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ENGENDERING POLITICAL AND ECONOMIC SUSTAINABILITY FOR THE ENERGY AND CHEMICAL SECTOR OF THE BIOECONOMY Tomas W. Green University of Kansas AIChE WISE Program Embracing Our Bioeconomic Future:

Embracing Our Bioeconomic Future_Full

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Page 1: Embracing Our Bioeconomic Future_Full

ENGENDERING POLITICAL AND ECONOMIC SUSTAINABILITY FOR THE ENERGY AND CHEMICAL SECTOR OF THE BIOECONOMYTomas W. GreenUniversity of Kansas

AIChEWISE Program

Embracing Our Bioeconomic Future:

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Overview: A Brief History of Biofuels and its

Politics An Overview of the Bioeconomy Political and Economic Challenges Strategic Priorities Policy Proposals

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A Brief History of Biofuels and its Politics• History• Renewable Fuel Standard• Low Carbon Fuel Standard• Federal R&D

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Ethanol “makes a beautiful, clean and efficient fuel … that can be

manufactured from corn stalks … we need never fear the exhaustion of our

present fuel supplies so long as we can produce and annual crop of alcohol to

any extent desired” -Alexander Graham Bell, 1917

A Brief History of Biofuels and its Politics:History

It is a “universal assumption that [ethyl] alcohol in some form will

be a constituent of the motor fuel of the future”

-Scientific American, 1920

“The fuel of the future” wouldn’t come from oilfields, but rather “fields of weeds”

-Henry Ford, 1925, NY Times

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A Brief History of Biofuels and its Politics:History

1819: Glucose

produced from

Cellulose

1920’s: Biofuels receive acclaim

1973: Arab Oil Embargo

2005: Energy Policy

Act

1900: Rudolf Diesel exhibits

engine

WWI: Cellulosic Ethanol Plants

1990: Clean Air

Act

2007: Energy Independence

and Security Act

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RVO set annually EPA using waiver authority

RINs generated and traded Fuels require GHG

reductions 20% total, 50% advanced,

60% cellulosic 36 billion gallons by 2022

21 billion gallons advanced

A Brief History of Biofuels and its Politics:Renewable Fuel Standard

Total Renewable Fuels

Advanced Biofuels

Cellulosic Biofuel

Cellulosic Diesel

Biomass-Based Diesel

Other Biofuels

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LCFS passed in 2007, enacted in 2009 Three national bills introduced in 2007 by Obama, Boxer, Feinstein

Sets carbon intensity requirements for fuel each year Goal: 10% reduction by 2020

Compliance can be traded in credit system In 2012, found unconstitutional, overturned by 9th Circuit,

Supreme court did not take case Technology neutral, flexible, encourages investment, market

driven Emulated by Oregon, Washington, B.C. and considered by 20

other states

A Brief History of Biofuels and its Politics:Low Carbon Fuel Standard

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A Brief History of Biofuels and its Politics:Federal R&D

Source: Bioenergy Technologies Office Multiyear Program Plan, US DOE, 2016.

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An Overview of the Bioeconomy• The Potential Future of the

Bioeconomy• The Current State of

Technology• Codependence of Biofuels

and Biochemicals• Key Institutions• Future Legislation

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An Overview of the Bioeconomy:

The bioeconomy is an “economic field which uses

novel biological knowledge for commercial and industrial

purposes.” (1997)

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An Overview of the Bioeconomy:

“The knowledge-based production and utilization of biological

resources to provide products, processes and services in all sectors

of trade and industry within the framework of a sustainable

economic system”-German Bioeconomic Council

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An Overview of the Bioeconomy:

Relates to: • pharmaceuticals• bioplastics

• composite materials• biofuels

• bio-based chemicals • cosmetics

• high-value foods

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An Overview of the Bioeconomy: Significant energy and

chemical production currently taking place

Estimated to be $350 billion annually

In 2012, over $125 billion produced from biotechnology

For every bio-based products job, 1.64 more jobs are created

Biofuels account for over 5% of transportation energy

Source: Billion Ton Update 2016, Oak Ridge National Laboratory, US DOE, 2016.

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An Overview of the Bioeconomy:

Source: Billion Ton Update 2016, Oak Ridge National Laboratory, US DOE, 2016.

