Infrastructure Investments to Reach U.S. Renewable Fuels Goals
The U.S. must increase incentives for a wide variety of biofuels infrastructure investments if the nation is to meet the federal renewable fuels standard (RFS), according to a new report released by a task force of leading energy infrastructure experts. In the new study, the Biofuels Infrastructure Task Force, convened by the National Commission on Energy Policy (NCEP), examined the infrastructure implications of the federal Renewable Fuels Standard, which commits the U.S. to 36 billion gallons of biofuels production by 2022 from a current level of about 9 billion.
"The renewable fuels standard is ambitious," said Norm Szydlowski, chairman of the Biofuels Infrastructure Task Force. "To meet its timetable, approaches to biofuels infrastructure upgrades must also be ambitious. Whether its vehicles, pipelines, or pumps, new investment will be needed to meet the 36 billion gallon mandate."
The report identified several key issues. The RFS will require that the nation transition to a broad-based use of a 10 percent ethanol blend as well as increased use of higher-ratio blends. Transporting and blending this much ethanol will stress existing networks and require new infrastructure investment.
In the current economy however, it may be difficult for businesses to access capital and make large investments in new infrastructure such as biofuel production facilities, blending terminals, pipelines, unit trains and terminals, ethanol retail facilities and flex fuel vehicles to support national biofuels distribution, without increased federal tax and other incentives.
The Task Force developed several recommendations including growing the flex fuel vehicle (FFV) fleet. Reducing or limiting the number of different blends that fuel refiners must produce to meet state-level specifications and simplifying permitting processes along all aspects of the biofuels supply chain would help to reduce costs and lead times for infrastructure investment
The report said that market confidence in the government's commitment
to the RFS is a prerequisite for timely private large-scale biofuels
investments.
Copies of the full report can be downloaded by
clicking here.
COMMENTS:
rolf westgard
Date Posted:
April 22, 2009
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Ronald STEENBLIK
Date Posted:
April 22, 2009
Biofuels policy has become one of endless ratcheting: raise the bar high with mandates (obligatory bending volumes), and then provide subsidies so that the industry can get up to the bar. The subsidies prove to be over-generous (especially when oil prices are high) and the industry over-builds. So then it has more capacity than it needs, and asks the government to create yet more demand. That demand is difficult to meet because of infrastructure constraints, however. So it asks for more government help.
The irony is that if better biofuels, like octanol or butanol, come along, most of the investment in special infrastructure for ethanol will have been for naught ... except, of course, that it will have increased the country's capacity to consume liquid fuels, and created one more advantage for liquid fuels over alternatives like electric vehicles.