US Governors Urge Aggressive Acceleration of Development, Production and Deployment of Ethanol
10 January 2007
|Members of the GEC.|
The 37 gubernatorial members of the Governors’s Ethanol Coalition (GEC) have released a report that recommends mechanisms to accelerate the development, production and deployment of biofuels in the short- to medium-term with a focus on cellulosic ethanol.
Along with the report—Ethanol from Biomass: How to Get to a Biofuels Future—the governors called upon the President and the Congress to adopt their four primary recommendations. These include:
Expanding the Renewable Fuels Standard (RFS) to include a short-term target of 12 billion gallons a year of ethanol and biodiesel utilization by 2010. The current target is 6.8 billion gallons in 2010. This goal includes 500 million gallons a year from cellulosic ethanol by 2012.
For the longer term, GEC recommends British thermal unit (BTU)-based targets of 15% of total motor fuels consumption by 2015 and 25% by 2025, with equal incremental steps provided for each year in between.
Assigning a financial value to the RFS cellulosic ethanol 2.5:1 trading credit into a more practical credit. Under the current RFS, Congress included a 2.5:1 “trading credit” for cellulosic ethanol. This enhanced trading credit means that each gallon of cellulosic ethanol counts as 2.5 gallons for purposes of meeting the RFS requirements.
But with the rapid expansion of conventional ethanol production, there is no financial incentive for ethanol blenders to pay more for cellulosic ethanol, and therefore there is no incentive for producers to invest in cellulosic production.
The Coalition recommends that Congress convert the $0.51 Volumetric Ethanol Excise Tax Credit (VEETC) to a ten year Cellulosic Ethanol Production Tax Credit (CETOH PTC). With the CETOH PTC, cellulosic ethanol would be worth an additional $0.765 a gallon compared to conventional ethanol, or $0.765 plus the value of the regular ethanol VEETC at that time. Properly structured, the GEC argues, this would provide incentive for a range of new ethanol production technologies that reduce fossil fuel inputs and increase the competitiveness of domestically produced ethanol.
Establishing a timetable for delivering E85 (85% ethanol/15% gasoline)infrastructure on a regional basis within five years. Specifically, the Coalition recommends that Congress adopt performance standards for major gas station owners and branders (e.g., owners of 100 or more fueling stations, high-volume stations) that would provide at least one E85 pump at 95% of their stations in at least one region over five years.
The governors also are recommending adopting a timetable for the transition to uniform flexible-fuel vehicle standards that not less than 70% of new light duty vehicles sold in the United States be fuel flexible within 10 years.
Providing adequate funding for the Energy Policy Act of 2005 authorized biofuel research, demonstration and incentive programs. The Coalition recommends providing $213 million for the DOE Biomass Program’s research and demonstration activities in 2007.
The governors also recommend a one-time, five-year appropriation of $250 million for the Section 942 reverse auction production incentive authorized in the Energy Policy Act of 2005. Funding this incentive for cellulosic ethanol will provide needed market-pull to bring innovative production processes to both existing ethanol facilities and new facilities in other regions of the nation using an array of locally available feedstocks, according to the Coalition.
In support of the study, the Coalition commissioned the University of Tennessee to conduct a study of the economic, environmental, and agricultural impacts of increasing levels of ethanol production and use.
That study concluded that further expansion of production—10 billion gallons in 2010, 30 billion gallons in 2020, and 60 billion gallons in 2030—is within the capability of the industry and farmers under conservative grain yield improvement assumptions and market entry of modest amounts of cellulosic derived ethanol production by 2012.
The growth of the bioenergy industry is closely tied to the availability of the cellulose-to ethanol technological path. A delay in the commercial introduction and wide spread adoption of this new technology would impose significant costs for the users of agricultural commodities and limit the contribution of agriculture to the energy needs of the country. To expedite commercial introduction of cellulosic ethanol technologies, adequate support of research and development activities and policies toward commercialization are merited.—U. Tenn study
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