From: World Business Council for Sustainable
Development (WBCSD)
Published January 5, 2009 08:33 AM
U.S. will fail to meet biofuels mandate - EIA
The United States will fall well short of biofuels mandates on the
uncertain development of next-generation fuels made from grasses and wood
chips, the government's top energy forecasting agency said on Wednesday.
"The key risk factor is rate of development of cellulosic biofuels
technology," Howard Gruenspecht, the Energy Information Administration's
acting head, said at press conference in Washington introducing the agency's
annual energy forecast. "Near term growth of cellulosic ... is certainly a
question mark."
The country, the world's top producer of the main biofuel ethanol, will only
blend about 30 billion gallons of fuels like corn-based ethanol and the
advanced fuels into gasoline by 2022. That is about 17 percent short of the
U.S. mandate of 36 billion gallons by that year, the EIA said in the
forecast.
The United States enacted the mandate, known as the Renewable Fuels
Standard, late last year in an effort to provide jobs and begin to wean the
country off foreign oil.
It calls for corn ethanol, but also an increasing amount cellulosic
ethanol made from fast-growing grasses and trees, and biodiesel made from
non-food sources. Cellulosic is not yet made commercially.
Loopholes in the mandate that allow regulators to waive the requirements, if
needed, could also result in lower blending, Gruenspecht, said.
So far, such waivers have not been approved. In August, U.S. environmental
regulators rejected a request from Texas Gov. Rick Perry to halve the
mandate, which he blamed for boosting corn prices and making it costly for
farmers to feed livestock.
AMBITIOUS
Matt Hartwig, a spokesman for the ethanol industry group the Renewable Fuels
Association, said, "Is the mandate ambitious? Absolutely." But research in
cellulosic production being carried out on college campuses and federal
research labs will help the country meet the target, he said.
Meeting the mandate could provide President-elect Barack Obama with
challenges if he does not adjust policies. Obama has said he wants to boost
the use of alternative motor fuels above the mandates.
His choice for agriculture secretary, Tom Vilsack, the former governor of
Iowa, the top ethanol producing state, has recommended phasing out subsidies
for corn-based ethanol and reducing tariffs on imports of Brazilian ethanol
made from sugar cane. Steven Chu, Obama's pick for energy secretary, is also
a strong proponent of advanced biofuels.
This year's oil price collapse and the credit crunch has hurt many biofuel
companies financially and cut the amount of fuel some of them are making.
VeraSun Energy Corp, the largest publicly traded ethanol company, filed for
bankruptcy protection in late October. This month, company lawyers said
eight of VeraSun's 16 plants were in "hot idle" mode, or ready to operate
but not currently producing ethanol.
Ethanol producers are also pushing for changes in blending regulations to
allow more of the fuel to blended into gasoline that is burned in regular
cars. Currently rules limit gasoline to 10 percent ethanol, while specially
made "flex- fuel" cars can burn fuel that is 85 percent ethanol.
For the moment U.S. ethanol capacity is too high, which is helping to make
distilling ethanol barely profitable. U.S. capacity to make ethanol is
slightly above the 2009 mandate for blending of 11.1 billion gallons of
biofuels into gasoline.
(Reporting by Timothy Gardner; additional reporting by Ayesha Rascoe in
Washington; editing by Marguerita Choy)
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