But critics say the fuel has long been been overhyped by the EPA and doubt
whether cellulosic can meet the agency’s targets.
“I’ve heard the same thing for years: We’re just six months away (from a
breakthrough), we’re right around the corner,” said Charles Drevna, former
president of the American Fuel and Petrochemical Manufacturers, a group critical
of cellulosic biofuel mandates. “Well, that’s a pretty damn wide corner because
I haven’t seen much yet.”
Brooke Coleman, executive director at the Advanced Ethanol Council, counters by
saying the industry is at an inherent disadvantage compared to oil companies and
is ready for prime time.
“Once cellulosic biofuel breaks through on a commercial scale, there is no going
back,” Coleman said.
Cellulosic biofuel is produced using renewable, organic and nonfood material
such as switchgrass, wood chips and corn stalks.
Supporters insist cellulosic holds great promise and on May 29, the EPA released
its long-awaited Renewable Fuel Standard and called for big increases in the
fuel source between 2014 and 2016:
cellulosic biofuel volumes by epa - from epa renewable fuel standards proposal
The numbers represent just a small percentage of the more than 16 billion-gallon
requirement the EPA mandates for total renewable fuel each year, but the spike
in cellulosic from 33 million gallons in 2014 to 206 million gallons next year
represents a 524 percent increase.
Can those lofty targets be met?
That’s what Watchdog.org asked the EPA, but did not receive a response to an
email.
“It’s an easily reachable goal,” Coleman told Watchdog.org in a telephone
interview. “We have a number of plants coming online … They have the ability on
their own by applying the technology to their assets to very, very quickly ramp
up the capacity of the industry.”
But critics say the EPA’s goals are way too optimistic.
“There is no cellulosic ethanol to be had,” said Robert Bryce, an energy writer
and senior fellow at the Manhattan Institute, a right-of-center think tank. “Yet
they increased the mandate for it. How do you increase the mandate for something
that doesn’t exist?”
“These plants are all over the place and they’re producing cellulosic ethanol,”
Coleman said. “What we don’t have is a willing buyer because the oil industry
won’t buy our stuff unless someone makes them do it.”
Congress created the Renewable Fuel Standard as a way to reduce dependence on
oil and help create a cleaner energy alternative. Cellulosic biofuel was part of
the standard’s requirements, which are enforced by the EPA.
A decade ago, the government anticipated cellulosic biofuel would grow by leaps
and bounds.
Congress initially called for 100 million gallons of cellulosic ethanol to be
blended into the gasoline supply by 2010 and the program was revised, calling
for the target to shoot up to 16 billion gallons of cellulosic biofuel by 2022.
But the cellulosic industry has not kept pace with those goals.
As a result, the EPA has had to radically adjust its targets for cellulosic
biofuel down. In fact, the agency in 2012 revised the number all the way to
zero.
“The technology is not there to make it economic,” said Drevna.
“Yes, the cellulosic biofuel industry has not produced to the levels targeted by
the law and it is no secret why that is true,” Coleman said. “We went through a
global, 100-year recession. You couldn’t get a car loan much less a loan for a
$250 million or $300 million plant and we’re behind. But what (critics) leave
out is that the EPA has the authority to adjust the program to levels that are
reasonable and they have done that.”Corn-based ethanol was also part of the
RFS when the standard was introduced in 2005 and updated in 2007, but corn-based
ethanol production has exponentially outpaced cellulosic.
EPA records indicate between 14 billion and 15 billion gallons of corn-based
ethanol was produced last year.
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Coleman estimated to Watchdog.org that last year cellulosic ethanol
generated “a couple million gallons.” Officials at the the American
Fuel and Petrochemical Manufacturers point to EPA figures and say
only 728,509 gallons of cellulosic ethanol were produced in 2014.
A number of companies have jumped into the biofuels business and
they are spending quite a bit of money — and quite a bit of
government taxpayer money — to try to make the technology work.
DuPont is wrapping up construction on a $200 million cellulosic
ethanol facility in Iowa it touts will be among the first
commercial-scale biorefineries in the world.
POET, a biofuel company based in Sioux Falls, South Dakota, opened a
$275 million cellulosic ethanol production facility in Iowa that
converts baled corn cobs, leaves, husk and stalk into renewable
fuel.
The U.S. Department Energy provided $100 million in investments and
research grants to POET while Iowa spent $20 million.
“Some have called cellulosic ethanol a ‘fantasy fuel,’ but today it
becomes a reality,” Jeff Broin, POET founder and executive chairman,
said when the facility opened last September.
POET expects to produce ethanol at a rate of 20 million gallons per
year, later ramping up to 25 million gallons.
Other facilities include the Ineos Bio plant in Florida and Abengoa,
a company based in Spain that opened a cellulosic ethanol plant in
Kansas in 2014.
According to the New York Times, the Ineos Bio facility received a
$75 million guarantee for a refinery.
Abengoa said it received a $132.4 million loan guarantee and a $97
million grant through the Department of Energy to help construct its
facility in Hugoton, Kansas.
Another company, KiOR, supplied an estimated 230,000 gallons of
cellulosic biofuel in 2013, but ended up going bankrupt. Late last
year, KiOR defaulted on a loan it had with Mississippi after failing
to make a $1.8 million debt payment.
Related: The EPA’s Renewable Fuel Standard proposal ticks off just
about everyone
Energy analyst Robert Rapier noted the industry’s struggles in a
recent column.
“Of course you can subsidize all sorts of schemes into existence,”
Rapier said. “The real question is whether there is a realistic
pathway to the process standing on its own commercially … it’s going
to require exponential production increases over the next few months
to salvage the economics.”
“The fundamental problem is the energy density of feed materials,
which is — regardless whether it’s corn or grass or woodchips or
whatever — is so low that you’re not able to achieve the power
density on the land that is required to make any sense,” Bryce said
in a telephone interview.
“There’s nothing wrong with an aggressive yet adjustable mandate and
there’s nothing wrong with the RFS,” Coleman said. “But the oil
industry is very creative in what they do and they’ve taken this
positive and tried to turn it into a negative and say, well the
targets were aggressive therefore the program’s broken.”
“The Renewable Fuel Standard is an anachronism,” said Drevna, who
now is a senior scholar at the Institute for Energy Research, which
has been harshly critical of mandates for biofeuls. “It has totally
failed to live up to the commitment and the intent for why it was
passed and it’s far past time to get rid of it and allow the market
to work.”
Biofuel defenders say the oil companies and refineries simply don’t
want competition from a nascent industry.
“The entire market is rigged to create one outcome and that is
petroleum motor-based fuels at the pump,” Coleman said. “This is not
a free market. If it was, we’d be out there competing with them and
beating them without the RFS.”
But critics say the EPA requirements for cellulosic biofuels weren’t
met before and don’t think they’ll be met again.
The EPA is “saying we think cellulosic will be available in these
quantities and tomorrow is going to be a better day,” Drevna said.
“It’s trite, but the definition of insanity is repeating the same
thing over and over again and looking for a different result.”
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