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An Overview of the Bioeconomy:Potential Future

“The bioeconomy takes simple and safe raw materials – the carbohydrates in plants – and converts them into fuels, polymers,

fabrics, and other chemicals. Every function now served by petrochemicals can

also be served by biochemicals – more simply, safely, and sustainably.”

- Future 500 Partners

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An Overview of the Bioeconomy:Potential of the Bioeconomy One Billion Tons

2005, 2011, 2016 Bioeconomy has potential to grow

by $100 billion by 2030, with the creation one million jobs, particularly in rural areas

Biofuels account for 3% of world road transport fuel, expected to grow to 27% by 2050 Would cut 2.1 gigatonnes of CO2

per year

Source: Billion Ton Update 2016, Oak Ridge National Laboratory, US DOE, 2016.

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An Overview of the Bioeconomy:Potential of the Bioeconomy

Source: Billion Ton Update 2016, Oak Ridge National Laboratory, US DOE, 2016.

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An Overview of the Bioeconomy:State of Technology: Ethanol US Produced 57% of world’s ethanol In 2015, US produced 14.7 billion gallons

Supported 85,967 direct jobs and 271,440 indirect and induced jobs The USDA reports 5.2 billion bushels of corn were consumed in 2014 to

produce ethanol Ideal octane enhancer E10 sold almost everywhere E85 sold in 2,795 stations E15 sold in 180 stations

Source: 2016 Ethanol Industry Outlook: Fueling a High Octane Future, Renewable Fuels Association, 2016.

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An Overview of the Bioeconomy:State of Technology: Cellulosic Fuels Low production for RFS history In 2014, the EPA reported 728,000 gallons Three large cellulosic ethanol facilities are coming online with the

combined capacity of 75 million gallons of cellulosic fuel: Abengoa’s facility in Hugoton, Kansas, DuPont’s biorefinery in Nevada, Iowa, POET-DSM’s project in Emmetsburg, Iowa

In 2014, EPA reported 29,000 gallons of cellulosic renewable gasoline blendstock, 12 million gallons of naphthas (a liquid hydrocarbon blend), and 5,000 gallons of cellulosic diesel

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An Overview of the Bioeconomy:State of Technology: Algal Biofuels Expanding and growing industry Greatest challenges:

Scale-up & economization Understanding synthetic biology Establish industrial standards & best practices

Promising signs: Included in 2016 Billion Ton Update Provision in Clean Power Plan Algal oil converted to jet fuel and biodiesel, passing ASTM standards and high

fuel performance in test trials

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An Overview of the Bioeconomy:State of Technology: Bioproducts Can be: high-value chemicals, bio-reagents, bio-materials, fuels, or bio-

based intermediates Breakthroughs with synthetic biology “Bioproducts … hold strong promise to reduce this petroleum use and

serve as the backbone of an emerging bioeconomy” –White House Subcommittee on Advanced Manufacturing

U.S. revenues from industrial biotechnology (fuels, enzymes, and materials) reached at least $125 billion in 2012

US chemical industry is worth $3 trillion per year, $812 billion from petroleum derived chemicals

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An Overview of the Bioeconomy:State of Technology: Biogas In 2014, EPA reported 53 million gallons of biogas and

renewable natural gas, 20 million gallons of biogas, 15 million gallons of renewable

compressed natural gas, and 17 million gallons of renewable liquefied natural gas

Growing number of anaerobic digesters, landfill gas plants,

Source: Biogas Energy Solutions, http://www.besch4.com/processes_high.html

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An Overview of the Bioeconomy:Codependence of Biofuels and Biochemicals

Source: Bioproducts to Enable Biofuels Workshop Summary, Bioenergy Technologies Office, US DOE, 2015

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An Overview of the Bioeconomy:Codependence of Biofuels and Biochemicals

Economic viability Chemical market

growing faster than GDP

Fuel market shrinking

Potential for “platform chemicals”

Source: Bioproducts to Enable Biofuels Workshop Summary, Bioenergy Technologies Office, US DOE, 2015

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An Overview of the Bioeconomy:Key Institutions White House:

