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The Race for BioFuels

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BioFuels are No Longer Just a “Field of Dreams”

July 13th 2009

Energy / Environment - Biofuel field
BioFuel Farm

In the movie "Field of Dreams," Ray Kinsella (Kevin Kostner) hears a voice saying "if you build it, they will come." Following his dream, he builds an elaborate baseball stadium in the middle of an Iowa corn field, and lo and behold, the Chicago Black Sox return from the afterlife to play ball on his field, and his stands are soon filled with fans. For more than a year, a number of proponents of biofuels have suggested a similar approach for solving America’s energy crisis: require auto manufacturers to produce "flexible fuel" vehicles that can run on alcohol fuels, and the demand that these vehicles will create for alcohol fuels will result in the production of additional billions of gallons of alternative liquid fuels that will replace gasoline and help end our nation’s dependence on foreign oil. Rather than "build it, they will come," their approach has been "make Detroit build cars that can run on alternative fuels, and the alternative fuels will come."

Until now, the problem with achieving this vision has been that officials in Washington have been slow to levy such a mandate on the auto industry and on American auto buyers, based merely a dream, and absent a guarantee, that these alcohol fuels will be produced. Just this past May, the House Energy and Commerce Committee resisted incorporating in the House climate bill such a mandate for flexible fuel vehicles—proposed by Congressman Eliot Engel in the form of the Open Fuel Standards Act of 2009 (HR1476)—because of auto industry objections that the fuels will not be available. The auto lobbyists’ argument was given particular weight because of the current economic downturn, and because of fears that producing alcohol fuels would either end up raising the price of corn, require the importation of ethanol from Brazil where fragile rain forests would be injured (again spurious), or increase the production of methanol from coal, which would increase the emission of greenhouse gases. What the Committee, and its Chairman Henry Waxman, were willing to agree to in the face of these barriers was a watered down version of the Engel proposal, providing the Secretary of Transportation the authority to require the production of some flexible fuel cars, but refusing to set a specific target for how many such cars would have to be produced.

But suddenly, circumstances have radically changed.

According to a just-issued U.S. EPA analysis, rather than a shortage of biofuels to run flexible fuel cars, the U.S. soon will be awash in them. According to the EPA study, "Draft Regulatory Impact Analysis: Changes to Renewable Fuel Standard Program (May 2009)," the Energy Independence and Security Act (EISA) which Congress passed in 2007, has led to a revision in the Renewable Fuel Standard (RFS2) which will require U.S. gasoline refiners to include more than 15 billion gallons of biofuels in the fuel that they sell each year. Because most cars today cannot run well on a mixture of more than 10 percent ethanol, that level of national ethanol production is about the limit of what refiners will be able to blend in with the gasoline that they sell for the 250 million ordinary cars on U.S. roads—what the EPA study terms the "ethanol blend wall." Yet RFS2 will require that more and more ethanol be produced in the years afterward, reaching 36 billion gallons a year in 2022—20 billion gallons a year more than can be consumed (for a year-by-year breakdown of the requirement see the EPA Regulations, EPA-420-F-09-023, May 2009). The EPA study points out that some of this excess could be put to good use if auto manufacturers were required to produce flexible fuel vehicles (FFVs) that could run on a blend of fuels with a percentage of ethanol greater than just 10 percent. In their study EPA examines a scenario in which manufacturers would be required to produce 50 percent of their vehicles as FFVs by 2012 and 100 percent after 2015. According to this scenario, even if 16 million such flexible fuel vehicles were sold every year after 2015, the U.S. still would only use about 68 percent of the biofuels that will be produced.

Ironically, what the EPA report seems to point out is that we are faced not with a need to stimulate the production of biofuels, but with an excess and little prospect of fully using them. Little could those who support biofuels as a solution to America’s energy problems anticipate that, rather than needing to build flexible fuel cars to create the demand for alcohol fuels, we will need to build these cars so that we can have a way to consume the billions of gallons that will be produced and that, otherwise would go to waste.

Action on "Open Fuel Standard" legislation now moves to the Senate, where Senator Brownback has recently introduced his Senate version of the bill, S835 (cosponsored by Senators Cantwell, Collins, Klobuchar, Lieberman, Thune, and Grassley) and to the Senate Commerce Committee, where the measure has been referred. There Senate staffers already are aware of the new EPA study and of its impact on the debate over whether such an Open Fuel Standard should be enacted.

Cutting Edge contributor Neil Goldstein is CEO of Energy Alternatives for the 21st Century.

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