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The Future Role of Biofuels in Achieving American Energy Independence

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  1. The Future Role of Biofuels in Achieving American Energy Independence Christine Zeivel Energy Law Spring 2007 Professor Bosselman

  2. What are Biofuels? • a combustible fuel produced from any sort of vegetation (“biomass”) • 3 MAIN TYPES: • Bioethanol • Biodiesel • Purified biogas

  3. Source: Energy Information Administration

  4. History • Production triggered by 1970s oil shocks • Ethanol from sugarcane in Brazil • Ethanol from corn in U.S. • Grew rapidly until stagnation in 1990s • Oil price increases after 2000 re-stimulated production

  5. Current Usage • 2005: 2% of global gasoline usage • Ethanol Production • 2000: 4.6 billion gallons • 2005: 12.2 billion gallons • Biodiesel Production • 2000: 251 million gallons • 2005: 790 million gallons

  6. Ethanol • Mainly produced by fermenting sugar or starch portions of raw agricultural material • Sugar (sugar beets, sugar cane) • Starch (corn) – converted into sugar • Cellulose (trees & grasses) – more difficult to convert to sugar • Sugar & starch come from fuel or energy crops varying by region

  7. Ethanol Production Process • Grind up feedstock so more easily & quickly processed • Sugar is dissolved out of the material • Sugar fed to microbes that use it for food, producing ethanol & carbon dioxide in the process • Purify ethanol to desired concentration

  8. Current U.S. Usage • Blended with gasoline (reduces mileage by 2% - 30 mpg = 29.4 mpg) • E10 most common blend • E85 requires Flexible Fuel Vehicle (FFV) • E85 is a leading US alternative fuel • 3.5 million autos that can run on E85 fuel • apprx. 1000 public refueling sites • 2004: 3.4 billion gallons from 32 million tons of corn, 11% of harvest • 2007: 116 distilleries, 90 slated for construction • 2% of transportation needs

  9. U.S. Ethanol Policy • 51¢/gallon subsidy • CAA 1990 amendments required sale of oxygenated fuels in areas with unhealthy CO levels = increase • E85 & blends with higher concentrations of ethanol qualify as alternative fuels under the EPA of 1992

  10. Illinois Ethanol Policy • Sales & use taxes don’t apply to ethanol-blended fuels (containing between 70% and 90% ethanol) sold between July 1, 2003, and December 31, 2013. • Will apply to 100% of proceeds from sales made after. 35 ILCS 120/2-10; 35 ILCS 105/3-10

  11. Chicagoland Area E85 Pumps

  12. Advantages of Ethanol • Less toxic, less risk from spills • “Carbon Neutral” – same amount of CO2 emitted is absorbed during growth process • Easily integrated into current transportation system • can blend up to 10% w/ gasoline (E10) • Modified engines (FFVs) can take up to 85% ethanol (E85)

  13. Advantages of Ethanol • Energy efficient – yields 25% more energy than used in corn production • growing corn, harvesting, distilling into ethanol • Decreased fossil energy input • Gasoline: 1.23 million BTU/ I million BTU delivered • Ethanol: .78 million BTU/ 1 million BTU delivered

  14. Future of Ethanol • Industry set for 160% increase in next 2 years • 116 existing U.S. ethanol-fuel distilleries • use 53 million tons of corn • capacity to produce more than 5.6 billion gallons annually. • 80 refineries are under construction & 7 are expanding • Boost demand to 139 million metric tons of corn • add more than 6 billion gallons of capacity when complete • USDA predicts corn acreage will increase more than 15% in 2008 than in 2007

  15. Is Ethanol the answer? • CATO Institute "Ethanol will not lead to energy independence. If all the corn produced in America in 2005 were dedicated to ethanol production (and only 14.3% of it was), U.S. gasoline consumption would have dropped by only 12%. For corn ethanol to completely displace gasoline in this country, we would need to appropriate all U.S. cropland, turn it over to ethanol production, and then find 20% more land on top of that."

  16. And on top of it…. • Average fill up of a 25 gallon SUV gas tank with ethanol requires same amount of grain as it takes to feed 1 person for 1 year. • Every person in the US uses 500 gallons of gasoline per year. • That means that every American would use enough gas to feed 20 people over the course of the year. • There are 300 million people in the US, and 300 million people, each using enough food to feed 20 people to run their cars, would require enough grain to feed 6 billion people. • “So realistically, we are not discussing replacing 75% or 50% of our imported oil with biodiesel or ethanol – period. It isn’t possible. And if we are talking about a more realistic number, like 10-15%, that can only happen with policy programs designed to create, encourage, and perhaps require conservation.”

