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US Governors Urge Aggressive Acceleration of Development, Production and Deployment of Ethanol

10 January 2007

Gec_map82906
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.

Gecup2
One of the scenarios (ETH60) for ethanol feedstock from the U. Tenn. study. Corn ethanol production peaks at around 12 billion gallons per year and then plateaus and declines (with sharper decline in other scenarios. Click to enlarge. Source: U. Tenn.

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

Resources:

January 10, 2007 in Cellulosic ethanol, Ethanol, Policy | Permalink | Comments (36) | TrackBack (0)

Comments

There is only one good possible result from billions spent on oil wars - the failure of them. It seems clear that the sudden rush to ethanol, HEV, wind, etc. is because us regular folks are sick of petroleum wars and the catastrophic effect on people and planet. Don't forget that only a couple years ago all this activity did not exist.

Opportunities for a renewable energy industry that equitably replaces the monolithic petro industry are abundant. There is business and cleaner living in all the alternatives including FCs. So the real issue is not E85, E10 or BEV - it is to encourage all these solutions on a leveling field (leveling because subsidies must be rethought). Cost of cellulosic, algae and battery/cap start-ups should be incentivised with loan guarantees, tax deferment and credits.

The carbon tax issue may be addressed by the losses in petro market share raising the price of production and per gallon cost. Lower demand will raise prices to compensate for accelerated depreciation and unrecoverable drilling expenses.

Finally, let's try this idea - automakers become razor makers - give away the razor - sell the blades. They sell a car once and service it over its extended life with energy sales. This will likely be the model as we move through biofuels to BEVs. Or another analogy: alliances of hardware and software. Build the car AND the energy to drive it.

Posted by: gr | January 11, 2007 at 11:31 AM

With the complete lack of leadership (on all fronts) from the top, NOTHING is going to change until American's elect someone who has at least a clue as to what is going on. Sure, hydrogen may be the ultimate solution but lets not continue to ignore the possibilities that our current infrastructure and technology can do RIGHT NOW! Unfortunately everyone should just hold on till 2008 and hope that by then those not on board can catch up, because the administration's nose is so far up in Iraq that they have no clue (or interest) in changing energy policy. This should be abundantly clear to all on this site..."wringing of hands" over now...

Posted by: ed | January 11, 2007 at 11:54 AM

Can someone explain this to me. Why do people pretend that the cost to solving problems in Afghanistan will be insignificant? The $500 billion, if not spent in Iraq, would have been spent by continuing operations in OEF. Whether it be fuel or reconstruction, there are many needs to be met. Those helicopters, needed for mountain ops, are fuel hungry.
_Lets say, we did not launch OIF in 2003. The reminants of te Taliban and Al-Qaeda flee to Pakistan's FATA after Tora Bora. Pakistan does not have full control of these tribal areas. They then use it as a staging ground and rear area to attack from, as they have. At least 100,000 allied soldiers is needed to secure southern and eastern areas. Another 200,000 Afghan National Army and police is needed to hold the cleared sectors. Federal/national/provincial/local security and defense forces may ultimately need to number 500,000, to a million, for stabilization purposes. Add on top the 20+ years of war, and the need to recontruct the country the size of Texas, with ~30 million people.

_Granted, we could have eliminated the need for oil imports with $500 billion, by constructing xTl plants. Yes, might have created 500,000 to a million middle class jobs. However, we should not trivialise the costs of other endeavors, and obligations.

Posted by: allen_Z | January 11, 2007 at 12:18 PM

I wonder how may of these states have Net Metering to match there gusto for E-85. Missouri does not.

Posted by: dave | January 11, 2007 at 01:42 PM

Please no more e10,e20 mandates. They do NOTHING to lower our dependence on OIl.

E85 is a TRUE alternative to Gasoline.. E10,E20 is simply a white wash .


What are you going to do when the middle east turns off the spicket ? Your E10 and E20 GASOLINE will sky rocket in price, if you can even find fuel because it is mostly gasoline

E85 on the other hand is an ALTERNATIVE fuel ..

It is not a total answer, not a total soultion .. it is meant to be an alterntive.. maybe in 10 years it can have 30% of the auto fuel market , maybe hydrogen has 4% , plug in electrics 12% , propane 1% and gasoline products the other 53% .

