With gasoline prices climbing over $4 a gallon, the Obama administration and Republicans and Democrats in Congress are searching for a way to deflate the price bubble. Producing more home-grown renewable fuel is obviously the top remedy for alleviating America's dependence on foreign petroleum supplies, although it is not a short-term answer, of course. Unfortunately, the political crosscurrents are treacherous.
There are already 13 billion gallons of corn-based ethanol being produced annually, and almost all of that is going into E10. The EPA has approved use of E15 in model year 2001 cars and newer, and that will require an extra 4 billion gallons of ethanol per year. But that total — 17 billion gallons — won't get much higher unless consumers buy more flex fuel vehicles (FFVs) and can find E85 pumps to fill up at. The renewable fuels standard (RFS) that Congress increased in 2007 requires 36 billion gallons of biofuel by 2022.
But corn-based ethanol has produced a backlash. Grocery manufacturers complain that food price inflation is stoked by the diversion of corn into ethanol — a migration stimulated by federal tax credits. Environmental groups say corn ethanol is no bargain greenhouse gas-wise anyway, and that the federal government should ax the RFS. Auto manufacturers say higher levels of ethanol in gas will hurt car engines in conventional autos. E85 works great in FFVs, but drivers can’t find E85 pumps.
Cellulose-based ethanol would be an alternative to corn. But quantities produced in 2010 and 2011 were way short of the Energy Independence and Security Act of 2007 (EISA) targets of 100 and 250 million gallons for those years.
Dupont and BP are expected to start commercial production of biobutanol, made from corn stover or switchgrass, in the 2013-2014 time period via DuPont Danisco Cellulosic Ethanol (DDCE). But biobutanol may pose problems for some engine components.
However, short term it is hard to see a gasoline price reduction strategy outside some considerable dependence on biofuels, ethanol or otherwise. That is where Sen. Tom Harkin (D-Iowa) comes in. He is chairman of the Senate Agriculture Committee, so he has political sway. He has introduced the Biofuels Market Expansion Act of 2011 (S. 187). Harkin's bill calls for 90 percent of vehicles to be FFVs beginning in model year 2016. But it is not the number of FFVs that are the limiting factor, it is the number of E85 pumps. Shane Karr, vice president, federal government affairs, at the Alliance of Automobile Manufacturers, says that in Minnesota, for example, there are 364 stations with E85 pumps, yet on average, FFVs in the state use less than one full tank of E85 each for the whole year.
Harkin's bill has a number of provisions aimed at getting more E85 pumps in gas stations across the country. That is well and good. But it is probably of equal importance to get financial assistance, whether in the form of Department of Energy loan guarantees or tax incentives, to producers of advanced biofuels who have slow moving, incipient projects in progress.
Democrats in Congress are trying to kill some of the tax credits available to US oil companies. That makes some sense, but only if that freed-up revenue is shuttled over to the advanced biofuels industry, which argues, probably correctly, that its federal tax credits are less generous and less usable than those Congress has given, for example, to the solar and wind industries.
"One of the primary disappointments has been our biofuels tax policy," says Michael J. McAdams, president, Advanced Biofuels Association. "Advanced and cellulosic biofuels tax policy has been too inconsistent and is not tailored currently to provide parity or the right form of tax options to enable some companies to take advantage of the current law."
With gasoline prices climbing over $4 a gallon, the Obama administration and Republicans and Democrats in Congress are searching for a way to deflate the price bubble. Producing more home-grown renewable fuel is obviously the top remedy for alleviating America's dependence on foreign petroleum supplies, although it is not a short-term answer, of course. Unfortunately, the political crosscurrents are treacherous.
There are already 13 billion gallons of corn-based ethanol being produced annually, and almost all of that is going into E10. The EPA has approved use of E15 in model year 2001 cars and newer, and that will require an extra 4 billion gallons of ethanol per year. But that total — 17 billion gallons — won't get much higher unless consumers buy more flex fuel vehicles (FFVs) and can find E85 pumps to fill up at. The renewable fuels standard (RFS) that Congress increased in 2007 requires 36 billion gallons of biofuel by 2022.
But corn-based ethanol has produced a backlash. Grocery manufacturers complain that food price inflation is stoked by the diversion of corn into ethanol — a migration stimulated by federal tax credits. Environmental groups say corn ethanol is no bargain greenhouse gas-wise anyway, and that the federal government should ax the RFS. Auto manufacturers say higher levels of ethanol in gas will hurt car engines in conventional autos. E85 works great in FFVs, but drivers can’t find E85 pumps.
Cellulose-based ethanol would be an alternative to corn. But quantities produced in 2010 and 2011 were way short of the Energy Independence and Security Act of 2007 (EISA) targets of 100 and 250 million gallons for those years.
Dupont and BP are expected to start commercial production of biobutanol, made from corn stover or switchgrass, in the 2013-2014 time period via DuPont Danisco Cellulosic Ethanol (DDCE). But biobutanol may pose problems for some engine components.
However, short term it is hard to see a gasoline price reduction strategy outside some considerable dependence on biofuels, ethanol or otherwise. That is where Sen. Tom Harkin (D-Iowa) comes in. He is chairman of the Senate Agriculture Committee, so he has political sway. He has introduced the Biofuels Market Expansion Act of 2011 (S. 187). Harkin's bill calls for 90 percent of vehicles to be FFVs beginning in model year 2016. But it is not the number of FFVs that are the limiting factor, it is the number of E85 pumps. Shane Karr, vice president, federal government affairs, at the Alliance of Automobile Manufacturers, says that in Minnesota, for example, there are 364 stations with E85 pumps, yet on average, FFVs in the state use less than one full tank of E85 each for the whole year.
Harkin's bill has a number of provisions aimed at getting more E85 pumps in gas stations across the country. That is well and good. But it is probably of equal importance to get financial assistance, whether in the form of Department of Energy loan guarantees or tax incentives, to producers of advanced biofuels who have slow moving, incipient projects in progress.
Democrats in Congress are trying to kill some of the tax credits available to US oil companies. That makes some sense, but only if that freed-up revenue is shuttled over to the advanced biofuels industry, which argues, probably correctly, that its federal tax credits are less generous and less usable than those Congress has given, for example, to the solar and wind industries.
"One of the primary disappointments has been our biofuels tax policy," says Michael J. McAdams, president, Advanced Biofuels Association. "Advanced and cellulosic biofuels tax policy has been too inconsistent and is not tailored currently to provide parity or the right form of tax options to enable some companies to take advantage of the current law."