  17. But impact on other industries? • USDA has said that meat supply will fall this year because of high cost of feed • Beef, pork & chicken is expected to decline by 1 billion pounds • Typically, meat production in the United States rises by about 2% a year, but pressure from American ethanol producers has sent the price soaring to $4 a bushel

  18. Biodiesel 2 methods utilized • Fuel – “Neat” biodiesel is 100% • Fuel additive – “Biodiesel blend” is neat biodiesel blended with petrodiesel (Bxx)

  19. Biodiesel Production • Made from: • straight vegetable oil • waste cooking oil • animal oil & fat • Transesterification – process used to produce biodiesel by separating the glycerin from the fat or vegetable oil • methyl esters (chemical name for biodiesel) • glycerin (valuable byproduct usually sold to be used in soaps and other products)

  20. Biodiesel Basics • Largest possible source of oils = oil crops • such as rapeseed, palm or soybean • Soy driving force b/c capacity, surpluses, & declining prices • BUT expensive • Currently, waste oils (grease) & fats largest source because they are FREE • Not just raw vegetable oil! • Has to meet strict industry standards • Have to register with EPA

  21. Algae – “Green Gold?” • Currently being developed • 30 times more oil per acre than current crops used • no sulfur • non-toxic • highly biodegradable • not subject to a commodity risk as is crude oil, corn & soybeans.

  22. Biodiesel is approved for use in U.S. • Registered as a fuel & fuel additive with the Environmental Protection Agency (EPA) • Meets clean diesel standards established by the California Air Resources Board (CARB). • Neat biodiesel designated as an alternative fuel by DOE & DOT. • Only alternative fuel to fully complete health effects testing requirements of 1990 Clean Air Act Amendments.

  23. U.S. Biodiesel Policy – EPA of 2005 • Small Agri-Biodiesel Producer Tax Credit • volumetric based income tax credit for the production of agri-biodiesel – $.10/gallon (biodiesel made from first-use vegetable oils and first-use animal fats) • Alternative Fuel Refueling Infrastructure Tax Credit • tax credit for installation of certain qualifying fueling infrastructure that dispense alternative fuel, including biodiesel blends B20 and higher.

  24. U.S. Biodiesel Policy • Biodiesel Excise Tax • Extends the tax credit for biodiesel producers established in 2004 through 2008. • $.50/gallon of waste-grease biodiesel • $1.00 for agribiodiesel. • If used in a mixture, • $.01/ percentage point of agribiodiesel used or • $.005/percentage point of waste-grease biodiesel. • Consumer Credits • Income Tax credit • Credit for fed tax paid

  25. Illinois Biodiesel Policy • Sales & use taxes apply to 80% of proceeds from the sale of biodiesel-blended fuels made between July 1, 2003, and December 31, 2013. • Sales & use taxes don’t apply to the proceeds from sale of biodiesel blends containing more than 10% biodiesel made. • Taxes apply to 100% of the proceeds from sales made thereafter. • 35 ILCS 120/2-10

  26. National Biodiesel v. Diesel Prices

  27. Current U.S. Usage • 2005: EPA Act • 75 million gallons (vs. 62 billion diesel fuel) • Tripled in 1 year (25 million gallons in 2004) • End of 2006 • 105 producing plants • 77 more slated for construction in next 1 ½ years • available at over 1,000 pumps

  28. Current U.S. Usage • National Biodiesel Board predicts 150 million gallons in 2007 • More than 300 major fleets • U.S. Postal Service • U.S. Depts of Defense, Energy & Agriculture • Transit authorities, schools, parks

  29. Chicagoland Biodiesel Pumps

  30. Advantages of Biodiesel • Safe to handle, store & transport • Less toxic, less risk from spills • Higher flash rate = safer in a crash • “Carbon Neutral” - same amount of CO2 emitted is absorbed during growth process • But other emissions during process = 78% reduction in CO2 through life cycle (neat) = 15% reduction in CO2 through life cycle (B20) = 35% reduction in CO through life cycle

