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The Food, Conservation & Energy Act of 2008: Title IX Energy Provisions & Issues

The Food, Conservation & Energy Act of 2008: Title IX Energy Provisions & Issues. Larry D. Sanders National Farm Bill Education Program Kansas City-- Webfile 8-9 Jul 08. Overview.

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The Food, Conservation & Energy Act of 2008: Title IX Energy Provisions & Issues

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  1. The Food, Conservation & Energy Act of 2008:Title IX Energy Provisions & Issues Larry D. Sanders National Farm Bill Education Program Kansas City--Webfile 8-9 Jul 08

  2. Overview • NOTE: Key Bio-energy provisions for RFS are found in the Energy Independence and Security Act of 2007, not in Farm Bill • Note: “advanced biofuel” is fuel derived from renewable biomass other than corn kernel starch (cellulose, sugar, waste, biodiesel, biogas, butanol, etc.) • Note: “renewable energy” is energy derived from wind, solar, renewable biomass, ocean, geothermal or hydroelectric source, hydrogen from renewable biomass or water • Key shift in support from grain-based to cellulosic-based biofuels • $1 billion in funding for renewable energy • Biomass R&D continued; $118 mil. 2009-12 • Collaboration between USDA & DOE • $320 mil. Biorefinery aid • REAP provides $250 mil. • $300 mil. for Bioenergy Program 2009-12 • Sugar program in Commodity Title I calls for USDA purchase of sugar for ethanol use • Ethanol blending tax credit reduced by 12%

  3. Energy Provisions: 2002 vs 2008 FSRIA02 FCEA08 Federal procurement of biobased products Biorefinery assistance Biodiesel education Energy audit/renewable energy development program Renewable energy systems/ energy efficiency improvements Biomass R/D; crop assistance Rural aid; forest biomass; community wood energy Sugar purchase Cellulosic tax credit; ethanol subsidy cut; studies for infrastructure, fertilizer Bioenergy program 1.Federal Procurement of biobased products 2.Biorefinery development grants 3.Biodiesel fuel education programs 4.Energy audit and renewable energy development program 5.Renewable energy systems and energy efficiency improvements 6.Hydrogen and fuel cell technologies 7.Biomass research and development 8.Cooperative research and extension projects 9.Continuation of bioenergy program

  4. Corn Dry Milling/Ethanol Process Corn Coarse Flour Water Enzymes Saccharification Mash (Sugars) Yeast CO2 Fermentation Distillation Ethanol DDGS

  5. How ethanol is made – wet milling process Corn Dilute H2SO4 Corn steep liquor Steeping Germ Fiber Proteins Starch Corn oil Gluten meal Livestock feed Poultry feed Corn starch Syrup Ethanol

  6. How ethanol is made – wet milling process Corn Dilute H2SO4 Corn steep liquor Steeping Germ Fiber Proteins Starch Corn oil Gluten meal Livestock feed Poultry feed Corn starch Syrup Zhiyou Wen and Jactone Ogejo, Biological and Systems Engineering, VT, source for this and preceding slide. Ethanol

  7. Biobased Markets Program • Purpose: Provide govt demand for biobased products • Federal agencies will buy biobased products • Reasonably available • Meet performance standards • Available at reasonable price • Guidelines w/in 90 days • $1 mil. fy 08; $2 mil. each fy 09-12 mandatory funds for testing/labeling • $2 mil. each fy 09-12 discretionary funds • FSRIA02 funding $6 mil.

  8. Biorefinery Assistance • Purpose: Encourage growth of advanced biofuels industry • Competitive Grants for development/ construction of demo biorefineries for advanced biofuels (up to 30% of cost) • Loan Guarantees for development/construction/ retrofitting commercial biorefineries (max $250,000 or up to 80% of costs) • Eligible entities: individual, Indian tribe, state/ local govt, organization, corp., farm coop, producer assn., National lab, higher ed, REC, public power, consortium of these • Mandatory funding for loan guarantees $75 mil. fy 09, $245 mil. fy 10; Discretionary funding $150 mil. each fy 09-12

  9. Cellulosic ethanol production As my reviewer Francis Epplin (Oklahoma State University) notes, there are several alternate processes for cellulosic ethanol production, none of which have yet won the battle as “the best process”: enzymatic hydrolysis , acid hydrolysis, gasification, gasification-fermentation, liquefaction, mix alco. This slide is a generic representation of the process, followed by the next slide which is another process. Whether any of them are shown to be commercial and economic remains to be seen.

