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House Sends Energy Bill to President Bush; New Renewable Fuel Standard

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The new Renewable Fuel Standard in the energy bill calls for a rapid acceleration in the production of cellulosic biofuels (red), and a capping of corn ethanol at 15 billion gallons per year. Click to enlarge.

By a 314 to 100 vote, the US House of Representatives passed the energy bill (H.R.6) that had come back from the Senate, thereby sending the package of programs to the White House. President Bush has indicated that he will sign the bill into law before the end of the year.

In addition to raising CAFE standards to an average 35 mpg by 2020 (earlier post), the bill also contains some provisions that provide a major increase in the Renewable Fuel Standard (RFS); the electrification of transportation; improved standards for appliances and lighting; energy savings in buildings and industry; energy savings in government and public institutions; support for research into solar, geothermal, marine and hydrokinetic energy technologies, and energy storage for transportation and electric power; research, development and demonstration of carbon capture and sequestration; the modernization of the electric grid; and a variety of other initiatives.

Newrfs2
The components of the RFS. Click to enlarge.

Renewable Fuel Standard. The bill deals with four primary categories of renewable fuel: conventional biofuel—ethanol produced from corn starch; cellulosic biofuels; biomass-based diesel (which includes biodiesel—fatty acid methyl esters); and other advanced biofuels.

Under the bill, the RFS increases to 36 billion gallons by 2022. Of that, corn ethanol production is capped at 15 billion gallons per year starting in 2015; the remainder is expected provided by “advanced biofuels”, the majority of which are cellulosic biofuels. In the final year of the standard (2022), cellulosic biofuels contribute more (16 billion gallons) than does corn ethanol (15 billion gallons).

The bill assigns minimum lifecycle greenhouse gas improvements, measured against a baseline of the lifecycle emissions from gasoline or diesel (whichever is being replaced) on sale in 2005. The minimum GHG improvement is 20%; biomass-based diesel must deliver a 50% GHG improvement, and cellulosic biofuels must deliver a 60% improvement in lifecycle GHG emissions.

The bill defines “Advanced Biofuels” as renewable fuel, other than ethanol derived from corn starch, including:

  • Ethanol produced from cellulose, hemicelluloses, and lignin;

  • Ethanol derived from sugar other than from corn starch;

  • Ethanol derived from waste materials, including crop residue;

  • Butanol or other alcohols produced via conversion of organic materials;

  • Biomass-based diesel;

  • Biogas (including landfill gas and sewage waste treatment gas) produced through the conversion of organic matter from renewable biomass; and

  • Other fuels derived from cellulosic biomass.

The RFS provides significant allowances for adjustments and revisions based on determination of the Administrator of the EPA. For example, the Administrator can reduce the percentage reductions in greenhouse gas emissions specified in the bill by up to 10 percentage points for each category if he or she determines that the reduction is not commercially feasible.

As another example, if the production of cellulosic biofuel is projected to be less than that required by the RFS, the Administrator can reduce the applicable volume in the standard.

The bill requires the DOE, USDA, and EPA to engage the National Academy of Sciences to conduct a study to assess the impact of the RFS on feed grains; livestock; food; forest products; and energy.

It also requires DOE, DOT and EPA to study the optimization of flexible fuel vehicles to determine what fuel efficiencies could exist when operating on E85. The bill also requires a study on the effects of different levels of biodiesel blends (B5, B10, B20, B30 and B100) on engine and engine systems performance and durability.

Should ASTM no have established a standard for B20 biodiesel within a year following the enactment of the bill, the Administrator of the EPA is tasked to initiate a rulemaking to establish a uniform per gallon fuel standard for such a fuel.

The bill authorizes the appropriation of $500 million for the period of fiscal years 2008 through 2015 for grants to encourage the production of advanced biofuels. A project much achieve at least an 80% reduction in lifecycle greenhouse gas emissions to be eligible for such a grant.

The bill also requires a report to Congress on any research and development challenges inherent in increasing the biodiesel and biogas components of the fuel pool in the US. Another required report will update Congress on the status of the R&D on the use of algae as a feedstock for biofuels.

Other aspects of the bill touch on the development of a biofuel refueling infrastructure, an ethanol pipeline feasibility study, and transportation of renewable fuel via railroad and other modes of transportation.

