## 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.  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: ### Comments Great news. Thanks. Notice they don't project we will get much ethanol from corn. Perhaps because they figure it will become cheaper to produce ethanol from the other biomass. But they urge celluosic be subsidized to compete with the corn ethanol. That may be a contradiction or it mean that since corn is cheaper now it is impeding celluosic progress. Either way the graph says 'ded. energry crop' is going to be the big source - I guess that means switchgrass. I don't get this push for E85. E5 or E10 can raise engine power, be used in existing cars, and would require all the ethanol we can make for a decade. So why E85 when all the ethanol we make already has a market? E85 is a feel good number. GM has pushed it for their big SUVs to get the CAFE loophole offset, so politicians just think it sounds good I guess. The average voter and taxpayer has heard about Brazil and thinks if they can do it we can do it. The energy independance phrase keeps coming back. I would rather see E10 nationwide at every pump than E85 in a few towns in the midwest. We can have both, but there are only 5 million cars out of more than 100 million that can take E85 and a lot of them are gas guzzling trucks and SUVs that get lower mileage on E85. It is like someone said, when it comes to politics, don't confuse them with the facts. "K" has got it right. We should be mandating at least E5 in all states right now; to go into effect as soon as production levels can supply this level of demand. Then, move to E10 as soon as increased production levels can supply that level of demand. Similar efforts should also be implemented right now with Bio-diesel. Worry about E85 further down the road. I use E10 exclusively in both a '97 Cherokee and an '04 Grand Caravan; but I have to search for it. Both vehicles start easier and run cleaner throughout the varying seasons here in southeast Michigan. Geez! Is it all that much more difficult to produce butanol? I can't afford to replace all the fuel lines etc in my vehicle. What's with all this governmental support for ethanol and never a word abour butanol? Who's being paid off here? Certainly not the avaerage citizen paying taxes. Grr. Bob: The fact is that ethanol has a few decades head start on butanol, and it's currently easier to produce. However, I have seen butanol mentioned more and more often recently as an alternative fuel. Considering its superior energy content and full-replacement potential for gasoline, I hope that it's more than just talk. BP and DuPont are supposed to conduct some marketing experiments with butanol in the UK this year, I think. Mandate E10 and make the oil company worry about were to get it.there may be more than on soultion cellulosic,corn switchgrass alage. differnt parts of the country have different properties. we(USA) would have to produce 3 times the amount just to get to E10. worrying about E85 is silly. I did a search for "butanol" in Google News and came up with this: "Unsung biofuel gets backers". It's a quickie and worth a read. "We should be mandating at least E5 in all states right now." With corn ethanol barely breaking even on energy I don't see how it makes much sense to ship it 1,500 miles to Florida and Maine until every gallon of gas sold in the Midwest is E10. K, The trajectory of corn prices moving upwards, and increased C2H5OH production coming online in the next few years stoking even more demand. By 2009, half of US corn production could go towards ethanol. Thus, celluosic ethanol may become competitive with grain ethanol, by 2010, perhaps w/out subsidies. _This assumes you go the enzyme route. If you go BTL (gasify), the breakeven is close at hand (in the US). The main obstacles to overcome are the very high initial capital investment costs for these plants, and to a smaller degree, setting up a supply and customer chain. This whole ethanol thing seems like a giant diversion to me. Many people have pointed out the shortcomings of trying to use corn to make ethanol, and the cellulosic stuff isn't even out of the laboratory yet. In the meantime we *could* be making big strides in improving fuel economy of vehicles. A 10% increase in fuel economy buys us effectively the same amount as converting to E10 nationwide. But Detroit doesn't want to hear about anything like that - they want to keep pushing the same old fuel-hogs and use the CAFE loophole to put some green lipstick on those pigs. We went through the numbers and E5 takes about 25% of the corn crop and as Allen points out E10 would be about 50%. That seems more than a bit high to me, so if we can go from E5 to E10 with cellulose it, might be better. I like gasfication of stover, rice straw, wheat straw and such. The one thing there is consistency of feed stock. The process has to be tuned to consistent stock. But if you create a supply chain, this might not be a problem. eric: Even if you did raise fuel economy standards by 10%, that doesn't change the cars and SUVs that are already on the road. It takes a long time for such a changover to have much effect. As for "Detroit doesn't want to hear it", given the Chevy Volt concept, increased hybrid offerings, and so forth, I think they've gotten the message loud and clear. It just takes years to develop new vehicles and drivetrains. Toyota and Honda have a head start, true. But if they want to stay in business, the Big 2.5 will have to catch up. The Chevy Volt and a couple of hybrid offerings from Detroit is only a sideshow. GM/Ford pocketbooks are banking on the marketing the fallacy of E85. The Chevy Volt and a couple of hybrid offerings from Detroit may be only a sideshow. GM/Ford and their friends in gov. are banking on marketing the fallacy of E85. (edit) GM may be faking it, but if they are, all it will take is one more good spike in oil prices to sink them. I think we can be sure that Toyota and Honda are not faking it. ABCNews had a video on the car show. The take was that this is important and that they have to get it right. GM and Ford know their futures are on the line. They have been slackers before, changing