Transcript The Food, Conservation & Energy Act of 2008: Title IX

The Food, Conservation & Energy
Act of 2008:
Title IX Energy Provisions & Issues
Larry D. Sanders
National Farm Bill Education Program
Kansas City--Webfile
8-9 Jul 08
Overview
• NOTE: Key Bio-energy provisions for RFS are found in the Energy
Independence and Security Act of 2007, not in Farm Bill
• Note: “advanced biofuel” is fuel derived from renewable biomass other
than corn kernel starch (cellulose, sugar, waste, biodiesel, biogas, butanol,
etc.)
• Note: “renewable energy” is energy derived from wind, solar, renewable
biomass, ocean, geothermal or hydroelectric source, hydrogen from
renewable biomass or water
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Key shift in support from grain-based to cellulosic-based biofuels
$1 billion in funding for renewable energy
Biomass R&D continued; $118 mil. 2009-12
Collaboration between USDA & DOE
$320 mil. Biorefinery aid
REAP provides $250 mil.
$300 mil. for Bioenergy Program 2009-12
Sugar program in Commodity Title I calls for USDA purchase of sugar for
ethanol use
• Ethanol blending tax credit reduced by 12%
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Energy Provisions: 2002 vs 2008
FSRIA02
FCEA08
1.Federal Procurement of biobased
products
2.Biorefinery development grants
3.Biodiesel fuel education programs
4.Energy audit and renewable energy
development program
5.Renewable energy systems and
energy efficiency improvements
6.Hydrogen and fuel cell
technologies
7.Biomass research and
development
8.Cooperative research and
extension projects
9.Continuation of bioenergy program
1.
Federal procurement of biobased
products
2. Biorefinery assistance
3. Biodiesel education
4. Energy audit/renewable energy
development program
5. Renewable energy systems/
energy efficiency improvements
6. Biomass R/D; crop assistance
7. Rural aid; forest biomass;
community wood energy
8. Sugar purchase
9. Cellulosic tax credit; ethanol
subsidy cut; studies for
infrastructure, fertilizer
10. Bioenergy program
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Corn Dry Milling/Ethanol Process
Corn
Coarse Flour
Water
Enzymes
Saccharification
Mash (Sugars)
Yeast
CO2
Fermentation
Distillation
Ethanol
DDGS
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How ethanol is made – wet milling process
Corn
Dilute H2SO4
Corn steep liquor
Germ
Steeping
Fiber
Corn oil
Proteins
Starch
Gluten meal
Livestock feed
Poultry feed
Syrup
Corn starch
Ethanol
How ethanol is made – wet milling process
Corn
Dilute H2SO4
Corn steep liquor
Germ
Steeping
Fiber
Corn oil
Proteins
Starch
Gluten meal
Livestock feed
Poultry feed
Zhiyou Wen and Jactone Ogejo, Biological and
Systems Engineering, VT, source for this and
preceding slide.
Syrup
Corn starch
Ethanol
Biobased Markets Program
• Purpose: Provide govt demand for biobased
products
• Federal agencies will buy biobased products
– Reasonably available
– Meet performance standards
– Available at reasonable price
• Guidelines w/in 90 days
• $1 mil. fy 08; $2 mil. each fy 09-12 mandatory
funds for testing/labeling
• $2 mil. each fy 09-12 discretionary funds
• FSRIA02 funding $6 mil.
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Biorefinery Assistance
• Purpose: Encourage growth of advanced biofuels
industry
• Competitive Grants for development/ construction of
demo biorefineries for advanced biofuels (up to 30% of
cost)
• Loan Guarantees for development/construction/
retrofitting commercial biorefineries (max $250,000 or
up to 80% of costs)
• Eligible entities: individual, Indian tribe, state/ local govt,
organization, corp., farm coop, producer assn., National
lab, higher ed, REC, public power, consortium of these
• Mandatory funding for loan guarantees $75 mil. fy 09,
$245 mil. fy 10; Discretionary funding $150 mil. each fy
09-12
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Cellulosic ethanol production
As my reviewer Francis Epplin (Oklahoma State University) notes, there are several
alternate processes for cellulosic ethanol production, none of which have yet won
the battle as “the best process”: enzymatic hydrolysis , acid hydrolysis, gasification,
gasification-fermentation, liquefaction, mix alco. This slide is a generic
representation of the process, followed by the next slide which is another process.
Whether any of them are shown to be commercial and economic remains to be seen.
