New Math: will E15 rules, biomass supply barriers frustrate biofuels' best intentions

October 20, 2010 |

Tomorrow, Secretary of Agriculture Tom Vilsack will give a major address at the National Press Club, and is expected to outline a positive, broad outline of progress towards, and confidence in, the laudable RFS with its promise of green jobs, energy independence and rural economic development.

There’s reason for Vilsack’s optimism. Over the next week, we’ll be profiling communities in Florida and Iowa where that promise is turning into local reality. We’ll also profiling several Caribbean communities where that promise might well be duplicated and provide tourism-driven developing communities with some of the same stability that renewable energy has brought to economies that were overly dependent on real estate and agriculture in Florida and Iowa.

The scope of transition

But how many more communities will be able to enjoy the economic fruits associated with clean energy development and and the transition from fossil fuels? In the long term, major oil companies like Shell and ExxonMobil see global transition in the 30-40 percent range by 2050. That may sound like small potatoes. Voters, project developers, and politicians would like to see a faster, more intense transition. But it represents more than $1 trillion in direct economic impact.

That’s a lot of winners. Think of it this way – a thousand companies with a billion dollars in sales, or a dozen companies with $80 billion in sales. Monsters. The US Renewable Fuel Standard itself would create something on the order of $80-$100 billion in direct economic impact. That’s a lot of jobs, a lot of capital realized by investors large and small that can be redeployed.

But let’s look at the practicalities of distributing fuel.

God is in the (E15) details

God bless Bob Dinneen at the Renewable Fuels Association for accentuating the positive in this review at “It is now up to the industry to make a silk purse out of this sow’s ear,” he writes in a practical assessment of next steps, here.

Now, ultimately, the decision on E15 – especially if it is extended to the 2001-2006 model years, as is expected, will help create a larger market for ethanol. By 2015, older cars will be as hard to find on the market as pre-1995 models are today that are not approved for E10 ethanol.

New Math

The Digest’s “Be Careful What You Wish For, You Might Just Get it” Department has been working overtime in recent months. Our Wish Auditors have been carefully examining the approval of E15 ethanol and progress towards the Renewable Fuel Standard which calls for 21 billion gallons of advanced biofuels to be made from cellulosic biomass by 2022.

The E15 decision

The decision on E15 ethanol comes at a critical juncture. Give us market access! said ethanol’s supporters. It will ruin cars and economy in that order! said ethanol’s opponents.

So what did the EPA come up with? A stinker of a ruling – an approval of E15 ethanol, so narrowly defined that it managed to displease everyone, and drowned a critical issue in a thicket of complexity.

Let’s review what the EPA ruled. 2007 and later models are OK for E15. For 2001 through 2006 models we are still looking at the data. For models 1995-2000, we didn’t commission any research and decline to approve and change from E10. For models 1994 and earlier, E10 is not approved, but E5 might be OK as fuel oxygenate, to ensure fuels meet the standards of the Clean Air Act.

“It’s also important to remember,” adds the EPA, “that there are a number of additional steps that must be completed – many of which are not under EPA or DOE control – to allow the sale and distribution of E-15. These include but are not limited to: testing on dispensing equipment; changes to state laws to allow for the use of E15; and completion of the fuels registration process by industry.”

Our take: about as simple, useful and successful as “New Math,” which made a controversial appearance in US schools in the 1960s, and was lampooned here by Tom Lehrer in a YouTube that is is a pretty good proxy as an explanation on how E15 will work.

The dread ethanol label.

But for now, look at the proposed labeling. The Surgeon-General should take a look at the designs as a potential for cigarette warning labels. It’s a frightening design, about as encouraging and friendly as a radiation warning.

Yes, we have no biomass

It may be much ado about nothing. Digest contributing editor Tim Sklar, back from an industry conference with this report on the development of a market for, and production of cellulosic biomass, is critical over the pace of development.

“Many of these conferences have provided explanations of what the major impediments to bioenergy development are, but not enough time is being spent in adequately addressing specific issues that are impeding bioenergy project development and there are very few meaningful ideas being proffered for overcoming them. If good ideas are not advanced soon, not only will meeting RFS be unlikely, such standards will revert to being just a pipe dream.”

He looks at the opportunities offered in the near-term by torrified wood waste, and concludes that without appropriate incentives and enforceable mandates, “meeting of the renewable fuel standards by Year 2022 will remain a pipe dream, not a realistic achievable goal.”

Our take

As a rule the Digest is ruled over by a cabal of congenital optimists, and we’ll be back tomorrow with a far rosier look at how communities are reinventing themselves with clean energy. But the proposed ethanol label, presumably developed by lunatics out for an airing, and the problems in developing a biomass supply chain, are well worth looking at, and we think it’s worthwhile to let our clean energy bulls have the day off, and air some bearish issues and sentiments.

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Category: Fuels

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