Comments

Lad

From what is discussed in this article, I see in this bill the continued control of energy by the current distributors and owners of the fuel dispensing equipment; those are the oil and gas companies and now, the major farm companies. The lobbying firms for these industries must have been very busy dispensing campaign funds and favors. But, maybe we should be satisfied that in the long run, we will be using less oil. Perhaps invading another country like Iraq won't be necessary.

Nothing was discussed about a reduction in the cost of fuel; but, maybe that will be disclosed in a further analysis.

Is there any support in the bill for battery manufacturing and non-fossil fuel electrical generation? Anything for Big Auto? How about something for PHEV and BEV production development?

Also, and hopefully, the next group of politicians, in 2008 when our trickle-down White House is not around any more, can amend the policies to channel more funding into solar generation and storage.

And, one other question: where does coal fit in this policy bill? There are a lot of questions created by this bill.

treehugger

Where the hell are they going to find the land to triple the amount corn. 15 billions gallons of ethanol would requires the total amount of corn produced in this country. Where are they geting the water and how big will be the dead zone in the gulf of mexico ? this bill is insane, a recipe for an complete ecological disaster.

Harvey D

treehugger;

A very good question. Wheat has already hit $10/bushel because farmers are switching to corn. If the price of corn follows (and it may if corn ethanol production is tripled) nobody knows what will be the total effect on other grain price.

It wouldn't be exagerated to assume that corn and wheat price could go as high as $10 and $20 respectively. When feed price goes up, most food price follows. If the Big Mac and Pizzas will double or triple in price.

Business as usual with agrofuels instead of fossil fuels is not the wiser way to go.

Accellerated electrification of our vehicles, HVAC etc is the best way out to ensure lower food price, reduce oil imports and create less pollution and GHG. It is so obvious that it makes you wonder what our politicians are really trying to do.

Henrik

Treehugger

This year’s US corn harvest is 13 billion bushels and currently the ethanol plants can make 2.8 gallons of ethanol per bushels. This conversion rate is increasing a little each year as new production technology is introduced. If the entire US 2007 corn harvest was used for ethanol it would give you 36.4 billion gallons of corn ethanol and enough distiller grains to make up for the missing corn that is used for animal feed in the US. Direct human consumption of corn is minimal. The rest is export which is also wasting energy in transport.

The sad thing about this law is that they actually limit corn ethanol. That is not needed at all. The market will limit it naturally once the demand for corn increases the price to the point where it is cheaper to produce ethanol from other feedstock. I still think the ethanol industry is for this law. After all it guarantees them an almost 40 billion gallon market at possible $2 a gallon or a $80 billion a year industry for ethanol alone. Then add distiller grains and a possible future market for CO2 credits for carbon capture and storage. It is going to be big business but it could be better. Moreover, the business will be big enough to do their own research that could lead to much improved economics in the future and ultimately cheaper fuels.

BMW_4_ever

This is a huge win for the agro-lobby.

How can an "energy bill" not have substantive provisions of new solar and wind power generation?

Reality Czech

Because wind turbines and PV arrays don't contribute to pols.

Reality Czech

Because wind turbines and PV arrays don't contribute to pols.  ADM, XOM and the like do.

treehugger

Henrik

Do you think it is reasonnable to assume that 100% of corm production will go to ethanol ? I doubt that 2$ / gallon is relaistic, don't forget that given the amount of fossil energy you need to make corn ethanol, the price of ethanol will be tight to oil price...and all this just for 15% of oil consumption. In the same time a the current pace it will barely cope with the national gaz consumption increase. Biofuel shouldn't be allowed until the car mileage would have been drastically increased. Corn ethanol should only be authorised in car with better than 40MPG

Troy

I wonder how they're going to measure 35MPG if the gasoline is getting more and more diluted with the lower-btu ethanol?

Would they measure 35mpg with 100% petroleum gasoline or 35mpg with E10 or E20... ? What will the standard be?

Jim

Almost 50% of yearly energy use is consumed by buildings, and 76% of electrical energy use, yet what is the target of the bill?

Establishing building standards for all new building would have a greater impact than improvements in transportation.

Ash

Corn based ethanol is absolutely stupid in economics, ecology, and feasability.

Clearly the farm lobby's pockets are deep enough to circumvent reason. (And given that they own the largest building in DC, it isn't surprising)
And deeper than Toyota, GM, and etc's pockets who all tried to block this legislation entirely.

