ramps, technical corrections, and new legislation to amend the definition of renewable feedstocks. As the “Oil lobby looks to delay deadlines for new renewable fuels standard” ethanol and renewable fuel proponents are responding to keep the debate open and progress on the new RFS moving forward.
Regarding article, “Oil lobby looks to delay deadlines for new renewable fuels standard,” Feb. 13.) Biofuels are critical and necessary alternatives to environmentally hazardous fossil fuels. Concerning the frenzy over the recently released studies regarding biofuel cropland and its impact on greenhouse gases, it’s important to note that the energy bill of 2007 and its renewable fuel standard has specifically addressed these issues. The bill, signed into law, sets life cycle global warming pollution reduction standards for all new biofuels. The architects of the legislation anticipated hurdles and created mechanisms for addressing them.
As far as delaying implementation of the 2009 usage levels, we will have plenty of production in the U.S. to easily meet those requirements. Many more studies have revealed the potential of biofuels, including a joint study released in January by the U.S. Department of Agriculture and the University of Nebraska indicating that greenhouse gas emissions from switchgrass-derived ethanol were 94 percent lower than emissions from gasoline. While we must continue to research best practices and methods moving forward, it’s simply premature and foolish to write off biofuels and their potential to satisfy our nation’s energy, economic and environmental needs.
THE HILL, By Douglas A. Durante, Executive Director, CFDC, February 14, 2008
The Senate Committee on Energy and Natural Resources RFS Hearing
The Senate recently held an oversight hearing to discuss the new RFS. Senators Tim Johnson (SD) (co-chairman, of the Ethanol Across American education campaign), Larry E. Craig (ID), and Ken Salazar (CO) joined Committee Chairman Jeff Bingaman (NM) and Ranking Member Pete V. Domenici (NM) to address concerns industry and government are having about the final language contained in the EISA07.
Ranking member U.S. Senator Pete Domenici said that the recently passed RFS may need changes in order to be effectively implemented. Domenici identified a number of areas that may need attention, including very broad waiver authority given to the EPA Administrator, limits on what type of land can be used to cultivate crops, and definitions in the RFS which preclude materials from forest thinning to be used as biomass. In addition, Domenici said he wants to ensure that the RFS is not weighted against new technologies, such as biocrude derived from algae.
Highlights from testimony from The Honorable Alexander Karsner - Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Department of Energy
- One important feature of the President’s proposed Alternative Fuel Standard was the economic safety valve (proposed to be $1.00 per gasoline-equivalent gallon). This safety valve sought to improve the likelihood that the program would not impose unreasonable costs on consumers or result in unreasonable profits for alternative fuel producers. The safety valve in Title II of EISA does not provide the same level of protections to obligated parties or consumers. DOE, EPA, and USDA will coordinate on analysis needed to support the rule making to implement the new RFS program, including an assessment of what gaps, if any, exist in the incentive system in EISA, taking into account the costs of conventional (corn-based) ethanol, and cellulosic biofuels
production.
[It makes you wonder what the safety value is for consumers when gasoline goes up $1 per gallon?]
- In addition to concerns about the waiver/safety valve, the Department recommends that the definition of woody biomass in Section 201 be modified in order to parallel the definition contained in the Administration’s Farm Bill proposal. This revision would allow us to more readily meet the renewable fuel standard set forth in the law since it encourages producers to use materials from federal lands or non-industrial private forest lands. Thanks for the recommendation, it was a fun and informative read. The Energy Independence and Security Act of 2007 officially put the lid on this food vs. fuel concern. Corn is the bridge technology to cellulosic ethanol; one would not and will not exist without the other. Some suggested reading.
- On November 6, 2007, [CFDC Member] Range Fuels, Inc, became the first of the six companies selected by DOE last February, as a part of the EPACT 2005 integrated biorefineries solicitation, to break ground on a commercial cellulosic ethanol plant, one of the first in the nation. The plant is located near the town of Soperton, Georgia, and will draw on gasification technology to convert wood and wood waste from Georgia's pine forests and mills into 20 million gallons of ethanol per year during its first phase of operation. Construction of the first phase is expected to be completed next year.
Ms. Carol Werner - Executive Director, Environmental and Energy Study Institute
- A report by the Union of Concerned Scientists (UCS) reinforces the widely-accepted average direct life-cycle emissions reductions (compared to gasoline) of 20% for ethanol from corn starch and 80% for cellulosic ethanol. These statistics immediately suggest two things - A) that the emissions screens in the current RFS can be met and B) that cellulosic fuels have the potential to dramatically reduce our greenhouse emissions compared to either gasoline or corn-starch ethanol. Depending on choice of feedstock and agricultural practices, some cellulosic renewable fuels have the potential to substantially exceed the average 80% emission reduction found by UCS. A 5-yr field study jointly undertaken by the USDA Agricultural Research Service (ARS) and the University of Nebraska found a 94% reduction in direct life-cycle greenhouse emissions from switchgrass-based ethanol compared to gasoline.