2012 Blue Print US Department of Energy:

Bioenergy Technologies Office (BETO) Sun Grant Initiative Biorefinery Support

US Department of Agriculture Biomass Research and Development Initiative (BRDI) BioPreferred Biomass Crop Assistance Program (BCAP) Value Added Producer Grant (VAPG) Biofuel Infrastructure Partnership (BIP)

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An Overview of the Bioeconomy:Key Institutions National Laboratories

National Renewable Energy Lab Oak Ridge National Lab (Billion Ton) Lawrence Berkeley National Lab (Agile BioFoundry)

Department of Defense Advanced Drop-in Biofuel Production Project Living Foundries

Federal Aviation Administration Farm to Fly Program

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An Overview of the Bioeconomy:Future Legislation MLP Parity Act 2019 Farm Bill

Largely funding Highly dependent on Senate leadership

2022 Renewable Fuel Standard Does not actually expire Reform likely

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Political and Economic Challenges• Challenges with the RFS• The “Blend Wall”• Challenges with the LCFS• Regulatory Approval Process• Oil Markets• Young Technology• Tiring Environmental Battle

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Political and Economic Challenges:Challenges with RFS Repeal bill introduced in 112th, 113th, and 114th Congress (top priority of

American Petroleum Institute) Debatable GHG reduction of corn ethanol (20% necessary)

Indirect Land Use Change (ILUC) at center of debate. Searchinger et al: worse than petroleum, Plevin et al: models highly sensitive

EPA did not release RVO on time 5 of 8 times

Other environmental concerns Marginal Decrease on Foreign Oil

Source: Fueling a Clean Transportation Future: Smart Fuel Choices for a Warming World; Martin, Jeremy, Union of Concerned Scientists. 2016.

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Political and Economic Challenges:Challenges with RFS Inflation of Corn Prices

Called human rights abuse in some parts of world Hurts poor families the most Peaked in 2012

Source: Fueling a Clean Transportation Future: Smart Fuel Choices for a Warming World; Martin, Jeremy, Union of Concerned Scientists. 2016.

Source: Fueling a Clean Transportation Future: Smart Fuel Choices for a Warming World; Martin, Jeremy, Union of Concerned Scientists. 2016.

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Political and Economic Challenges:The Blend Wall Liability of blends higher than E10

Bill introduced to limit to 9.7% (H.R.5180) EPA set to push past blend wall to 10.4% of fuel consumption

Higher ethanol fuel blends: 2,795 fueling stations for E85 (51-83% ethanol blend) 17,400,000 cars can take E85 (”flex fuel vehicles” or FFVs) Lower energy density, but higher efficiency

Break-even at 25-40%?

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Political and Economic Challenges:Challenges with LCFS Called overly ambitious Could hurt jobs Raises fuel prices

Greatest burden on low socio-economic class Pathway approval process is expensive and

complicated Many lifecycle analyses to conduct

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Political and Economic Challenges:Regulatory Approval Process Pathway Approval

2014 review process by EPA to reduce wait and costs Bioproduct Regulation

Food or chemical? Corn ethanol faced complications because it was unclear

whether it qualified as a part of the food or chemical industry Jurisdiction?

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Political and Economic Challenges:General Capricious oil markets

History repeats itself Young technology in bioeconomy

Lack of trust, barriers to entry Tiring environmental battle

Clean Power Plan used political capital

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Strategic Priorities• Economic Stabilization via

Bioproducts and Specialization

• Target Mutually Beneficial Investments

• Regional Specialization • Develop Consensus and

Framework

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Strategic Priorities:Economic Stabilization via Bioproducts and Specialization Some activities that federal agencies (particularly the DOE, USDA, FAA, and

EPA) can expand upon are:1. Research, development, and demonstration projects for bioproducts2. Collaboration with biorefineries to develop waste utilization 3. Devoting resources to hasten bioproduct approval processes

Where possible, federal agencies (particularly the DOE, EIA, FAA, and National Laboratories) should:1. Consider markets that will be especially receptive to green technologies when

making RD&D investments in bioproduct synthesis2. Expand the presence of and investment in modeling capabilities that predict the

market viability for new biotechnology 3. Identify and promote technologies that can compete with petroleum

alternatives based on performance merits

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Strategic Priorities:Target Mutually Beneficial Investments