That diversity forces each Industry to be as efficient as possible because each Industry is then required ot compete , actually compete for the consumers dollar.

When the consumers have choices they get the best prices .

Right now E85 only represent 1% of all Ethanol production! the rest goes to the OIL COMPANIES! that should be outlawed NOT promoted.

Ethanol and Oil should be forced to COMPETE not encouraged into making deals selling ALL the ethanol to the OIl companies ..which is exactly what is going on .

By buying up all the ethanol production the Oil Companies are working to keep E85 off the market ..

They dont want any ALTERNATIVE fuels (like E85) on the market that directly competes gallon for gallon against their Gasoline product.


Posted by: Dan | January 11, 2007 at 05:42 PM

Allen Z,
The answer to your question goes way back before 911. Petroleum was what got Bush Sr. into Iraq in Desert Storm, stationing a lot of troops in Saudi, and intefering with the Saudi gov. in a way that caused a repulsion in the fundamentalist Arab youth, but mostly Saudi's youth, of which Osama bin Laden is the chief instigator. Had Petroleum been not so important, 911 would not have happened, and there would be no Afghan war, nor Iraq 1 or Iraq 2 wars. In a round about way, the USA is sustaining its profligate way of living with the blood of its soldiers, and the sweat of its future workers paying off the war debt. Shoulda follow thru with previous energy policies of conservation and development of alternative energy after the first and the second oil embargo...But somehow, complacency sets in, or was it the work of the oil cartel and other interest groups(?) hi-jacking America's well-intended alternative energy and conservation and flew them to the ground.

Must we now suffer thru another ill-advised energy policy (ie. corn ethanol) that will do nothing to solve our petroleum dependency?

Posted by: Roger Pham | January 11, 2007 at 08:01 PM

Wake up, Roger, it is not what we do, it is what they are…

Posted by: Andrey | January 12, 2007 at 02:45 AM

This whole Ethanol thing is getting souped up in politics I agree. Its going to damage it in the long run. Don't forget that Hydrogen Fuel Cells, ultra-capacitors and even the Nickel Metal Hydrite batteries in today's HEVs could be highly developled in a few years and subdue the political will as well as the desire and need for bio-fuels. Especially when their production costs are myopic.

I'd go with E10 right now, get into the market and secure a strong position. Look to compliment other developments as they roll in. Ethanol and other bio fuels are not the stars of alternative energy like fuel cells and ultra-capacitors. But it could pick up a backwater farmer's position and live on.

Posted by: AZ | January 12, 2007 at 07:35 AM

It was estimated that hybrids will make up about 1-2% of the car fleet and level out. I don't know if anyone believes that, but if these cars get 40% better mileage then E5 is a better bet. Corn is not good to use and sugarcane is better, we know that.
Hawaii and Florida had sugarcane industries until ADM came up with high fructose corn syrup. Let's push for cellulose between E5 and E10 and at the same time look for more efficiency and behavior modification. Less commuting would be good. That is one of the reasons Bob Lutz of GM gave for the Volt 16kWh of battereis, to communte to an from work 20 miles each way. That is why they made the Volt E85 capable.

Posted by: SJC | January 12, 2007 at 08:22 AM

One way to avoid future costly oil wars and greatly reduce terrorism potential would be for all industrial countries (oil consumers) to do as Brazil and Canada are doing, i.e. produce their own liquid fuel and completely stop importing OIL from the middle-East. Some kind of progressive embargo and/or a very large carbon tax on imported fossil fuel from the middle-east may be necessary.

Without the hundreds of $billions/year in oil revenues, the 200+ million people in that area would spend more time praying for better days and have less time and resources left to try to destroy us. By not using their oil, the main (apparent) reason to fight/kill us would cease to exist. They may even have to go back to work to survive.

Simultaneously, we should introduce ways to reduce liquid fuel consumption by 50%+ with PHEVs/EVs/FC etc while reducing GHG.

The progressive transition from the old petroleum based economy to a new alternative cleaner energy economy is part of the coming unavoidable post-industrial revolution. The leading countries will benefit most (USA/EU/China/Japan/etc) but others would follow.

We could even apply special import tarifs and/or quota on imported goods made with middle-east oil. This would discourage cheaters.

Posted by: Harvey D. | January 12, 2007 at 09:02 AM

FYI

Posted by: ed | February 05, 2007 at 06:30 AM

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