Also, since CAFE measurments are averaged acrost a company's lineup, this change will have very little impact overall, except to increase the price of cars that people will actually buy.


Patrick

Stop reading the headline and pay attention to the contents:

There are provisions for increasing efficiency in buildings (commercial and residential). There are mandates for DoE to produce new energy standards in a more timely manner.

They tried to push for a mandatory renewable energy portion and repealing tax breaks for oil companies but Bush stated he would veto any bill including these items and there was not enough support in congress to override a veto.

Cervus

Corn ethanol is basically liquid pork. And you can't pin the blame on a singly Party for this. Democrats and Republicans alike are addicted to it. There were over 8,000 earmarks in the last big spending bill, about three times as many as 2006. So much for promises to "clean up Washington".

Jim

Patrick, good point. The bill did not continue energy credits (solar, window replacement, more effecient water heaters, etc) expiring in a couple of weeks, but it does start a study on the effectiveness of these programs!!!!

To the poster earlier though, the mandatory renewable energy portion was on utilities. Germany started a program for national renewable energy with a target of 20% (ours was 15%) and it looks like they are going to hit 30% (re: Nova program titled 'Saved by the Sun'). The German approach was to pay anyone for electricity (at above market prices - but not that much above peak pricing) produced. Now they have their own industry for producing PV panels and the cost is coming down.

Jim

Patrick, good point. The bill did not continue energy credits (solar, window replacement, more effecient water heaters, etc) expiring in a couple of weeks, but it does start a study on the effectiveness of these programs!!!!

To the poster earlier though, the mandatory renewable energy portion was on utilities. Germany started a program for national renewable energy with a target of 20% (ours was 15%) and it looks like they are going to hit 30% (re: Nova program titled 'Saved by the Sun'). The German approach was to pay anyone for electricity (at above market prices - but not that much above peak pricing) produced. Now they have their own industry for producing PV panels and the cost is coming down.

Van

Hybrid electic vehicles like the Volt will change the game, and if we look back on this bill in 2012, it will be seen in the same light we look at the bill for Trident Submarines passed in 1988, by those unable to see the future.

Henrik

Treehugger

100% conversion is not realistic but the US can get close about 80% by using corn for export and corn for animal feed to produce ethanol. That would give you about 30 billion gallons of corn ethanol with the current corn harvest and the current conversion rate. As I said corn for animal feed can be replaced by distiller grains from this ethanol production. $2 per gallon of ethanol is very realistic. It competes with gasoline at about $3 gallon. Forthcoming second generation flex fuel vehicles will not only be able to run on E85 they will also be able to take advantage of the much higher octane number in E85 than in pure gasoline. This will mean that you will be able to run about the same mpg with E85 or pure gasoline despite of the lower energy content of E85. That will drive the pump price of E85 and pure gasoline towards each other. Each time the price of gasoline increases so can the price of E85. This direct effect is more important than the indirect effect of the cost of natural gas currently used for ethanol production. Plus that natural gas can be substituted with electricity from renewable energy as soon as the price of that electricity is competitive with the price of natural gas. In ten years from now that is an almost sure thing as the price of natural gas increases and the price of renewable energy decreases year after year.

Jim G.

The sad part is this is about as good as we are going to get from our political system today. If Hilary is elected and there is still a Democratic Congress, a few more policies that got scrapped along the way, such as extension of the renewable energy tax credit, may make it into law. But given the intensity of political opposition to just about any useful policy, the real changes will probably have to emerge not from Washington and Detroit but from California, both its government and its entrepreneurs. At least serious capital is flowing this direction for the first time since the 70's.

Patrick

Hmmm redirecting corn from exports to ethanol...the displaced oil imports should easily cover the loss of export money and you could probably lift subsidies from corn as the price of it increases.

Dave

I would like to know what the 100 members of congress that voted against this bill were thinking. Evidently they are not effected by high gas prices or do they want to be independent from foreign oil. 2020 seems like a long, long time. How many trillions of dollars will the oil companies make in the mean time. Couldn't the big car manufacturers make a car that doesn't run on oil and gasoline by the year 2020?

joe

Treehugger, from what I've read about the energy bill, it seems to place an emphasis on cellulosic biofuels. Cellulosic ethanol could be made from agricultural waste like corn cobs and wheat stover, thereby giving farmers multiple income streams for each crop... thereby encouraging increased production. As someone mentioned before, even 1st generation corn ethanol produces distillers grains(animal feed) as a co-product. Blaming high food prices solely on corn ethanol is more than a bit disingenuous. Food prices are also being affected by factors like increased overseas demand, the Australian drought, higher fuel prices, etc. If I understand the bill's provisions correctly, it would reduce the current corn ethanol subsidy to 46 cents per gallon while increasing the cellulosic tax credit to $1.01 per gallon. Isn't that enough of a nudge towards cellulosic fuels?

