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RFS Roundup: Potential Impacts of the GREENER Fuels Act on Cellulosic Fuels Development

Submitted by on March 18, 2018 – 7:19 pmNo Comment

by Jessie Stolark (Environmental and Energy Study Institute)  Riding the recent wave of Renewable Fuel Standard (RFS) reform talks, Representative Welch (D-VT) and Senator Udall (D-NM) introduced the Growing Renewable Energy through Existing and New Environmentally Responsible Fuels Act (GREENER Fuels Act) (H.R.5212 and S.2519) on March 8. On balance, the bill would hinder the development of even lower carbon cellulosic fuel feedstocks and pathways that may also provide additional environmental benefits beyond greenhouse gas mitigation, such as improved water quality or wildlife habitat.

While corn ethanol production is, on average, 43 percent less greenhouse gas intensive than conventional gasoline according to USDA, there is still tremendous potential to further revolutionize agricultural landscapes and the energy sector through the use of purpose-grown biomass crops that may be converted to cellulosic ethanol or other uses. 

In recent years, some have pointed to the tremendous successes of the corn ethanol industry as the reason for the failures in the cellulosic fuels space.  However, the two industries are fairly intertwined. As the U.S. biofuels industry continues to develop, the investors and technologies developed by corn ethanol producers are what will lead to further development of the advanced and cellulosic industries. Therefore, efforts to reform the RFS will be more damaging to the growth of cellulosic feedstocks than the mature corn ethanol industry. EESI has briefly summarized three of the twelve sections of the bill; these three would have especially damaging effects on the development of lower carbon cellulosic biofuels.

Section 3: Limit Corn Production: Prohibit Any Part of Corn Kernel for Qualifying as Cellulosic Fuel

Rationale: The production of cellulosic fuel from corn kernel fibers “continues to drive more corn development and have the same environmental concerns as corn ethanol.” 

Conclusion: There is not any evidence that allowing corn kernel fiber to count as cellulosic ethanol will drive the additional production of corn.  The price of corn per bushel is the main driver of planting decisions. …

Section 6: Set New Volumes and Sunset the RFS Fuel Categories

Rationale: The bill would “sunset the 4 biofuel categories: conventional ethanol, biomass-based diesel, cellulosic advanced and non-cellulosic advanced” in the following manner:

  • Fully eliminate the first generation fuel category (primarily corn ethanol) by 2030
  • Cap cellulosic ethanol production at 2 billion gallons per year and eliminate by 2037
  • Cap biomass-based diesel at 2 billion gallons per year and eliminate by 2030

Additionally, the bill would set fuel volumes based on “the previous year’s renewable fuel production volumes with a mid-year adjustment.”

Conclusion: This proposal is particularly nonsensical.  Setting annual production volumes based on actual production levels has already been shown to significantly stifle investment in the development of cellulosic fuels and pathways, as it provides no room for upward growth from the industry. Therefore, this provision would be incredibly damaging to the future growth of the cellulosic industry. Plus, incentives to invest in producing these low-carbon fuels would be stifled if there is only a 10 year horizon for the fuel.

Section 7: Cap Ethanol Blending at Under 10 Percent, Prioritize Cellulosic Biofuel Use

Rationale: The bill would “cap ethanol at 9.7% of the fuel supply, ensuring we remain below the blend wall … [and] would also require EPA to prioritize the use of cellulosic biofuels ahead of other biofuels.”

Conclusion: While this sounds like it would be a boon to cellulosic biofuels production by prioritizing it over corn ethanol – it would actually be quite damaging. Corn ethanol will continue to be the cheapest octane provider, a necessary component of fuel, with or without the RFS. To truly incentivize the use of cellulosic fuels, we need to increase blending well above 10 percent ethanol. Should we not be concerned about reducing the amount of fossil fuels and GHGs in transportation fuels?

Conclusions:

While there are more provisions in the bill, these three would be particularly damaging to the development of lower carbon cellulosic biofuels feedstocks and pathways.  Unfortunately, as written, the bill lacks a basic understanding of the mechanisms that motivate the biofuels industry to innovate and grow the cellulosic fuel space. Additionally, some of the measures called for in the bill are duplicative of excellent research already undertaken by the U.S. Department of Energy, USDA, and others.

Unfortunately, these changes would do more to stifle the growth of the cellulosic space than to help, for a variety of reasons.  Primary among them is that this bill would weaken, not strengthen, existing policy signals to the business community that investing in the development of low carbon biofuels is a wise investment.  READ MORE

Environmental groups back Ted Cruz, Republicans on overhaul of Renewable Fuel Standard (Washington Times)

Overhauling Ethanol Mandate Could Benefit Climate, NM Economy (Public News Service)

Legislators say “Well intentioned flop” needs environmental update (Great Lakes Now)

Reducing ethanol in the renewable fuel standard will help the environment (Pittsburgh Post-Gazette)

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