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Public Interest: Biofuels in Context
This brief is:
UNCLASSIFIED//RELEASABLE TO ALL AUDIENCES
April 11, 2012
Joelle Simonpietri, John Ashworth, Andy Aden
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Public Interest Topics Biofuels in Context • Hawaii Petroleum Market Summary of Potential Biofuels Benefits • Energy Security –
including fuel economics and costs to society o Diversification o Domestic resources
• Environmental o Greenhouse gas (GHG) reductions o Renewable, more sustainable
• Societal o Jobs creation o Rural development (USDA)
Hawaii relative to the continental U.S.
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Biofuels in Context: The Hawaii Petroleum Market
Chevron
Tesoro
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US – Alaska
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Biofuels in Context: Hawaii’s Petroleum Sources
Units are in barrels per day unless otherwise noted
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200
400
600
800
1000
1200
1400
1600
1800
2009
Fue
l Use
, Milli
on G
allon
s
Transportation: Jet fuel
Transportation: Gasoline & Ethanol
Transportation: Diesel & Biodiesel
Electricity: Diesel & Biodiesel
Electricity: Fuel Oil & Naphtha
32%
33%
35%
What is the petroleum market in Hawaii?
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Other: LPG, naptha, asphalt, High sulfur fuel oil 0
200
400
600
800
1000
1200
1400
1600
1800
2009
Fue
l Use
, Milli
on G
allon
s
32%
33%
35%
8%
Large Jet and Fuel Oil Fractions in Hawaii
Hawaii Refineries CONUS Refineries
18%
5%
18%
51%
Jet/Kerosene
Gasoline
Diesel
Heavy Fuel Oil
Key Takeaway: Jet and Heavy Fuel Oil markets are co-dependent
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0
200
400
600
800
1000
1200
1400
1600
1800
2009
Fue
l Use
, Milli
on G
allon
s
Transportation: Jet fuel
Transportation: Gasoline & Ethanol
Transportation: Diesel & Biodiesel
Electricity: Diesel & Biodiesel
Electricity: Fuel Oil & Naphtha
32%
33%
35%
Who’s buying fuel in Hawaii?
Hawaii Fuel Facilities Corporation
Defense Logistics Agency - Energy
The Hawaiian Electric Companies
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0
200
400
600
800
1000
1200
1400
1600
1800
2009
Fue
l Use
, Milli
on G
allon
s
Transportation: Jet fuel
Transportation: Gasoline & Ethanol
Transportation: Diesel & Biodiesel
Electricity: Diesel & Biodiesel
Electricity: Fuel Oil & Naphtha
32%
33%
35%
Who’s buying fuel in Hawaii?
Hawaii Fuel Facilities Corporation
Defense Logistics Agency - Energy
The Hawaiian Electric Companies
Renewable displacement must be balanced to prevent systemic disruption
Electrification & Biofuels
Renewable electricity &
Biofuels
???
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GIFTPAC Objectives 1) Displace 25% of DoD fuel used in Hawaii. The fuel must be domestically produced, non-fossil, meet military specifications, be cost-competitive, and reduce price volatility. 2) Enterprise model inclusive of the local energy market that incorporates the agricultural, energy, environmental, government, industrial, and commercial sustainability objectives. 3) End state with sustainable ongoing competition among multiple commercial entities at many levels.
Co-Sponsors: PACOM and Navy DoD Members: ASD OEPP, DLA-Energy, DARPA, Defense Production Act Title III, AFCO, IMCOM PAC. Other members: USDOE, USDA, EPA, State of Hawaii, A4A, Hawaiian Electric Co.
Strategic Imperatives: National: Dependence of U.S. economy and military upon petroleum. Need for new areas of technological innovation and economic growth for national competitiveness. Regional: Allies and key nations similarly poor in fossil energy – opprtunity to avert resource conflict. Remote and petroleum-dependent operating bases. Abundant clean and renewable energy resources.
