Jason Barton

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Archive for the ‘RFS’ tag

EPA reaffirms sugarcane biofuel is advanced Renewable fuel with 61% less emissions than gasoline

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This is huge. It blows open the door for vast increases in U.S. importation of Brazilian ethanol. I’m not sure if this is positive or negative, but it makes the work I’m doing, investigating the possible impacts of this increased importation, that much more pressing.

There is currently a tariff on imported ethanol here in the U.S. of $0.54 per gallon. We are still the largest importers of Brazilian ethanol, but it is a small fraction of both their production and our biofuels use. This ruling makes it increasingly likely that the U.S. will have to do something to lower or at least suspend this tariff in order to meet the Renewable Fuel Standards (RFS).

The Energy Independence and Security Act, which created the RFS (much discussed on this site) was signed into law by George Bush in 2007. Not only does it mandate increasing amounts of renewable fuels, mostly ethanol, in our fuel supply stretching out to 36 billion gallons in 2022, it also mandates use of “advanced biofuels,” which must reduce greenhouse gas emissions (GHGs) by at least 50% compared to gasoline.

For now, the only fuel that may be able to satisfy that mandate is Brazilian sugarcane ethanol.

There has been much debate regarding which fuels accomplish this GHG reduction, with many reliable models both including and excluding U.S. corn ethanol, while almost all of them maintain that Brazilian cane ethanol does indeed reduce GHGs by at least 60%, with some claiming it reduces emissions by as much as 80%.

This ruling by the EPA doesn’t necessarily end the debate, but it makes it law that, according to U.S. policy, Brazilian cane ethanol is the only renewable fuel available today on sufficient scale to accomplish this objective.

I’ll be in Brazil later this month to gather more data, mostly asking the folks there what they think.

02/03/2010

The U.S. Environmental Protection Agency (EPA) has confirmed that ethanol made from sugarcane is a low carbon renewable fuel, which can contribute significantly to the reduction of greenhouse gas (GHG) emissions. As part of today’s announcement finalizing regulations for the implementation of the Renewable Fuel Standard (RFS2), the EPA designated sugarcane ethanol as an advanced biofuel that lowers GHG emissions by more than 50%.

Read the entire article here.

Standing at the Crossroads: The Biofuels Industry in Colorado

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One of the more important points in this article is that “the Federal Government should let the marketplace determine who wins this race.” George Bush already laid out the framework in his 2007 update of the Renewable Fuel Standards, and it has just recently been clarified with the EPA’s RFS2 decision.

Under the RFS, the U.S. will need to increase use of renewable fuels, up to 36 billion gallons in 2022. Furthermore, the use of corn ethanol is capped at 15B gallons starting in 2015, meaning that those Colorado companies with the most economically, environmentally, and energetically efficient cellulosic and other advanced bioenergy technologies will have a place in the market.

As for the need for qualified managers with extensive technical understanding of bioenergy, as well as the ability to convey it’s merits to potential buyers and the public, I’m currently in Brazil working in their bioenergy sector, but I’ll be back in Colorado at the beginning of May.

February 1st, 2010

Colorado’s biofuels industry is faring better than elsewhere in the country, thanks to local entrepreneurial spirit, the area’s universities, the National Renewable Energy Lab (NREL) coupled with Governor Ritter’s early leadership in the New Energy Economy. However, bolder and more sustained actions are required if the state’s vision of becoming the cleantech version of Silicon Valley is to be realized. Colorado’s biofuels industry stands very much at a crossroads.

[…]

As an example, consider alternatives to traditional diesel fuel. At last count there were six different feedstock-technology pathways being developed by various companies across the US. How can federal policy makers know with any certainty [which technology] will ultimately win the race for a conventional diesel substitute? Maybe one is better in certain climates and geographies while another elsewhere. The federal government should let the marketplace determine who wins this race. Similar complexity exists for ethanol, butanol and other fuel alternatives.

[…]

Two-thirds of biofuels firms in Colorado believe enhancing the availability/supply of skilled employees is needed to build a robust clean-energy sector in the Front Range. Views vary, however, as to which functional areas (e.g. engineers, sales, technical) are most pressing, but expanding the pool of talented managerial staff emerges as the top priority.

Read the entire article here.

Ethanol Recovery Faces Oversupply Repeat

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A sad but probably inevitable reality not mentioned in this story is that many of those “smaller producers” to be “flushed out” if this glut does occur, are those refineries owned by farmers and/or farmer cooperatives. Valero and ADM have more than enough cushion to ride out those downturns until profits return, which is almost assured as the Renewable Fuel Standards call for increasing amounts of ethanol use, up to 36 billion gallons in 2022. Groups of farmers who band together to build a small refinery to maintain more of the profits from value added products such as ethanol have a larger positive impact on the local economy in terms of job creation and revenue generation[1], but have less capital to continue operating when times get tough, as they did late in 2008, and may do again next year according to this article.

DECEMBER 21, 2009

By MARA LEMOS STEIN

With ethanol margins staging a recovery this year, it was only a matter of time before producers were encouraged to restart idled facilities and expand output to join the bonanza.

The latest addition to the supply flow—Valero Energy, which announced last week that it will bring three facilities back online—adds to concerns that if too many people come to the party some of them will find the punch bowl emptying out fast.

“There are significant volumes of both idled and under-construction assets, and if operators are emboldened by the recent ethanol margins, we could see less-than-optimal assets begin to be reintroduced to production,” Ian Horowitz, an analyst at New York-based securities brokerage firm Rafferty Capital Markets, said in a recent report. “Bottom line: we are concerned that we could possibly see oversupply of ethanol in the second half of 2010.”

Steady ethanol prices and relatively low corn and natural-gas prices are putting producers in the black for the first time since mid-2008. The fact that various producers in financial distress suspended production since then has supported ethanol prices even as demand for gasoline, in which ethanol is blended at a 10% rate in the U.S., dropped during the economic slowdown.

Read the entire article here.


[1] Low and Isserman, 2008. “Ethanol and the Local Economy: Industry Trends, Location Factors, Economic Impacts, and Risks.” Econ. Dev’t Quarterly.

Written by Jason

December 21st, 2009 at 8:14 am