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BiofuelPolicyintheUnitedStates
Jeff NavinPartner, Boundary Stone PartnersVisiting Senior Fellow, Third Way
WhyBiofuels?• Reduce Dependence on Foreign Oil
• Reduce Emissions and Greenhouse Gas Emissions
• Provide Price Stability for American Consumers
• Promote Economic Development and Create Jobs
HowCongressHasSupportedBiofuels• Launching the Industry, Bringing Down Costs:
• USDA, DOE and Treasury• Initial RD&D (DOE/USDA)• Subsidy: Volumetric Ethanol Excise Tax (2004; 2008 –2011) $0.51‐$0.45/gallon. Expired in 2011
• Continued RD&D:• USDA/DOE
• DOE: Biofuels/Biomass Program• USDA: Biomass Crops/Research• DOD: Defense Production Act• DOE/USDA: Loan Guarantees
• Overcoming Market Barriers:• EPA: Renewable Fuel Standard
Scorecard:HowDidCongressDo?• Imported Oil Displaced:
• 2.07 billion gallons in 2002, 14.3 billion gallons in 2014
Scorecard:HowDidCongressDo?• Emissions Reduced:
• DOE’s GREET Model: Lifecycle GHG emissions of 34% with ethanol; without indirect emissions corn ethanol reduces GHG emissions by 44%.
• In 2014: Ethanol in United States reduced GHG emissions by 39.6 metric tons. Equivalent of removing 8.4 million cars from the road.
Scorecard:HowDidCongressDo?• Price Impact for Consumers
• Ethanol cheaper than gasoline on a per gallon basis; increased stability
Scorecard:HowDidCongressDo?• Economic Impact of Ethanol in 2104:
• 83,949 Direct Jobs; 295,265 Indirect Jobs• $53 billion to GDP • $10.3 billion in taxes paid in • Increased Household Income by $26.7 billion• Industry spent $27.8 billion in materials, services, labor
• Manufacturing Jobs in Rural America
What’sNext?• Transition to Advanced and Cellulosic
• Lower Prices• More Efficient Inputs• Even Better GHG Numbers
• How It’s Happening• Largely Private Investment
• POET, Abengoa, DuPont• Building on First Generation Technology
• What Will Stop It• Access to consumers blocked by oil companies• Lack of certainty of investment
CongressionalIntentontheRFS• Why a Renewable Fuel Standard
• Policy Should Evolve As the Market Evolves• Infrastructure Barriers: Free Market Access
• Intent:• Expand Biofuel Production and Adoption; Next Gen• Overcome Oil Industry Barriers
• Alternatives Considered:• Percentage Requirement• “Distribution Waiver”
• The RFS is the path beyond subsidy and to next generation biofuels
RFSandAdvancedBiofuels“Regulatory and market uncertainty of this type is likely to shrink investment in biofuels production and research—both for conventional and advanced fuels…. investors will realize little to no return on investment to justify the risk of investing in these new technologies and therefore limit any chance of future development of cellulosic biofuels by any entity.” – Third Way, Feb. 2014
“The development of advanced biofuels will only continue with the market certainty provided by the RFS, which enables companies to invest in the development and commercialization of cellulosic and advanced biofuels that are half as dirty as conventional fuels. Without the RFS, the diversification of fuel sources, the investment in advanced biofuels, and the effectiveness of U.S. climate policy will be severely limited. Through the RFS and the development of much cleaner biofuels, the United States can continue to reduce petroleum use, enhance energy security, and effectively address climate change.” – Center for American Progress, Dec 2013
The threat that oil companies could simply lie down on the RFS to avoid obligations vastly increases supply‐chain risk for new projects, as opposed to those already in the ground. Given that more than 90 percent of future blending obligations under the RFS are for advanced biofuels, the Administration’s new methodology would actually scuttle U.S. investment in advanced, low‐carbon biofuels in direct conflict with the Climate Action Plan…” – Letter from 33 Advanced Biofuels Companies to President Obama, May 2014
