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National Research Council report finds it unlikely the US will meet cellulosic biofuel mandates absent major innovation or a change in policies

In the absence of major technological innovations or policy changes, the United States is unlikely to meet cellulosic biofuel mandates under the current Renewable Fuel Standard (RFS2) by 2022, according to a new report from the National Research Council.

Further, the report found, only in an economic environment characterized by high oil prices, technological breakthroughs, and a high implicit or actual carbon price would biofuels be cost-competitive with petroleum-based fuels.The report also suggests that RFS2 may be an ineffective policy for reducing global GHG emissions because the effect of biofuels on GHG emissions depends on how the biofuels are produced and what land-use or land-cover changes occur in the process.

In 2005, Congress enacted the Renewable Fuel Standard as part of the Energy Policy Act (EPAct) and amended it in the 2007 Energy Independence and Security Act (EISA). The amended standard mandated that by 2022 the consumption volume of the renewable fuels should consist of:

  • 15 billion gallons of conventional biofuels, mainly corn-grain ethanol, with at least 20% reduction in lifecycle greenhouse gas emissions (GHG) compared to petroleum-based gasoline or diesel;
  • 1 billion gallons of biomass-based diesel fuel that achieves a lifecycle GHG threshold of at least 50%;
  • 4 billion gallons of advanced renewable biofuels, other than ethanol derived from cornstarch, that achieve a life-cycle greenhouse gas threshold of at least 50%; and
  • 16 billion gallons of cellulosic biofuels produced from wood, grasses, or non-edible plant parts—such as from corn stalks and wheat straw—that achieve a lifecycle GHG threshold of at least 60%.

All volumes, except for volumes of biomass-based diesel, are in gallons of ethanol-equivalent. The consumption mandate for biomass-based diesel is to be met on a biodiesel-equivalent basis.

The committee that wrote the report said that production of adequate volumes of biofuels are expected to meet consumption mandates for conventional biofuels and biomass-based diesel fuel. However, whether and how the mandate for cellulosic biofuels will be met is uncertain.

Because cellulosic biofuel is a developing industry, there are multiple economic, policy, environmental, and social barriers to producing 16-20 billion gallons of ethanol-equivalent cellulosic biofuels to meet the consumption mandate of RFS2. Resolving most of the barriers is necessary to achieving RFS2, and many of them are interrelated as illustrated by the examples below.

A key barrier to achieving RFS2 is the high cost of producing biofuels compared to petroleum-based fuels and the large capital investments required to put billions of gallons of production capacity in place. As of 2010, biofuel production was contingent on subsidies, tax credits, the import tariff, loan guarantees, RFS2, and similar policies. These policies that provide financial support for biofuels will expire long before 2022 and cannot provide the support necessary for achieving the RFS2 mandate. Uncertainties in policies can affect investors’ confidence and discourage investment. In addition, if the cellulosic biofuels produced are mostly ethanol, investments in distribution infrastructure and flex-fuel vehicles would have to be made for such large quantities of ethanol to be consumed in the United States.

Given the current blend limit of up to 15-percent ethanol in gasoline, a maximum of 19 billion gallons of ethanol can be consumed unless the number of flex-fuel vehicles increases substantially. However, consumers’ willingness to purchase flex-fuel vehicles and use E85 instead of lower blends of ethanol in their vehicles will likely depend on the price of ethanol and their attitude toward biofuels. Producing drop-in biofuels could improve the ability to integrate the mandated volumes of biofuels into US transportation, but would not improve the cost-competitiveness of biofuels with petroleum-based fuels.

One opportunity to reduce the cost of biofuels is to reduce the cost of bioenergy feedstock, which constitutes a large portion of operating costs, and increase the conversion efficiency from biomass to fuels. Research and development to improve the on-farm yield of bioenergy feedstocks through breeding and biotechnology and conversion efficiency in biorefineries would reduce the cost of biofuels production and potentially reduce the environmental effects per unit of biofuel produced. However, this opportunity will not be realized if farmers and landowners are unaware of the market opportunities for bioenergy feedstocks or are unwilling to participate in that market. If competition for bioenergy feedstocks intensifies because of low supply, the price will likely increase.

Given the numerous barriers outlined...the committee judges that the consumption mandate for cellulosic biofuels is not likely to be met by 2022 without substantial improvement in technologies in the next few years and a stable economic and policy environment to encourage accelerated demonstration and deployment of cellulosic biofuels.

—Renewable Fuel Standard: Potential Economic and Environmental Effects of US Biofuel Policy

Currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel. The capacity to meet the renewable fuel mandate for cellulosic biofuels will not be available unless the production process is unexpectedly improved and technologies are scaled up and undergo several commercial-scale demonstrations in the next few years. Additionally, policy uncertainties and high costs of production may deter investors from aggressive deployment, even though the government guarantees a market for cellulosic biofuels up to the level of the consumption mandate, regardless of price, the report says.

Greenhouse gas emissions. The extent to which using biofuels rather than petroleum will reduce greenhouse gas emissions is uncertain, the report says. How biofuels are produced and the changes in land use or land cover that occur in the process affect biofuels’ impact on such emissions. Dedicated energy crops will have to be grown to meet the mandate, which will probably require conversion of uncultivated land or the displacement of commodity crops and pastures.