Stan Peterson

Real energy work was done in legislation in 2001 (battery research subsidies, and nuclear subsidies to fund GEN III+ standard designs), 2004, (funding the Last scientific Fusion and at the same time the First engineering experiment, ITER) and 2005, (reformed regulation for erecting and operating Nukes). This wasn't glamorous legislation but it was fundamental legsilation.

With all the real work accomplished, this bill is largely symbolic.

Much ado about nothing.

Irrelevant subsidies for bio fuels that are uneconomic but will buy votes. This generation's version of Carter's ill-fated Synfuels corporation, and about as enduring. Irrelevant mileage standards, for a hydrocarbon based auto fleet, that is already doomed to be augmented/replaced before the regulations bite.

The sane people had to throttle the renewables mandates for electricity that would have disrupted the planned modernization of the electric utilities.

That very delayed and necessary modernization is planned and in progress to provide the electrons for the new electric auto fleets. That mandate could have been extremely disruptive and delayed/doomed the coming of the electric auto, for a decade.

But sanity prevailed. Other wise the mischief is the usual political petty corruption; subsidies to rentiers; mostly farmers and bio fuels makers.

America has largely addressed and responded to the price cues of the oil crisis. For example the American steel industry has essentially been completely rebuilt on a much greater efficiency. Efficiency based on "mining" scrap steel and melting it in electric furnaces instead of starting with 3% iron ore.

The auto industry in America has rationalized and modernized extensively, using lots of energy saving processes. It manufactures more cars and trucks than it ever did, in mostly new factories, erected in the last 20 years, even if the name plates now includes numerous foreign names and innovations developed in many places in the world. The autos emerging from the factories are rapidly equaling the best in the world.

American GDP is up massively in the past 30 years, essentially doubling or more, yet American industries collective CO2 emissions are slightly lower or unchanged from the early 70s, such is the magnitude of the efficiency gains.

American CO2 increases come from more autos, driving more miles; and modestly more from the Commercial and Residential heating from more homes and offices. America has invested in more efficient houses and commercial establishments in the past 30 years. More insulation and more efficient furnaces and HVAC have all contributed.

Europe still believes in district heating with the losses that come from running steam pipes under the streets to heat many buildings, wanted or not. Co generation can be efficient but not as efficient in comparison as it used to be; and a lot less flexible or easy to modernize. Massive investment in conforming to revised building and appliance standards has had an effect also in the USA.

Even with the growth in autos and miles driven, the CO2 emissions have risen even as real pollutants have plummeted. World technology (and that is American technology) since we believe in Schlumpeter's "Creative Destruct" is rapidly advancing on a now technologically ready substitution of electrons for hydrocarbons in the transportation sector. And the electrons will come from splitting atoms rather than oxidizing hydrocarbons, and eventually from fusing atoms.

Even without the massive transportation conversion that is coming, North America is already a net Carbon sink. absorbing more CO2 from the atmosphere than it emits. If only the rest of the world was as successful.

joe

Speaking of carbon sinks, a cellulosic feedstock like say... prairie grasses... can actually be carbon negative. The University of Minnesota did a 10 year study with various mixtures of native prairie plants and found that the returned energy per acre was 238% higher than any monocrop. Further, the native plants needed very little fertilizer, no irrigation, and after planting once could be harvested for at least ten years. The icing on the cake was the fact that the root systems sequestered about 1.2 tons of atmospheric CO2 per acre per year. The prairie plant crops could also be grown on marginal land that was not suitable for corn or wheat.

Pyrolysis biofuel is another type of promising technology that doesn't compete with food crops. Some variations of this method use woodchips and produce a valuable co-product called biochar that can be used to improve soil fertility.

Then there's algae biodiesel, plasma conversion of municipal waste to biofuels, etc, etc. To make a long story short, "biofuel" is more than just corn ethanol.

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