To grow and support feedstock development, federal agencies (particularly the USDA and DOE) should:1. Further the partnership with farmers to grow localized feedstocks2. Invest in infrastructure that collects, processes, and distributes feedstocks3. Support cogeneration projects in both financing and regulatory measures

such as the EPA did for algal fuels in the Clean Power Plan To promote downstream biorefinery technologies, federal agencies

(particularly the DOE) should: 1. Further support for biorefinery grant and loan programs2. Partner with the petroleum industry to support conversion of refinery

capabilities to co-process biomass

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Strategic Priorities:Regional Specialization Actions that federal agencies (particularly the DOE and USDA) take into

consideration are:1. Weigh grant and loan proposals by their merits of leveraging regional

advantages and collaborations 2. Promote the use and reliance on the Billion Ton Report for business to

model the use of biomass in future planning3. Provide networks to collaborate with stakeholders and find regionally specific

partnerships

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Strategic Priorities:Develop Consensus and Framework

Develop comprehensive studies on: 1. Land use concerns2. Economic projections (especially as they relate to job creation) for RFS policy

alternatives such as the LCFS3. The potential for E15 and E85 market penetration4. Auxiliary environmental concerns related to a bioeconomic transition.

Establish more formalized policy and regulatory framework for the bioeconomy Canada (Growing Forward) Germany (Policy Strategy BE) European Union (Innovating for Sustainable Growth)

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Policy Proposals• Reform the RFS• Modify FFV Incentives • Low Carbon Fuel Standard• Price Carbon

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Policy Proposals:Reform the RFS End food-based fuel standard

Only regulate ”advanced biofuels” Pushing past blend wall should happen on demand side, not supply

Proportional, not volumetric, standards Emulates LCFS, does not require predicting evolving transportation market

Annual update to carbon intensity of petroleum Oil is getting dirtier

Extend advanced fuels tax credit

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Policy Proposals:Modify FFV Incentives FFVs largely made due to “loop hole” in Corporate Average Fuel

Economy (CAFE) standards Many who drive FFVs do not know Change incentive to consumer side

Creates demand for higher blends of ethanol fuel

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Policy Proposals:Low Carbon Products Standard Encourage use of bio-based produced in similar way as LCFS

Set carbon intensity requirements Target chemicals widely used with able bioproduct alternatives

Technology neutral Flexible compliance Encourages investment Helps make economic viability for biofuels, implicitly Greatest challenge is in lifecycle analyses

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Policy Proposals:Price Carbon Gibson (R-NY 19) Resolution Bipartisan Climate Solutions Caucus, established by Rep. Curbelo (R-FL

26) and Rep. Deutch (D-FL 21) Carbon Fee and Dividend

Price carbon at source (e.g. well, mine, border), increase steadily over time Give dividend check back on equal basis to families Revenue neutral, abides by Norquist pledge Expected to add 2.8 million jobs over 20 years

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Thank You!Steve Smith, Dr. Marcus, Senator Pat Roberts (KS), Kevin Stockert (Rep. Murray), Adam York (Rep. Jenkins), Dr. David Daniels (EIA), Dr. Eric Larson (Princeton University), Dr. Kimberly Ogden (Arizona University), Dr. Bala Subramaniam (University of Kansas), Scott McKee (Senate Energy and Commerce Committee), Jeremy Martin (Union of Concerned Scientists), Steven Kopecky (EOP Center for Environmental Quality), and all of Citizen’s Climate Lobby!

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https://www.epa.gov/renewable-fuel-standard-program/program-overview-renewable-fuel-standard-program. [Accessed July 2016].

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J. Martin, "Fueling a Clean Transportation Future: Smart Fuel Choices for a Warming World," Union of Concerned Scientists, Washington, D.C. , 2016.

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California EPA Air Resources Board, "LOW CARBON FUEL STANDARD," [Online]. Available: http://www.arb.ca.gov/regact/2015/lcfs2015/lcfsfinalregorder.pdf.

Bioenergy Technologies Office, "BETO Multiyear Program Plan," March 2016. [Online]. [Accessed July 2016].

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Sources P. Lamers, E. Searcy, J. R. Hess and H. Stichnothe, Developing the Global Bioeconomy: Technical, Market,

and Environmental Lessons from Bioenergy, London: Elsevier, 2016. Office of Science and Technology Policy, "National Bioeconomy Blueprint," The White House, Washington,

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