Strategic Imperatives
GIFTPAC Objectives
Membership
Pacific Region
Green Initiative for Fuels Transition Pacific (GIFTPAC)
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Summary of Potential Biofuels Benefits
• Energy Security – including fuel economics and costs to society o Diversification o Domestic resources
• Environmental o Greenhouse gas (GHG) reductions o Renewable, more sustainable
• Societal o Jobs creation o Rural development (USDA)
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Hawaii As an Oil Importer
• Petroleum provides nearly nine-tenths of all the (fossil) energy consumed in Hawaii. o 40.8 million barrels per year of petroleum products consumption
(2009) • The transportation sector leads energy demand in Hawaii, due in large
part to heavy jet fuel use by military installations and commercial airlines.
• Petroleum-fired power plants supply more than three-fourths of Hawaii’s electricity generation.
Source: EIA – Hawaii Quick Facts. http://205.254.135.7/state/state-energy-profiles.cfm?sid=HI
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Fuel Economic Costs ≠ Total Costs to Society
• National Security Concerns o Potential supply interruptions due to political unrest or
geopolitical decisions – Venezuela, Iran, Libya, Iraq, and many others
o Securing fossil fuel delivery routes • Even small changes in crude supply or refining capacity can have big
impacts on prices • Anticipated fuel price changes or fuel availability affects business &
consumer choices
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0
50
100
150
200
250
300
350
400
0 20 40 60 80 100 120 140
Prod
uct P
rices
(¢ p
er g
asol
ine
gallo
n eq
uiva
lent
)
Crude Oil (WTI) Spot Price ($ per barrel)
Example: Price Spikes Due to Supply Bottlenecks
Historical Gasoline Prices (6/2/86-6/17/08)
Hurricane Katrina
Source: EIA (2008) spot prices. Data ranging from 1986 – 2008.
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Oil Demand (U.S.)
0
5
10
15
20
1985 1990 1995 2000 2005 2010
MBD
Imports
Domestic Production
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Energy Security Driver for Biofuels
Oil Price (WTI)
$/BBL
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Biofuels Contribute to U.S. Fuel Supply Diversity
• U.S. crude oil imports are down due to biofuels, more efficient cars, and down economy o 2006 – 13.70 million B/D; OPEC was 5.5 million B/D o 2011 – 11.36 million B/D; OPEC was 4.5 million B/D
• Ethanol produced in 209 domestic biorefineries • Transition to cellulosic biofuels will require another 400 U.S.
biorefineries, using locally plentiful feedstocks
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Roles Biofuels Play in the U.S. and Global Economy
• U.S. and Brazil dominate global biofuels markets, using corn, sugar cane, and soy oil as feedstocks
• U.S. today produces 14 billion gallons of fuel ethanol/year and another 1.1 billion gallons of biodiesel/year o Industry is a major buyer of U.S. corn (>5 billion bushels/year)
and a large seller of animal feed (DDGS) • Biofuels account for about 10% of U.S. gasoline pool and 1 – 2% of
diesel pool
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0
10
20
30
40
Conventional (Starch) Ethanol
Biodiesel Cellulosic Ethanol Other Advanced Biofuels
Billion Gallons
EISA Mandated Biofuels Production Targets
Actual Production Renewable Fuels Standard (RFS) Targets
15 BGY cap on conventional ethanol
~ Equivalent to National E10
(~ Equivalent to National E15)
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
EISA defines Advanced Biofuel as “renewable fuel, other than ethanol derived from corn starch, that has lifecycle greenhouse gas emissions…that are at least 50 percent less than baseline lifecycle greenhouse gas emissions.” This includes biomass-based diesel, cellulosic biofuels, and other advanced fuels such as sugarcane-based ethanol.
EISA defines Cellulosic Biofuel as “renewable fuel derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass and that has lifecycle greenhouse gas emissions…that are at least 60 percent less than baseline lifecycle greenhouse gas emissions.” The EPA interprets this to include cellulosic-based diesel fuel.
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Sustainability Challenges Biomass to Biofuels System
Minimize Greenhouse Gas Emissions
Land • Use and change • Competition with food • Soil
Water • Use • Quality • Efficiency of use
Minimize Environmental Impacts
Biofuels and Biomass • Supply infrastructure • Fuel production • Distribution and use
Economic Prosperity • Rural and urban communities • Industry Social Well-being
Increase Food and Energy Security
Biodiversity
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Biofuels Play a Significant Role in Stabilization of Atmospheric CO2 Concentrations
• A technology strategy is an important part of a larger strategy to address climate change and needs to be included along with the other major components: climate science research, adaptation to climate change, and emissions mitigation.