  10. Cellulosic Ethanol Option http://gas2.org/2008/04/02/worlds-first-commercially-viable-cellulosic-ethanol-plant-online-2009/

  11. Repowering Assistance • Purpose: Encourage existing biorefineries to replace fossil fuels used in production w/renewable energy • Mandatory funding $35 mil. fy 09, and until expended • Discretionary funding $15 mil. each fy 09-12

  12. Bioenergy Program • Purpose: Encourage production of advanced biofuels • Contract with biorefineries, payments based on quantity of advanced biofuel produced and net nonrenewable energy content of the fuel • Mandatory funding $55 mil. each fy 09-10; $85 mil. fy 11; $105 mil. fy 12 • Discretionary funding $25 mil. each fy 09-12 • Eligibility Limitation: no more than 5% funds to facilities w/capacity > 150 mil. gal./yr • FSRIA02: $150 mil./yr 03-06 authorized

  13. Biodiesel Fuel Education Program • Purpose: Educate those w/vehicle fleets/ others about biodiesel benefits • Eligible entities: • nonprofits or higher ed • Demonstrated knowledge of biodiesel fuel production, use or distribution • Demonstrated ability to conduct educational/technical support programs • $1 mil. each fy 08-12 (no change from 02)

  14. Catalyst 1. Mixing Methanol Vegetable oil 2. Transesterification 5.Methanol recovery Crude biodiesel 3. Separation Crude glycerol 4. Washing Biodiesel Biodiesel Production Source: Wen and Ogejo.

  15. Rural Energy for America Program • Purpose: REAP promotes energy efficiency & renewable energy development for ag producers & rural small businesses • Provides Competitive Grants to provide energy audits, renewable energy development assistance, energy efficiency improvements & renewable energy systems • Eligible entities: state/tribe/local govt, land-grants/other higher ed, REC or public power utility, other similar entity • Loan guarantees/grants to ag producers/rural businesses for energy efficiency improvements & renewable energy systems (max $25 mil. for guaranteed loan; max 75% of cost) • Mandatory funding $55 mil. fy 09; $60 mil. fy 10; $70 mil. each fy 11-12 • Discretionary funding $25 mil. each fy 09-12

  16. Biomass Research & Development • Purpose: USDA & DOE coordinate policies to promote research/development for production of biofuels/biobased products • Establishes Biomass R/D Board & Technical Advisory Committee • Biomass R/D Initiative • Competive grants/contracts/financial assistance • Technologies for commercial, competitive biofuel production • Hi-value biobased products • Diversity of economical/environmentally sustainable domestic sources of renewable biomass • 3 areas: Feedstocks; Biofuels/biobased products; Biofuels development analysis • Mandatory funding $20 mil. fy 09; $28 mil. fy 10; $30 mil. fy 11; $40 mil. fy 12 • Discretionary funding $35 mil. each fy 09-12 • FSRIA02: $5M 2002; $14M 2003-2007; additional authorized $49M 2002-2007

  17. Rural Energy Self-Sufficiency Initiative • Purpose: Provide financial assistance for rural communities to increase energy self-sufficiency • $5 mil. authorized each fy 09-12

  18. Feedstock Flexibility Program for Bioenergy Producers • Purpose: Establishes purchase program 2008-2012 crop year for sugar (raw, refined, in-process eligible to be marketed in US for human consumption or for extraction of sugar for human consumption) • Sell sugar (by bid) to bioenergy producers at no cost to Federal govt. • CCC funds/facilities used to purchase sugar at loan levels

  19. Biomass Crop Assistance Program • Purpose: BCAP supports establishment/production of eligible crops for conversion to bioenergy • Payments up to 75% of establishment costs for crop (seeds/stock, planting, site prep/tree planting) • Payments for assistance w/collection, harvest, storage, transport: match $1 for $1 per ton of biomass up to $45/ton for 2 yrs • 5 yr contracts for annual/perenial crops • 15 yr contracts for woody biomass • CCC funds used

  20. Forest Biomass for Energy • Purpose: USFS will conduct competitive R/D to encourage use of forest biomass for energy • Eligible entities: FS, other Fed agencies, state/local govt, tribes, land-grants, private • Project selection criteria • Uses low-value biomass for energy • Integrate energy production into biorefineries and other mfg • Develop new transportation fuels • Improve growth/yield of trees for energy production • $15 mil. each fy 09-12 authorized