- In closing, I feel that it is important to stress that renewable fuels are one piece of the solution to transportation emissions, but not a complete solution. Renewable fuels will be ONE part of a larger strategy, but so will increased vehicle fuel efficiency, expanded public transit, and “smart growth” practices (enabling more transit, biking and walking). In addition, technologies such as E85 engine optimization and plug-in hybrids will allow us to get more out of each gallon of fuel.
Mr. Bob Dinneen - President and Chief Executive Officer, Renewable Fuels Association
- According to a report set to be released in late February from economist John Urbanchuk of LECG, LLC, the American ethanol industry is a job creating engine. The increase in economic activity resulting from ongoing production and construction of new ethanol capacity supported the creation of 238,541 jobs in all sectors of the economy during 2007. These include more than 46,000 additional jobs in America’s manufacturing sector -- American jobs making ethanol from grain produced by American farmers. The 9 billion gallons of ethanol we will produce in 2008 will reduce greenhouse gas emissions by more than 14 million tons, or the equivalent of taking 2.5 million vehicles off the road (Air Improvement Resources, Inc., February 2008). Specifically, expansion of the U.S. biofuels industry will:
- Add more than $1.7 trillion (2007 dollars) to the gross domestic product between 2008 and 2022;
- Generate an additional $436 billion (2007 dollars) of household income for all Americans between 2008 and 2022;
Support the creation of as many as 1.1 million new jobs in all sectors of the economy by 2002; - Generate $209 billion (2007 dollars) in new Federal tax receipts; and,
- Improve America’s energy security by displacing 11.3 billion barrels of crude oil between 2008 and 2022 and reduce the outflow of dollars to foreign oil producers by $817 billion (2007 dollars) between 2008 and 2022. (Source(Economic Impact of the Energy Independence and Security Act of 2007, Renewable Fuel Standard, by John M. Urbanchuk, Director, LECG LLC January 2008).
- A recent report by the U.S. Department of Commerce’s Bureau of Manufacturing and Services, Energy in 2020: Assessing the Economic Effects of Commercialization of Cellulosic Ethanol, noted the commercial viability of cellulosic ethanol will strengthen the competitiveness of many domestic industries and have a positive effect on the U.S. economy. In fact, the report found that annual benefits for American consumers would total $12.6 billion if cellulosic ethanol production increased; U.S. crude oil imports would fall 4.1 percent if 20 billion gallons of cellulosic ethanol were produced in 2020, which is approximately 40 percent of current crude oil imports from Venezuela; and, the global price of oil and the domestic U.S. fuel price would be 1.2 percent and 2.0 percent, respectively, lower than projected.
Mr. Brian Jennings - Executive Vice President, American Coalition for Ethanol
"According to the National Commission on Energy Policy, the combination of the new RFS schedule and landmark corporate average fuel economy (CAFE) requirements in EISA 2007 will achieve numerous economic and environmental benefits:"
- Reduction of transfer of wealth abroad of $73 billion per year in 2020 and $129 billion in 2030, using current prices ($90 per barrel oil, $3 per gallon gasoline)
- Reduction in U.S. oil use of 2.8 million barrels a day by 2020, and 5 mbd by 2030.
- U.S. consumer fuel savings of $71 billion per year in 2020, and $161 billion in 2030, using approximate current prices.
- Reduction in U.S. CO2 emissions by 320 million metric tons in 2020, and 675 mmt in 2030.
- Reduction in passenger vehicle emissions by 15 and 30 percent, respectively, under what they otherwise would be.
- Reduction in 2020 of approximately 4 percent of projected total net U.S. CO2 emissions versus what they would otherwise be.
The testimony of Mr. Charles Drevna - President, National Petrochemical and Refiners Association
was very similar to the rash of anti-ethanol stories that appeared in the media during the EIAS07 debate. The speech was also hauntingly familiar to past testimony provided by NPRA during the phasing out of leaded gasoline, the creation of the oxygenated fuel standard in carbon monoxide non-attainment areas, the reformulated gasoline program for ozone non-attainment areas, and in response to efforts by EPA to reduce the volatility and sulfur content of gasoline, and Congressional hearings during the creation of the RFS in the Energy Policy Act of 2005 and expanding the RFS in the EISA07.
Mr. Robert Meyers - Principal Deputy Assistant Administrator for Air and Radiation, U.S. Environmental Protection Agency also provided testimony for the Committee.