Six energy technologies and systems with potential to play a major role in a climate-controlled world:
-Biomass
-Carbon Capture & Storage (CCS)
-Nuclear
-Hydrogen
-Wind & Solar
-End Use Technologies
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Relative Emissions Impacts
Greenhouse gas emissions of fuels vary by feedstock and by type of energy used for processing.
CO Plants Wet DGS Reduction 36%
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0
0.5
1
1.5
2
2.5
Cellulosic EthanolCorn EthanolReformulated Gasoline
From RenewablesFrom Coal and Natural GasFrom Petroleum
BTU
s Re
quire
d pe
r BTU
of F
uel
45% Efficiency
57% Efficiency
81% Efficiency
Fossil Energy Ratio: 10.1
Fossil Energy Ratio: 1.4
Fossil Energy Ratio: 0.81
Energy Required to Produce Fuels
Total Btu spent for 1 Btu available at fuel pump
Based on “Well to Wheels Analysis of Advanced Fuel/Vehicle Systems” by Wang, et.al (2005).
Btu Content of Finished Fuel
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While the growing need for sustainable electric power can be met by other renewables…
The Unique Role of Biomass
Biomass is our only renewable source of carbon-based fuels and chemicals
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Secondary Benefits of a U.S. Typical 100 million Gal/Year Ethanol Biorefinery
• Sales of $250 - 300 million of fuel plus 320,000 tons of animal feed at $80-120/ton
• Buy 35 million bushels (980,000 tons) of grain (corn or sorghum) locally • Employ 100 – 200 during construction, then directly employ 20 – 30
during plant operation • Secondary or indirect local employment of 100 – 150 in local
community • Pay city, county, state and federal property, sales and income tax
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Jobs and Economic Development Impacts (JEDI)
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• 1. A project-level tool in Excel (http://www.nrel.gov/analysis/jedi/)
• To estimate the number of jobs (and income, economic activity), that will accrue to the
state from the project
• 2. Input-output analysis (or multiplier analysis)
• A method of summing the impacts of a series of effects generated by an expenditure (e.g.,
jobs/million dollar purchase of inputs)
• Multipliers in JEDI derived from IMPLAN
• 2008 multipliers: reflect the economic conditions (e.g., inter-industry relationships, jobs
supported by industries, and industry demand) in 2008
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3. Total employment effects, including
• Direct jobs: project development and onsite labor
• Indirect jobs: local revenue and supply chain effects
• Induced jobs: effects driven by re-investment and spending of earnings
• Total jobs:
• Total jobs = Direct + Indirect + Induced
JEDI model (cont’d)
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Jobs Creation – JEDI Model Estimation for Hawaii
Local Economic Impacts - Summary Results
Jobs Earnings Output
During construction period $MM (2007) $MM (2007)
Direct Impacts 683 $58.18 $94.65
Construction Sector Only 385 $45.59
Indirect Impacts 258 $9.52 $28.48
Induced Impacts 417 $13.70 $44.35
Total Impacts (Direct, Indirect, Induced) 1,358 $81.39 $167.47
During operating years (annual)
Direct Impacts 1067 $20.62 $66.74
Plant Workers Only 68 $2.44
Agricultural Sector Only 944 $15.98
Other Workers 54 $2.19
Indirect Impacts 162 $4.62 $16.01
Induced Impacts 205 $6.72 $21.74
Total Impacts (Direct, Indirect, Induced) 1,434 $31.95 $104.50
Notes: Earnings and Output values are millions of dollars in year 2007 dollars. Construction period related jobs are full-
time equivalent for the 3 year construction period. Plant workers includes operators, maintenance, administration and
management. Economic impacts "During operating years" represent impacts that occur from plant operations/
expenditures. The analysis does not include impacts associated with spending of plant "profits" and assumes no tax
abatement unless noted. Totals may not add up due to independent rounding.
Assumptions: 61 MM gal/yr cellulosic ethanol, bagasse at $75/dry ton, Biochemical Conversion
