EIA Forecasts Significant Shortfall in Cellulosic Biofuel Production Compared to Target Set by Renewable Fuel Standard
|Under the EIA AEO2008 forecast, a shortfall in cellulosic ethanol production will trigger an adjustment of the RFS target. Click to enlarge.|
The US Energy Information Administration (EIA) is forecasting a significant shortfall in the production of cellulosic biofuels required to meet the targets of the Renewable Fuel Standard established in the Energy Independence and Security Act of 2007 (EISA2007).
In testimony before the US Senate Committee on Energy and Natural Resources today, EIA Administrator Guy Caruso provided a summary of the agency’s Annual Energy Outlook 2008 (AEO2008) forecast, revised to factor in the different provisions of EISA2007, including the new RFS target of 36 billion gallons by 2022 and new CAFE requirements.
While the situation is very uncertain, the current state of the industry and our present view of projected rates of technology development and market penetration of cellulosic biofuel technologies suggest that available quantities of cellulosic biofuels prior to 2022 will be insufficient to meet the new RFS targets for cellulosic biofuels, triggering both waivers and a modification of applicable volumes as provided for by paragraphs 7(D) and 7(F), respectively, of Section 211(o) of the Clean Air Act as amended by EISA2007.
The modification of volumes reduces the overall target in 2022 from 36 billion gallons to 32.5 billion gallons. The modified cellulosic biofuel requirement is projected to be met by a combination of domestic cellulosic ethanol, imported cellulosic ethanol, and biomass-to-liquids diesel, but the specific mix is again highly uncertain.—Guy Caruso
Overall, the EIA sees ethanol use grows from 5.6 billion gallons in 2006 to 24.3 billion gallons in 2030 (more than 16% of total gasoline consumption by volume).
Ethanol use for gasoline blending grows to 13.3 billion gallons and E85 consumption to 11.0 billion gallons in 2030. The ethanol supply is expected to be produced from both corn and cellulosic feedstocks, with corn accounting for 15.0 billion gallons of ethanol production in 2030. The AEO2008 reference case also expects strong growth in ethanol imports after 2010, reflecting the pending expiration of the tariff on imported ethanol in January 2009.—Guy Caruso
|Transportation dominates liquid fuel use. Click to enlarge.|
The forecast puts biodiesel use at 1.3 billion gallons in 2030 (about 1.6% of total diesel consumption by volume), but the consumption of diesel liquids produced from biomass (BTL) at to 4.2 billion gallons in 2030, 4.9% of total diesel consumption by volume.
Other transportation-related highlights in the Administrator’s summary of the revised AEO2008 forecast include:
The total consumption of liquid fuels will grow at an average annual rate of 0.4% in the AEO2008 reference case, from 20.7 million barrels per day in 2006 to 22.8 million barrels per day in 2030 led by growth in transportation uses, which account for 68% of total liquid fuels demand in 2006, increasing to 73% in 203O. Improvements in the efficiency of vehicles, planes, and ships are more than offset by growth in travel.
Based on the new CAFE regulations, the average in-use fuel economy for the stock of light-duty vehicles in 2030 increases to 28.0 mpg, 38% above its 2006 level.
US crude oil production grows from 5.1 million barrels per day in 2006 to a peak of 6.3 million barrels per day in 2018, primarily due to increased production from the deep waters of the Gulf of Mexico and from the expansion of enhanced oil recovery operations in onshore areas supported by higher crude oil prices. Domestic production subsequently declines to 5.6 million barrels per day in 2030, as increased production from new smaller discoveries is inadequate to offset the declines in large fields in Alaska and the Gulf of Mexico.
Total domestic liquids supply, including crude oil, natural gas plant liquids, refinery processing gains, and other refinery inputs (e.g., ethanol, biodiesel, BTL, and liquids from coal) grows from 8.3 million barrels per day in 2006 to 10.5 million barrels per day in 2030.
The EIA forecasts as its base case real world crude oil prices (defined as the price of light, low-sulfur crude oil delivered in Cushing, Oklahoma, in 2006 dollars) decline gradually from current levels to $57 per barrel in 2016 ($68 per barrel in nominal dollars), as expanded investment in exploration and development brings new supplies to the world market. After 2016, real prices begin to rise, as demand continues to grow and higher cost supplies are brought to market. In 2030, the average real price of crude oil is $70 per barrel in 2006 dollars, or about $113 per barrel in nominal dollars.
A complete copy of the revised tables for the reference case will be posted on the web site on 5 March 2008. A revised version of the Overview to the AEO2008 will be posted in the next few weeks.