Transcript Document

Ethanol Update
Biofuels Moving Indiana Forward
April 28, 2008
Ethanol Promotion and Information
Council (EPIC)
EPIC’s Mission:
The Ethanol Promotion and Information Council
(EPIC) is a non-profit alliance of industry leaders that
have come together to grow consumer demand for
ethanol energy through targeted marketing.
EPIC’s Vision:
Establish and grow ethanol’s place in the global
renewable energy market.
U.S. Ethanol Production
• 147 Ethanol Plants in Operation (8.55BGPY)
• 61 Under Construction/10 Under Expansion
(an additional 5.08BGPY)
• Total of 13.61BGPY
* A minimum of 6 cellulosic ethanol plants on
the way…
E85
• Been in use since the early 1990’s.
• Classified as an Alternative Fuel.
• Same storage & handling characteristics as gasoline.
• Seasonally adjusted for cold-start issues.
• Requires special dispensing equipment.
• Requires special vehicle – Flex-Fuel Vehicle (FFV).
• Reduction in energy content.
• Reduction in emissions and carbon footprint.
Current Federal Legislation
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Energy Independence and Security Act of 2007
VEETC.
FFV labeling.
Tax credit of 30% of the total cost of an alternative fuel
system, up to a maximum credit of $30,000.
• CAFE credit extension - incentives necessary to absorb
the increased cost of production of a FFV.
• A requirement that federal fleets purchase alternative
fuel for use in their alternative fuel vehicles.
• Grants to encourage the advancement of hybrid-flexible
fuel vehicles.
Energy Independence and
Security Act of 2007
Increased Renewable Fuels Standard (RFS):
• 9BGPY in 2008
• 36BGPY in 2022
– Reaches maximum of 15BGPY in Conventional
Biofuels in 2015
– Remainder is Advanced & Cellulosic Biofuels.
Energy Independence and
Security Act of 2007
Grants:
• Authorizes $500M annually for FY08-15 for the production
of advanced biofuels that have at least an 80% reduction in
lifecycle GHG emissions relative to current fuels.
• Authorizes $25M annually for FY08-10 for R&D and
commercial application of biofuels production in states with
low rates of ethanol and cellulosic ethanol production.
• Authorizes a $200M grant program for FY08-14 for the
installation of refueling infrastructure for E85.
Energy Independence and
Security Act of 2007
Biofuels Infrastructure:
• Amends the Petroleum Marketing Practices Act to make it
unlawful for a franchiser to prohibit a franchise from
installing E85 or B20 tanks and pumps within the franchise
agreement.
• Requires the Secretary of Energy to report to Congress on
the market penetration of flex-fuel vehicles and on the
feasibility of requiring fuel retailers to install E85
infrastructure.
• Requires the head of each federal agency to install at least
one renewable fuel pump at each federal fleet refueling
center by January 1, 2010.
Energy Independence and
Security Act of 2007
Enactment:
– January 1, 2009
– Except for RFS Standard – 9BGPY in 2008
VEETC
• Volumetric Ethanol Excise Tax Credit
• $.51/gallon for every pure gallon of ethanol
blended.
• Credit expires in 2010.
• Eliminated highway trust fund issues.
• Payment within 20 days.
• Good for taxable/nontaxable.
• Eliminates AMT.
Alternative Fuels Tax Credit
• Federal income tax credit.
• Covers up to 30%, maximum of $30,000.
• Availability for non-taxable entities.
Other Key Items
• CAFE Credits: Incentives to automakers to
produce flex-fuel vehicles.
• Federal Fleets: Required to purchase
alternative fuels for alternative fuel vehicles.
• Grants: Encourage advancement of hybrid
flex-fuel vehicles. Encourage more fuel
efficient flex-fuel vehicles.
Potential Federal Legislation
•CAFE Fine Monies.
•Increased Tax Credit or Grants
•Tax Credit for Ethanol Plants for
Blending Equipment.
•Mandated FFV Production.
Potential State Legislation
•BTU Equivalency.
•FFV Tax Credits.
•Infrastructure Tax Credits.
•Ethanol Standards.
BTU Equivalency
• Due to lower fuel economy, vehicles that travel
200 miles on E85 will use more fuel than on
RUL, but both fuels are taxed the same.
• Legislation lowers the state motor fuel tax
based on BTU equivalency of E85 to RUL.
• No loss of revenue to the state.
FFV Tax Credits
• State tax credit for the purchase of a flex-fuel
vehicle.
• Tied to E85 purchases.
• Proof of purchase for vehicle and fuel are
submitted with tax filing.
Infrastructure Tax Credits/Grants
• State tax credit (or grant) for the installation of
E85.
• In most cases, this is in addition to the federal
tax credit.
Ethanol Standards
• A handful of states have passed ethanol
standards, setting the minimum amount of
ethanol to be blended in their state.
• This increases the distribution and location of
ethanol storage, which allows for lower
transportation costs for E85.
Retails Sales Incentive
• Quarterly incentives based on gallons of E85
or biodiesel sales.
• Must be 10% of overall sales for E85, 2% of
overall sales for biodiesel.
Other Possible Sources
• Some ethanol producers have started funding
infrastructure to get E85 stations open.
• Loans that are paid back as fuel is purchased.
• Grants
• Both require long-term contract.
Additional Information
Alternative Fuels and Advanced Vehicles Data Center’s
State & Federal Incentives & Laws:
www.eere.energy.gov/afdc/incentives_laws.html
Public Relations
Key Messages:
• Ethanol is an American resource.
• Ethanol is an important part of the solution to
our energy problems.
• Ethanol has clear environmental benefits.
• Ethanol is ready and available today.
Public Relations
The Big Three:
• Food vs. Fuel
• Subsidies
• Water Consumption
Food vs. Fuel
• Energy Prices number one! Many other factors
also involved.
• Not using food grade corn, demand is stagnate.
• Increasing yields, both in ethanol plants/corn fields.
• Just use the starch, vitamins & minerals remain.
• Cap of 15BGPY from corn.
Subsidies
• VEETC – cost of ~$4B.
• Ethanol Plants do not receive!
• Will likely be reduced.
• Almost all industries are subsidized
somehow, petroleum industry has been for
100+ years…
Water Consumption
50MGPY Plant:
• Less water than an average 18-hole golf course.
• Less water than 200 average households.
• Same/Less than refining gasoline.
• Water usage is down 27% since 2001.
Example: Average Sunday newspaper takes 150
gallons of water.
Reality Check
• Ethanol saves consumers between $.50 $1/gallon, whether they use it or not.
• Consumers would pay an additional
$200M/day for gasoline.
• This has no inclusion for all other factors
and the increased price of oil.
Questions?