  31. Advantages of Biodiesel • Reduces other pollutants • 35% reduction in unburned hydrocarbons through life cycle – smog & ozone precursor • 8% reduction in sulfur oxides – acid rain • 3% reduction in methane • 32% reduction in particulate matter (PM10 68%) • 83.6% reduction in PM soot • 79% reduction in wastewater • 96% reduction in hazardous waste, but double non-hazardous waste

  32. Future of Biodiesel • Most major car manufacturers offer FFVs running on E85 where it is popular • Japan • South Korea • DaimenChrysler & Volkswagon working on “SunDiesel” made from crops grown specifically for energy use (willow), waste wood & other plant material • GHG & other pollutants reduced up to 90% • Manufacture cars as soon as tech developed to produce enough fuel

  33. Is Biodiesel the Answer?Case Study: North Carolina Zoo • Fuel for trams, buses, trucks, tractors & equipment • Restaurants provide about 1500 gallons of used oil • Current capacity can produce 1500 gallons of pure B100 or 7,500 gallons of B20 blend annually  • Enough B20 to meet 40% of Zoo fuel demand.  • Plans to increase the batch size & add 2nd reactor tank will increase output to 17,000 gallons of B20 to meet 100% of Zoo diesel fuel needs • As production capacity increases, the Zoo will need to obtain additional waste oil from local restaurants

  34. Is Biodiesel the Answer? • It would be very ambitious to produce the amount of diesel used on the farm • That would require all of the vegetable oil currently produced in the U. S. & about 15% of our total production land area. • It would in fact be very ambitious to have even a 0.5 billion gallon per year biodiesel industry • This would be only 1.5% of our on-highway diesel fuel or less than 1% of our total fuel oil and kerosene use • would require • all of the surplus vegetable oil (0.13 bil. gal.), • 1/2 of the used oil (0.17 bil. gal.), and • all of the oil which could be produced on the 37 million acres of idle crop land (approx. 0.3 billion gal.) or the equivalent by displacing current crops

  35. Biogas • Composed of 60% methane • Purified or refined biogas has 85-96% methane • Sources – “wet biomass” • Landfills – methane collection • Water sewage treatment plants • Gas from biomass (fermentation of organic wastes) • Animal manure • Industrial organic wastes Biogas Pump in Sweden

  36. Biogas Production • Bacteria in bio-degradation of organic material under anaerobic (without air) conditions. • Digester: heats & agitates to produce anaerobic conditions • Small Scale v. Large Scale • Methanogens (methane producing bacteria) help degrade organic material & generates biogas • Purified: Biogas is passed through a gas purification system which removes excess moisture & hydrogen sulphide

  37. Small Energy Uses • fuel to run power generators, boilers, burners, dryers or any equipment using propane, gas or diesel. • requires minor adjustments to run on biogas • electricity can be used to power small appliances & lights • dual-fuel generator that permits the use of conventional diesel fuel with or without biogas (good if biogas shortage)

  38. Animal Manure & Plant Residue

  39. Industrial Organic Waste

  40. Integrated biogas plant for treatment of 500 people’s dung waste built in China 2005. The biogas is provided as fuel for a restaurant.

  41. Natural Gas Substitute • Substitute or combined with natural gas • Can be used in natural gas vehicles if upgraded to 85% methane • When used alone, faster breakdown of parts & engine overheating • Injected into natural gas grid • if injected close to the production site (low pressure network) it can only be used locally • for high pressure injection the installation need special infrastructures

  42. U.S. Biogas Policy • AgSTAR Program • voluntary effort jointly sponsored by the U.S. EPA, U.S. Dept of Agriculture, & U.S. Dept of Energy. • encourages the use of methane recovery (biogas) technologies at the confined animal feeding operations that manage manure • Biogas Production Incentives Act of 2007 • Proposed by Senator Ben Nelson of Nebraska & of Larry Craig of Idaho • Providing biogas producers with a tax credit of $4.27 for every million British thermal units (Btu) of biogas produced

  43. U.S. Biogas Usage • Most of the methane from wastes is allowed to escape into the atmosphere • about 100 dairy farms • few pig farms • some landfills • few municipal sewage treatment plants • 125 operational digester systems • methane emission reductions of approximately 80,000 metric tons • energy generation of about 275 million kWh.