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Cellulosic Ethanol Option
http://gas2.org/2008/04/02/worlds-first-commercially-viable-cellulosic-ethanol-plant-online-2009/
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Repowering Assistance
• Purpose: Encourage existing biorefineries to
replace fossil fuels used in production
w/renewable energy
• Mandatory funding $35 mil. fy 09, and until
expended
• Discretionary funding $15 mil. each fy 09-12
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Bioenergy Program
• Purpose: Encourage production of advanced
biofuels
• Contract with biorefineries, payments based on
quantity of advanced biofuel produced and net
nonrenewable energy content of the fuel
• Mandatory funding $55 mil. each fy 09-10; $85
mil. fy 11; $105 mil. fy 12
• Discretionary funding $25 mil. each fy 09-12
• Eligibility Limitation: no more than 5% funds to
facilities w/capacity > 150 mil. gal./yr
• FSRIA02: $150 mil./yr 03-06 authorized
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Biodiesel Fuel Education Program
• Purpose: Educate those w/vehicle fleets/
others about biodiesel benefits
• Eligible entities:
– nonprofits or higher ed
– Demonstrated knowledge of biodiesel fuel
production, use or distribution
– Demonstrated ability to conduct
educational/technical support programs
• $1 mil. each fy 08-12 (no change from 02)
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Biodiesel Production
Catalyst
Vegetable oil
Crude biodiesel
4. Washing
Source: Wen and Ogejo.
1. Mixing
2. Transesterification
3. Separation
Methanol
5.Methanol recovery
Crude glycerol
Biodiesel
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Rural Energy for America Program
• Purpose: REAP promotes energy efficiency & renewable
energy development for ag producers & rural small
businesses
• Provides Competitive Grants to provide energy audits,
renewable energy development assistance, energy
efficiency improvements & renewable energy systems
• Eligible entities: state/tribe/local govt, land-grants/other
higher ed, REC or public power utility, other similar entity
• Loan guarantees/grants to ag producers/rural businesses
for energy efficiency improvements & renewable energy
systems (max $25 mil. for guaranteed loan; max 75% of
cost)
• Mandatory funding $55 mil. fy 09; $60 mil. fy 10; $70 mil.
each fy 11-12
• Discretionary funding $25 mil. each fy 09-12
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Biomass Research & Development
• Purpose: USDA & DOE coordinate policies to promote
research/development for production of biofuels/biobased
products
• Establishes Biomass R/D Board & Technical Advisory Committee
• Biomass R/D Initiative
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Competive grants/contracts/financial assistance
Technologies for commercial, competitive biofuel production
Hi-value biobased products
Diversity of economical/environmentally sustainable domestic sources
of renewable biomass
– 3 areas: Feedstocks; Biofuels/biobased products; Biofuels
development analysis
• Mandatory funding $20 mil. fy 09; $28 mil. fy 10; $30 mil. fy 11; $40
mil. fy 12
• Discretionary funding $35 mil. each fy 09-12
• FSRIA02: $5M 2002; $14M 2003-2007; additional authorized $49M
2002-2007
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Rural Energy Self-Sufficiency Initiative
• Purpose: Provide financial assistance for rural
communities to increase energy selfsufficiency
• $5 mil. authorized each fy 09-12
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Feedstock Flexibility Program for
Bioenergy Producers
• Purpose: Establishes purchase program 20082012 crop year for sugar (raw, refined, inprocess eligible to be marketed in US for
human consumption or for extraction of sugar
for human consumption)
• Sell sugar (by bid) to bioenergy producers at
no cost to Federal govt.
• CCC funds/facilities used to purchase sugar at
loan levels
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Biomass Crop Assistance Program
• Purpose: BCAP supports establishment/production of
eligible crops for conversion to bioenergy
• Payments up to 75% of establishment costs for crop
(seeds/stock, planting, site prep/tree planting)
• Payments for assistance w/collection, harvest, storage,
transport: match $1 for $1 per ton of biomass up to
$45/ton for 2 yrs
• 5 yr contracts for annual/perenial crops
• 15 yr contracts for woody biomass
• CCC funds used
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Forest Biomass for Energy
• Purpose: USFS will conduct competitive R/D to
encourage use of forest biomass for energy
• Eligible entities: FS, other Fed agencies,
state/local govt, tribes, land-grants, private
• Project selection criteria
– Uses low-value biomass for energy
– Integrate energy production into biorefineries and
other mfg
– Develop new transportation fuels
– Improve growth/yield of trees for energy production
• $15 mil. each fy 09-12 authorized
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Community Wood Energy Program
• Purpose: Development of community wood
energy plans and acquisition/upgrading
• USFS will provide grants up to $50,000 to
state/local govts. to develop community wood
energy plans; competitive grants to state/local
govts. to acquire/upgrade community wood
energy systems
• $5 mil. each fy 09-12 authorized
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Studies
• Biofuels Infrastructure Study
– USDA-DOE-EPA-DOT joint study to:
• Assess infrastructure needs to expand domestic production,
transport, distribution of biofuels; water resource needs
• Recommend for specific infrastructure development actions
• Trends thru 2025
– No funding authorized
• Renewable Fertilizer Study
– Assess current state of knowledge on potential for
production fertilizer from renewable energy sources in
rural areas
– $1 mil. authorized
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Title XV-Tax Provisions affecting Energy
• Credit for production of cellulosic biofuel
$1.01/gal.
