Transcript E.N. Thompson Forum on World Issues Changing Nature 20007-2008

22nd Annual EPAC Biofuels
Conference
June 24-26, 2012
Billings, Montana
Douglas A. Durante
Executive Director
Clean Fuels Development Coalition
www.cleanfuelsdc.org
 Federal Policy and Programs
 Recapturing the High Ground
 E30, FlexFuel Vehicles,
CO2/Carbon Reduction
The Mood in Washington







Anything the government supports must be a boondoggle
Anything the government pays for must be wasteful
If it was here it needs to go
For ethanol, an industry literally created and sustained by
public policy, i.e., the Government, that's not good news.
However justifiable, the tax exemption/credits, import
duties, environmental requirements, loans/loan
guarantees, etc. all were criticized as everything that was
wrong with government.
Ethanol has gone from hero to villain.
Expiration of the tax exemption and duty has helped
tremendously
3
D4: Total Disconnect, Discord, and
Dysfunction in DC



Complete lack of consensus w/regard to renewables, alt
fuels, env.
RFS is the law of the land and by definition it is the policy of
the US Government to develop & use renewable fuels,
Supported by EPA RIS
How do we meet that requirement and goal?
- A Republican House denying funding for EPA Labels on
E15, blender pumps, etc.
- Legislation to define Nat gas and coal as renewables
- ILUC Policy that cripples ethanol
- Administration that is force feeding electric vehicles in a
square peg/round hole approach requiring massive
subsidies--10K per car
- Eliminating FFV Credits that cost nothing!
Dysfunction, continued








Solar, Wind, Geothermal, Biomass, Hydro all being whipsawed
Any Environmental or Green Initiative being painted as job killing
Dueling Polls
- Just last week-- Gallup says 65% pro GHG
- Previous week ABC-NY Times says 70% feel EPA Overreaching
Suspension of stationary CO2 rule
Opposing Solar in the Mojave Desert -- $45 mill to preserve
Nat'l Wildlife Opposing Energy Crops as too invasive
Environmental Groups (Friends of Earth) hailing expiration of
VEETC as first step with elimination of RFS next
$3-4 gasoline here to stay . . . . . . . . . . . .
AND NOT A SINGLE SERIOUS EFFORT TO
REPEAL OIL SUBSIDIES!!
Key Federal Policy and Programs
Affecting Ethanol





Legislative: RFS, Tax Credits (alt fuel, cellulose, ITC,
etc.), Farm Bill
- Possible Collaborative Opportunities:
-- EV Incentives, Nat Gas Act, FFV Mandates/
Open Fuel Standard
Regulatory: E15, CAFE, Tier 3, (EPA), Biorefinery
Assistance, BCAP, REAP (USDA) -- Ethanol need not
apply (DOE)
FOR ETHANOL THE PLAY IS EPA!!
CAFE/GHG/Fuel Quality
ILUC
Extraordinary authority to redefine RFS
RFS Requirements
Cellulose Requirements VS Reality
6 Million
Gallons
13 Million
Gallons
13 Million
Gallons
Cellulose Requirements VS Reality
Adjusting the RFS



EPA Required (Shall) to Promulgate a Rule if...
- 20% of volume is waived for 2 years
- 50% for one year
Administrator can modify volumes for all years following
the year of the waiver-- any time after 2016.
EPA/DOE/USDA to consider
- Environment
- Energy Security
- Infrastructure
- Rate/Status of Commercialization
- Cost
- Jobs, ag/food impacts, prices, etc.
Adjusted RFS Scenario
20
-2.5
15
10
16
15
5
+2.5
5
0
RFS Requirements
Adjusted RFS?
Solution
Recapturing the High Ground: The Case
for More Ethanol & More FFVs

Obvious energy security/diversity; agriculture/economic
benefits,
 Less obvious are environmental/health benefits- ethanol
has great resume in CO, Ozone/RFG
- New CAFE standards will require small bore, high
compression engines needing more octane
- Air Toxics/Aromatic content likely to increase to meet
octane needs, resulting in particulates & CO2
 Mid-level blends e.g. E30 could reduce aromatic content
by substituting clean, low carbon, renewable octane for
these air toxics
 New standards make reducing carbon critical!
The Case for More Ethanol
(Continued)
 Mobile source controls remain
lowest cost per ton to reduce most
pollutants
 Ethanol increases gasoline yield at
refineries from the oil barrel
Illustration of a 10% increase in
gasoline yield when substituting
ethanol for aromatics at 30%
Air Toxics – Aromatics Particulates

Aromatics are hazardous air pollutants and linked to
many cancers and respiratory problems
- Benzene – Toluene – Xylene

They are in gasoline and the concentration goes up as
refiners produce higher octane fuels

They form secondary organic aerosols and bond with
carbonaceous material to form PM – 10, 2.5, and now
ultrafine particulates


PM of all types identified by EPA as major health threat
EPA has clear authority to regulate air toxics
18
Mobile Source Provisions of CAAA Established
as Minimum Threshold –EPA declined to
further tighten aromatic restrictions
 Even back in 1990, Congress directed the EPA to
periodically review available technologies to reduce air
toxics as much as possible
“…use maximum achievable control technology to reduce levels of both
benzene and non-benzene aromatics in gasoline to protect the public
health and environment.”
 In a 2007 Ruling, the EPA recognized ethanol as a
substitute for aromatics, acknowledging “high octane
quality”
 EPA declined to further tighten aromatic restrictions,
pointing to economic challenges and not enough ethanol
supply.
Cost benefit assessment was conducted with oil
at a range of $17-$35 a barrel
Before RFS2
Reduction in Aromatic Compounds with
Scheduled Increase in Ethanol
37
35
Reduction of Aromatics by
50% from current levels
33
31
29
27
25
23
21
19
15 BG biofuel
production as
of 2012
Increasing biofuels by
100% from 2012 to 2022
under the RFS
17
15
BG/Yr
1
2
3
4
5
Year6
7
8
9
10
11
E30 Scenario--Creating a Sea
Change in Just One Decade
 Current Gasoline Pool of 135 BGPY, 25% aromatic
content= 34BGPY
 Modest, i.e. "achievable" reduction in aromatics of 5060% = demand for a new 15BGPY of ethanol--exactly
what is called for in the RFS!!
 Gradual reductions in aromatics, replaced with ethanol,
coupled with gradual increase in FFVs, with gradual
replacement of pumps with FlexFuel pumps--(10%, or
7700 per year wear out, 245 million vehicle fleet
turnover in 13-17 years)
 CFDC, Nebraska Ethanol Board, Growth Energy, ACE
and others called on EPA in our comments to connect
all the dots and do something about it!!
Lets make these guys irrelevant!
BILAL QABALAN/AFP/Getty Images. Saudi Crown Prince Abdullah bin
Abdel Aziz inaugurates the Al-Qatif new oil production plant
Thank you!
For more information log on to
www.cleanfuelsdc.org
www.ethanolacrossamerica.net