their ways only to fall back to the same ol' same ol'. Who knows if the transformation will stick, but they are serious about making car people want to buy and not just trying to convince them to buy what they have. Most matter is made of Carbon and Hydrogen. When we send our refuse as feedstock for Plasma breakdown you get a Syngas rich in CO and H2. F/T this to ethanol and you get a renewable fuel supply. NYC produces about 50,000 Ton of garbage a day. If we plasma F/T this feedstock it would power the entire city!!! The State of California seems to be pursuing a more rational and science based path in this area. They are calling for reductions in co2 for fuels. However, it must be demonstrated that actual reductions are being made throughout the full cycle of these fuels. Instead of just blindly assuming that ethanol significantly cuts co2, California requires that companies show the reduction while considering all the fossil fuel inputs required to get that fuel to the wheel. The Governors have chose to push ethanol in a manner intended to convince voters that they are really doing something meaningful about energy policy. It is just a feel good policy that will leave all us taxpayers paying the bag. And that includes those who drive very little or not at all. I wondered how the politicians were going to subsidize cellulosic. They are hedging their bets. Instead of simply subidizing the technology that is supposedly the future of ethanol, they have decided to keep the subsidy on corn ethanol and subsidize cellulosic ethanol at even a greater rate. Instead of spending 100+ $$billion a year on unjustified costly oil wars, USA has what it takes to put an end to all future oil driven wars by investing the same 100+$$ billions/year for the next 10 to 20 years to: 1) Quickly develop and locally mass produce advanced quick charge affordable lower cost batteries. 2) Quickly develop and mass produce affordable PHEVs with 100 mpg instead of the current ICE 20 mpg to reduce fuel consumption by up to 80%. 3) Quickly develop and locally mass produce affordable alternative fuels such as cellulosic ethanol and biobutanol in sufficient quantities to stop all Oil imports by 2020. 4) Quickly develop and install lower cost alternative electrical energy sources such as wind, solar, waves and state of the art nuclear power plants to the level required to operate 200+ million PHEVs and EVs and to replace some of the most polluting coal fired power plants. A progressive but meaningful carbon tax (+ an end to costly Oil wars) could easily finance this national job creation, environment protection, local production, economic program. However, the current adminstration seems to go the other (wrong) way with more and more budget and trade deficits and bigger oil wars. I'm getting a bit of a sinking feeling about all of this. It seems with ethanol, governments and groups are betting on a technology that really isn't ready yet. Cellulose-based ethanol reminds me of fusion, a technology that was supposed to be ready in 30 years---thirty years ago. Once we can make a full-scale CE plant, then I'm game. And, I'm sorry, but demands to "quickly develop" makes me giggle. Working in a laboratory as long as I have, I know that technological improvement is not proportional to the amount of money or politics involved....unless I'm on a funding round, of course. Harvey D., I said it once and I'll say it again. Yes Iraq is very expensive, but Afghanistan is underfunded and undermanned. Even if Iraq were to right itself tomorrow, and 50% (~65,000) of our forces came home fall 2007 (nevermind the surge), we will need to rectify the deteriorating situation on the Afghan front. We need lots of men, money and equipment to stabilise the southern and eastern areas. Some of the additional forces/spending would be from NATO, and other OEF allies. Ultimately, we need to continue to build up the Afghan National Army, the police, and national/provincial govts. It will take lots of time (beyond 2010), money (>$100 billion) and effort. 20+ years of war and opium poppies have, and are stunting peace and development.
_Points 1-4 are good, though 200 million PHEV might stretch global lithium supply. Perhaps carbon ultracapacitors may fill in, when they become cheap, and capable enough. As for carbon tax, raise the gas tax to the point that it covers actual govt road spending. Currently, the federal gasoline and diesel taxes cover roughly half of the DOT highway spending. The rest is from elsewhere (debt). It may be part of a PayGo (pay as you go) spending bill. Beyond covering this shortfall, "A progressive but meaningful carbon tax" might take a different legislative approach to get through. It might not survive in Congress right now, but it might in, or pass after 2008. That is unless we get a hurricane season like 2004, '05, 1933, '38, or '50.

tthoms: Quickly was met to be 10 to 20 years. With hundreds of billions $$a year you can go to Mars, build Atomic bombs, have 10 Marshall plans etc in the same time frame. Why would it be impossible to finance a 10 to 20 year clean energy program instead? Call it a post-industrial revolution if you have do, but it will have to be done sooner or latter. USA could be the leader. Europe, Japan, China will do it. Don't forget that private industry would contribute many times more. The government/public contributions is to get the projects started/going and offset the initial high cost differentials. We would be well on the way if oil wars billions$$$had been used for such projects for the last 6 years. Yes, the$500 billion spent in Iraq would have bought us great investments in renewable energy instead of wasteful deadly spending half way around the world. Just be careful who you vote for next time.

SJC: Plus another \$500 billions from a progressive carbon tax, many of us would be driving GM-Ford-Chrysler US made PHEVs powered by 20 000 new wind mills + cellulosic ethanol/butanol today.

Bad governance has been responsible for the downfall of many strong countries (and even empires) before.

Will history repeat itself again? Oil barons may see to it.

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