Congressional study critical of biofuels is quickly attacked

27 June 2014 17:40 Source:ICIS News

WASHINGTON (ICIS)--A congressional study warns that the US realistically cannot meet statutory requirements for increased biofuel consumption, an analysis that was quickly attacked on Friday by the renewable fuels industry.

A study by the Congressional Budget Office (CBO) says that the 2007 Energy Independence and Security Act (EISA) mandate for annual increases in US consumption of biofuels cannot be met without significant changes to the nation’s transportation fuels infrastructure and without putting older passenger cars at risk for engine damage.

But the Advanced Ethanol Council (AEC) charged that the CBO study “fails to take into account basic realities” and is neither impartial nor objective.

The CBO study, done at the request of House Energy and Commerce Committee chairman Fred Upton (Republican-Michigan), holds that EISA’s renewable fuel standard (RFS) requiring annual increases in biofuels blending in the nation’s gasoline supply poses significant problems.

The analysis said that escalating annual volumes of biofuels “would require a large and rapid increase in the use of advanced biofuels”, which are not widely available in sufficient quantities to meet the EISA mandates.

Even if those advanced biofuels, such as cellulosic ethanol, were available in large volumes, the CBO said that the RFS mandate “would cause the total percentage of ethanol in the nation’s gasoline supply to rise to levels that would require significant changes in the infrastructure of fuelling stations”.

“The rising requirements in EISA would be very hard to meet in future years because of two main obstacles,” the CBO said, citing “the supply of cellulosic biofuels and the amount of ethanol that older vehicles are said to be able to tolerate”.

“Fuel suppliers have had trouble meeting the annual requirements for cellulosic biofuels because making such fuels is complex, capital-intensive and costly,” the CBO said, noting that while cellulosic biofuel production is increasing, only a few cellulosic production facilities are operational.

“The industry’s capacity in coming years is projected to fall far short of what would be necessary to achieve the very rapid growth in the use of cellulosic biofuels required by EISA,” the report said.

In addition, says the study, if the RFS biofuels mandate were to be met in coming years, it would require ethanol-gasoline blends higher than the current 10%, known as E-10.

Those higher blends could cause corrosion damage to older passenger vehicles and light trucks, the analysis adds.

“EISA’s growing requirements for the total gallons of renewable fuels to be used each year, combined with a projected decline in gasoline use, suggest that the average concentration of ethanol in gasoline would have to rise well above that 10% ‘blend wall’,” said CBO.

Noting that fewer than 2% of existing retail gasoline stations in the US are capable of dispensing ethanol blended gasolines higher than E-10, “the cost of encouraging additional sales of high-ethanol fuel falls on the producers and consumers of gasoline and diesel”, the study concludes.

The analysis also noted that because of these challenges, the Environmental Protection Agency (EPA) has eliminated or greatly reduced the annual mandate for cellulosic biofuel in recent years.

But AEC executive director Brooke Coleman charged that the CBO study “is not rooted in reality”.

Coleman argues that the benefits of the RFS outweigh other concerns.

“You cannot assess the impacts of the RFS without looking at the benefits of reducing consumer demand for gasoline and diesel fuel,” Coleman said, adding that “the entire point of the RFS” is to displace domestic demand for foreign oil.

“An analysis of a foreign oil displacement program that does not look at the benefits of displacing foreign oil demand should be dismissed out of hand,” he said.

The CBO prepares reports and analyses at the request of members of Congress.

There is mounting pressure among many in Congress to do away with the federal biofuel mandate.

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By Joe Kamalick