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RSS By: Marc Schober, AgWeb.com

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

A Breakdown of Renewable Fuel Standards

Apr 30, 2012

The U.S.'s course of providing cleaner and cheaper fuel while having less dependence on foreign oil has been a subject of much debate. Some believe in drilling domestic oil would provide the best course, others in increasing ethanol production, or pushing for electric powered vehicles. Whichever route the U.S. chooses, it better be fast as gas is pressing $4 per gallon.

In order to meet these goals, the U.S. has developed mandates for renewable fuel production through 2022. Below is a description of these goals and after reading them, you, the reader, can decide if the U.S. is on track to a self sustaining fueled economy.
In 2005, the U.S. passed a Renewable Fuel Standard (RFS) as part of the Energy Policy Act (EPA). Included in this standard was the first U.S. renewable fuel volume mandate. This act was amended in 2007 in the Energy Independence and Security Act, increasing the volume mandate. The mandate stated that the U.S. will need to produce 36 billion gallons of renewable fuel by the year 2022. Of that 36 billion gallons, 15 billion needs to come from corn based ethanol, 16 billion from cellulosic ethanol, 4 billion from other advanced biofuels, and 1 billion from biodiesel.
These were the goals set forth by the EPA. How far along are we to meeting these mandates? U.S. renewable fuel production in 2011 was 13.9 billion gallons, and of that, 13.5 was corn based ethanol. The goal of producing 15 billion gallons of corn based ethanol by 2022, is a feasible goal. For the past 30 years, the corn based ethanol industry has come a long way. In 1980, the U.S. produced 175 million gallons of ethanol and that number has increased to 13.5 billion today.
 
Renewable Fuel Standard Consumption Manadate

In contrast, the cellulosic ethanol industry has produced 0 gallons of ethanol through 2011. This is alarming due to the fact that the federal mandate called for 250 million gallons to be produced in 2011 and 16 billion gallons to be produced by 2022. Wallace Tyner, co-chair of the National Academy of Sciences panel, a professor of agricultural economics at Purdue University and co-director of the Center for Research on Energy Systems and Policy stated, “Whereas the technology and costs of making ethanol fuel from corn are well known, cellulosic on the other hand is new technology. We don’t know how it works. We don’t know how much it will cost. There are no plants in operation. Here we are in 2011 at 0 gallons and we have to get to 16 billion gallons by 2022. That’s double or triple how fast ethanol fuel became commercially viable. Everybody in the industry wants to build the fourth or fifth plant. Nobody wants to build the first.”

 
Furthermore, the Midwest Energy Security and Climate Stewardship Platform Plan in which most Midwest states are participating in called for the production of commercially available cellulosic ethanol by 2012. With no commercially viable plants producing cellulosic ethanol, the goal of producing 16 billion gallons in 10 short years seems more of a miracle than an achievable goal.
 
The U.S. government has taken steps to increase renewable fuel production. In April of 2012, the EPA approved E15 as a registered fuel. E15 contains a 15% blend of ethanol, whereas the current blend at pumps is 10%. Fueling stations would not be required to provide E15 but the Obama Administration has set a goal to install 10,000 blender pumps to support E15 in the next five years.
 
Tom Buis, CEO of Growth Energy commented, “This announcement strengthens the ethanolindustry’s efforts to innovate and continue to deliver domestically-produced and affordable alternatives to foreign oil. With ethanol selling an average of a dollar a gallon cheaper than gasoline and $4 a gallon gasoline on the horizon, we’d encourage all Americans to ask their local filling station how soon they will see more-affordable E15.”
 
The approval by the EPA for E15 as a registered fuel will increase ethanol demand in the U.S., but where are we going to get supplies for this increased demand? With over 200 commercially viable corn based ethanol plants in the U.S. and cellulosic ethanol not ready for commercial use, corn based ethanol is the only viable option.
 
To better understand how the U.S. will meet these goals, here is a breakdown of goals for some of the top renewable fuel producing states provided by the National Governors Association:   
 
Illinois
 
·         Goal to replace 50% of the state’s energy supply with homegrown fuels by 2017.
·         Increase the percentage of biodiesel blend required to be used by a diesel powered vehicle owned by the State or units of local government of the State when refueling at a bulk central fueling facility from 2% to 5%.
 
Indiana
 
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Iowa
 
·         RFS goal to replace 25% of gasoline in the state with biofuels (ethanol or biodiesel) by January 1, 2020.
·         Enrolled 2008 legislation provides 1) that renewable fuels infrastructure is expanded to include blender pumps, 2) increased funding for biodiesel terminals from $50,000 to $100,000, and 3) tasks the Office of Energy Independence to create a renewable fuels marketing plan and a marketing campaign for owners of flexible fuel vehicles.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
 
Michigan
 
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Minnesota
 
·         Requires all gasoline to contain 10% ethanol increasing to 20% by 2013 and requires all diesel fuel to contain 2% biodiesel, increasing to 5% in 2009 and 20% by 2015.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to
           establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Nebraska
 
·         Offered assistance to fuel marketers who wish to market E85 via direct marketing agreements with Nebraska ethanol plants; technical and marketing assistance are available; E10 market share stands at 77%; Nebraska fleet compliance for Flexible Fuel Vehicle use exceeds gubernatorial target.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
 North Dakota
 
·         75% of gasoline used in the state must be blended with ethanol by 2015 and the state will have a production capacity of at least 135 million gallons per year of biodiesel by 2015.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
·         Set goal of producing 450 million gallons of ethanol by 2011.
·         Created an Ethanol Council that appropriates the ethanol fund and reports to the legislature.
 
South Dakota
 
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Wisconsin
 
·         The state aims to generate 25% of its transportation fuels from renewable sources by the year 2025.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
As an educated reader, what is your conclusion? Is the U.S. on track to provide a self sustaining fueled economy?
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