  21. Community Wood Energy Program • Purpose: Development of community wood energy plans and acquisition/upgrading • USFS will provide grants up to $50,000 to state/local govts. to develop community wood energy plans; competitive grants to state/local govts. to acquire/upgrade community wood energy systems • $5 mil. each fy 09-12 authorized

  22. Studies • Biofuels Infrastructure Study • USDA-DOE-EPA-DOT joint study to: • Assess infrastructure needs to expand domestic production, transport, distribution of biofuels; water resource needs • Recommend for specific infrastructure development actions • Trends thru 2025 • No funding authorized • Renewable Fertilizer Study • Assess current state of knowledge on potential for production fertilizer from renewable energy sources in rural areas • $1 mil. authorized

  23. Title XV-Tax Provisions affecting Energy • Credit for production of cellulosic biofuel $1.01/gal. • Comprehensive study of biofuels by USDA, Treasury, DOE, EPA, NAS • Modifies the subsidy paid to ethanol producers from 51 cents per gallon thru 2008 to 45 cents beginning 2009

  24. Likely Consequences • Argument for cellulosic over grain-based ethanol marginally won out • To shift emphasis from grain-based to cellulosic could cost billions (not yet commercially viable); FCEA provisions are for millions; weak commitment • However, commitment to buy domestic sugar and sell to ethanol producers could be very expensive with low-cost imported sugar • Reduction in ethanol tax credit at a time of high corn prices will contribute marginally to decisions to halt plant construction • Debate continues over biofuel impact on food & feed prices • Debate continues over “life cycle” issues (do renewable fuels really have a smaller carbon footprint?) • Commodity, conservation and disaster assistance provisions and their impact on renewable fuels remains for further analysis

  25. http://www1.eere.energy.gov/biomass/

  26. References • Babcock, B. “The Long-run Impact of Corn-based Ethanol on the Grain, Oilseed & Livestock Sectors: A Preliminary Assessment”, CARD, ISU, January 25, 2007. • Bryant, H., et al., “Analysis of the Effects of Short Corn Crop Scenarios on the Likelihood of Meeting the Renewable Fuel Standard”, AFPC Briefing Paper 08-02, June 2008. • Cornell, C.B., “Gas 2.0: World’s First Commercially Viable Cellulosic Ethanol Plant Online 2009”, Biofuels business, Ethanol, cellulosic ethanol, April 2, 2008. • “Revised RFS for 2008, …”, Notices, Federal Register, Vol. 73, No. 31, February 14, 2008. • The Food, Conservation & Energy Act of 2008:Title IX Energy (pp. 421-454); Title XV, Subtitle C Tax Provisions, Part II Energy Provisions (634-637) • Kenkel, Philip, various presenations, Oklahoma State University. • “Renewable Fuels Standard”, Renewable Fuels Association, information summary for the Energy Independence and Security Act of 2007; http://www.ethanolrfa.org/resource/standard/ • Sanders, LD, J. Pease, J. Novak, “Bio-Energy Policy Issues for the 2007/8 Farm Bill”, OSU, December 2007. • Snell, W. “Farm Bill & Energy Policy Update: Implications for US Agriculture”, Economic and Policy Upddate, January 18, 2008, UKCES.

  27. Appendix

  28. The Energy Independence and Security Act of 2007 (HR 6) • Signed 18 Dec 07, in part amended Clean Air Act • Increases fuel efficiency standard from current 25 mpg to 35 mpg in 2020 • Increases renewable fuels from 2007 7 bil. gal. & 9 bil gal in 2008 to 36 bil. gal. by 2022 (15 bil. gal. corn ethanol; 21 bil. gal. cellulosic ethanol) • Grants for production, R/D, infrastructure

  29. US Biomass Sources, 2005 Milbrandt, Anelia, 2005: “A Geographic Perspective on the Current Biomass Resource Availability in the United States”, National Renewable Energy Laboratory, Golden, CO.

  30. Will renewable energy solve all the “problems”? Targeted Problems Solution? Renewable energy likely to be a marginal part of supply Fossil fuel prices driven by many factors (China) New research suggests ethanol not a solution to environmental concerns Fossil fuel demand likely to continue high • Energy independence • Hi fossil fuel prices • Environmental concerns (carbon footprint) • Fossil fuel shortage

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