• Comprehensive study of biofuels by USDA,
Treasury, DOE, EPA, NAS
• Modifies the subsidy paid to ethanol
producers from 51 cents per gallon thru 2008
to 45 cents beginning 2009
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Likely Consequences
• Argument for cellulosic over grain-based ethanol marginally
won out
• To shift emphasis from grain-based to cellulosic could cost
billions (not yet commercially viable); FCEA provisions are
for millions; weak commitment
• However, commitment to buy domestic sugar and sell to
ethanol producers could be very expensive with low-cost
imported sugar
• Reduction in ethanol tax credit at a time of high corn prices
will contribute marginally to decisions to halt plant
construction
• Debate continues over biofuel impact on food & feed prices
• Debate continues over “life cycle” issues (do renewable
fuels really have a smaller carbon footprint?)
• Commodity, conservation and disaster assistance provisions
and their impact on renewable fuels remains for further
analysis
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http://www1.eere.energy.gov/biomass/
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References
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Babcock, B. “The Long-run Impact of Corn-based Ethanol on the Grain, Oilseed &
Livestock Sectors: A Preliminary Assessment”, CARD, ISU, January 25, 2007.
Bryant, H., et al., “Analysis of the Effects of Short Corn Crop Scenarios on the
Likelihood of Meeting the Renewable Fuel Standard”, AFPC Briefing Paper 08-02,
June 2008.
Cornell, C.B., “Gas 2.0: World’s First Commercially Viable Cellulosic Ethanol Plant
Online 2009”, Biofuels business, Ethanol, cellulosic ethanol, April 2, 2008.
“Revised RFS for 2008, …”, Notices, Federal Register, Vol. 73, No. 31, February 14,
2008.
The Food, Conservation & Energy Act of 2008:
Title IX Energy (pp. 421-454); Title XV, Subtitle C Tax Provisions, Part II Energy
Provisions (634-637)
Kenkel, Philip, various presenations, Oklahoma State University.
“Renewable Fuels Standard”, Renewable Fuels Association, information summary
for the Energy Independence and Security Act of 2007;
http://www.ethanolrfa.org/resource/standard/
Sanders, LD, J. Pease, J. Novak, “Bio-Energy Policy Issues for the 2007/8 Farm Bill”,
OSU, December 2007.
Snell, W. “Farm Bill & Energy Policy Update: Implications for US Agriculture”,
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Economic and Policy Upddate, January 18, 2008, UKCES.
Appendix
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The Energy Independence and Security
Act of 2007 (HR 6)
• Signed 18 Dec 07, in part amended Clean Air
Act
• Increases fuel efficiency standard from current
25 mpg to 35 mpg in 2020
• Increases renewable fuels from 2007 7 bil. gal.
& 9 bil gal in 2008 to 36 bil. gal. by 2022 (15
bil. gal. corn ethanol; 21 bil. gal. cellulosic
ethanol)
• Grants for production, R/D, infrastructure
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Corn Ethanol Production . . .
expect to use 27% of ’07 corn crop for nearly 9 bil. gal.
10
30
25
8
7
20
6
5
15
4
10
3
2
5
1
Ethanol
/0
8F
20
07
/0
5
20
04
/0
2
20
01
/9
9
19
98
/9
6
19
95
/9
3
19
92
/9
0
19
89
/0
7
19
86
19
83
19
80
/0
4
0
/0
1
0
Share of Corn Production
Percent
Billion gallons
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Biodiesel Production . . .
8
100
4
0
0
Share
20
07
20
06
20
05
20
04
20
02
20
01
20
03
Biodiesel
Percent
200
/0
8F
12
/0
7
300
/0
6
16
/0
5
400
/0
4
20
/0
3
500
/0
2
24
/0
1
600
20
00
Million gallons
expect to use 17% of ’07 soyoil crop for 500 mil. gal.
USDA Baseline Biofuel Production
40
Billion gallons
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“20 in 10”
30
25
22 billion
20
15
10
5
0
2007/08
2009/10
2011/12
Ethanol
2013/14
Biodiesel
2015/16
US Biomass Sources, 2005
Milbrandt, Anelia, 2005: “A Geographic Perspective on the Current Biomass Resource Availability in the United States”, 32
National Renewable Energy Laboratory, Golden, CO.
Will renewable energy solve all the
“problems”?
Targeted Problems
– Energy independence
– Hi fossil fuel prices
– Environmental concerns
(carbon footprint)
– Fossil fuel shortage
Solution?
• Renewable energy likely to
be a marginal part of supply
• Fossil fuel prices driven by
many factors (China)
• New research suggests
ethanol not a solution to
environmental concerns
• Fossil fuel demand likely to
continue high
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