If the expanded production involves removing perennial vegetation on a piece of land and replacing it with an annual commodity crop, then the land-use change would incur a one-time greenhouse gas emission from biomass and soil that could be large enough to offset benefits gained by displacing petroleum-based fuels with biofuels over subsequent years. Such land conversion may disrupt any future potential for storing carbon in biomass and soil. In addition, the renewable fuel standard can neither prevent market-mediated effects nor control land-use or land-cover changes in other countries.

Economic effects. The best cost estimates of cellulosic biofuel are not economical compared with fossil fuels when crude oil’s price is $111 per barrel. Furthermore, absent major increases in agricultural yields and improved efficiency in converting biomass to fuels, additional cropland will be required for growing cellulosic feedstock. This could create competition among different land uses and, in turn, raise cropland prices.

In addition, achieving the renewable fuel standard would increase the federal budget outlays, mostly as a result of increased spending on grants, loans, loan guarantees, and other payments to support the development of cellulosic biofuels and foregone revenue as a result of biofuel tax credits.

Moreover, nutritional and other income assistance programs are often adjusted for changes in the general price level. If food retail prices go up, expenses could increase for the Supplemental Nutrition Assistance Program and Special Supplemental Assistance Program for Women, Infants, and Children, as well as for much larger income assistance programs, such as Social Security, military and civilian retirement programs, and Supplemental Security Income Program. Nevertheless, given that biofuels are only one of many factors affecting food retail prices, it will be hard to attribute any future increases in program costs to the standard alone.

Environmental effects. Although biofuels hold potential for providing net environmental benefits compared with using petroleum-based fuels, specific environmental outcomes from increasing biofuels production to meet the renewable fuel consumption mandate cannot be guaranteed. The type of feedstocks produced, management practices used, land-use changes that feedstock production might incur, and such site-specific details as prior land use and regional water availability will determine the mandate's environmental effects, the report says. Biofuels production has been shown to have both positive and negative effects on water quality, soil, and biodiversity. However, air-quality modeling suggests that production and use of ethanol to displace gasoline is likely to increase air pollutants such as particulate matter, ozone, and sulfur oxides.

In addition, published estimates of water use over the life cycle of corn-grain ethanol are higher than petroleum-based fuels.

Barriers and opportunities. Key barriers to achieving the renewable fuel mandate are the high cost of producing cellulosic biofuels compared with petroleum-based fuels and uncertainties in future biofuel markets, the report finds. Biofuel production is contingent on subsidies, the nature of the mandate, and similar policies.

Although the mandate guarantees a market for the cellulosic biofuels produced, even at costs considerably higher than fossil fuels, uncertainties in enforcement and implementation of the mandated levels affect investors’ confidence and discourage investment. To reduce costs of biofuels, the committee suggested carrying out research and development to improve feedstock yield and increasing the conversion yield from biomass to fuels.

The study was sponsored by the US Department of Agriculture, US Department of Energy, and US Environmental Protection Agency. The National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies. They are independent, nonprofit institutions that provide science, technology, and health policy advice under an 1863 congressional charter. Panel members, who serve pro bono as volunteers, are chosen by the Academies for each study based on their expertise and experience and must satisfy the Academies' conflict-of-interest standards. The resulting consensus reports undergo external peer review before completion.

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Comments

HarveyD

Over $600B/year in direct and indirect subsidies are given to fossil fuel production. Will ethanol and bio-fuels get the same or even more in the future.

Wouldn't be wiser to:

1. transfer 50% of all those subsidies to double the efficiency of ICE from 25% to 50+%.

2. transfer the other 50% to promote the purchase of partly and fully electrified vehicles and to scrap over sized gas guzzlers..

Treehugger

Harvey

Where do you get this 600B$/year of subsidies ? I don't think it is even close to this, even if you count the wars in middle-east.

But anyway it sounds clear that biofuel are not a solution to significantly displace oil consumption, nothing to day show evidence that biofuel will help in anything at this point. Putting a gaz tax will be wayyy more effective to reduce oil addiction and finance innovation, in more efficient engine and electrification.

Account Deleted

It is too early to say that the renewable mandate for cellulosic ethanol is not doable. Poet energy is right now building a 25 million gallons per year cellulosic facility and they have spend over ten years developing and pilot testing the equipment that will make this plant possible. Poet expects to make cellulosic ethanol for 2 USD a gallon at that facility. The cost breakdown is roughly as follows:

50 cents per gallon for enzymes (this is what Novozymes charges for their latest cellulosic enzymes).
80 cents for capital expenses (a corn based ethanol plant has capital expenses of 25 cents per gallon).
10 cents per gallon for labor (about 50 people at the facility making 2.5 million USD).
60 cents per gallon for biomass (based on about 55 USD per dry ton of biomass and a conversion rate of 90 gallons per dry ton).

The remaining uncertainties are about whether the capital cost can be kept below 80 cents per gallon and whether the conversion rate of 90 gallons of ethanol per ton of biomass is possible in scale. These uncertainties will be answered by Poet when its facility is up and running in 2013. When Poet starts building a second cellulosic plant we will know they have succeeded in making cellulosic ethanol at 2 USD per gallon. I guess it could happen as early as 2015.

Globally almost 2 million barrels of biofuels are produced per day. However, with cellulosic ethanol at 2 USD per gallon 20 million barrels per day should be possible provided that oil stay above 100 USD per barrel.

Herm

no talk of making ethanol or methanol out of coal or NG?.. those sources were biological originally.

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