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Biofuels Moving Indiana Forward April 28, 2008

Ethanol Update. Biofuels Moving Indiana Forward April 28, 2008. Ethanol Promotion and Information Council (EPIC). EPIC’s Mission:

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Biofuels Moving Indiana Forward April 28, 2008

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  1. Ethanol Update Biofuels Moving Indiana Forward April 28, 2008

  2. Ethanol Promotion and Information Council (EPIC) EPIC’s Mission: The Ethanol Promotion and Information Council (EPIC) is a non-profit alliance of industry leaders that have come together to grow consumer demand for ethanol energy through targeted marketing. EPIC’s Vision: Establish and grow ethanol’s place in the global renewable energy market.

  3. U.S. Ethanol Production • 147 Ethanol Plants in Operation (8.55BGPY) • 61 Under Construction/10 Under Expansion (an additional 5.08BGPY) • Total of 13.61BGPY * A minimum of 6 cellulosic ethanol plants on the way…

  4. E85 • Been in use since the early 1990’s. • Classified as an Alternative Fuel. • Same storage & handling characteristics as gasoline. • Seasonally adjusted for cold-start issues. • Requires special dispensing equipment. • Requires special vehicle – Flex-Fuel Vehicle (FFV). • Reduction in energy content. • Reduction in emissions and carbon footprint.

  5. Current Federal Legislation • Energy Independence and Security Act of 2007 • VEETC. • FFV labeling. • Tax credit of 30% of the total cost of an alternative fuel system, up to a maximum credit of $30,000.  • CAFE credit extension - incentives necessary to absorb the increased cost of production of a FFV.  • A requirement that federal fleets purchase alternative fuel for use in their alternative fuel vehicles.  • Grants to encourage the advancement of hybrid-flexible fuel vehicles. 

  6. Energy Independence and Security Act of 2007 Increased Renewable Fuels Standard (RFS): • 9BGPY in 2008 • 36BGPY in 2022 • Reaches maximum of 15BGPY in Conventional Biofuels in 2015 • Remainder is Advanced & Cellulosic Biofuels.

  7. Energy Independence and Security Act of 2007 Grants: • Authorizes $500M annually for FY08-15 for the production of advanced biofuels that have at least an 80% reduction in lifecycle GHG emissions relative to current fuels. • Authorizes $25M annually for FY08-10 for R&D and commercial application of biofuels production in states with low rates of ethanol and cellulosic ethanol production. • Authorizes a $200M grant program for FY08-14 for the installation of refueling infrastructure for E85.

  8. Energy Independence and Security Act of 2007 Biofuels Infrastructure: • Amends the Petroleum Marketing Practices Act to make it unlawful for a franchiser to prohibit a franchise from installing E85 or B20 tanks and pumps within the franchise agreement. • Requires the Secretary of Energy to report to Congress on the market penetration of flex-fuel vehicles and on the feasibility of requiring fuel retailers to install E85 infrastructure. • Requires the head of each federal agency to install at least one renewable fuel pump at each federal fleet refueling center by January 1, 2010.

  9. Energy Independence and Security Act of 2007 Enactment: • January 1, 2009 • Except for RFS Standard – 9BGPY in 2008

  10. VEETC • Volumetric Ethanol Excise Tax Credit • $.51/gallon for every pure gallon of ethanol blended. • Credit expires in 2010. • Eliminated highway trust fund issues. • Payment within 20 days. • Good for taxable/nontaxable. • Eliminates AMT.

  11. Alternative Fuels Tax Credit • Federal income tax credit. • Covers up to 30%, maximum of $30,000. • Availability for non-taxable entities.

  12. Other Key Items • CAFE Credits: Incentives to automakers to produce flex-fuel vehicles. • Federal Fleets: Required to purchase alternative fuels for alternative fuel vehicles. • Grants: Encourage advancement of hybrid flex-fuel vehicles. Encourage more fuel efficient flex-fuel vehicles.

  13. Potential Federal Legislation • CAFE Fine Monies. • Increased Tax Credit or Grants • Tax Credit for Ethanol Plants for Blending Equipment. • Mandated FFV Production.

  14. Potential State Legislation • BTU Equivalency. • FFV Tax Credits. • Infrastructure Tax Credits. • Ethanol Standards.

  15. BTU Equivalency • Due to lower fuel economy, vehicles that travel 200 miles on E85 will use more fuel than on RUL, but both fuels are taxed the same. • Legislation lowers the state motor fuel tax based on BTU equivalency of E85 to RUL. • No loss of revenue to the state.

  16. FFV Tax Credits • State tax credit for the purchase of a flex-fuel vehicle. • Tied to E85 purchases. • Proof of purchase for vehicle and fuel are submitted with tax filing.

  17. Infrastructure Tax Credits/Grants • State tax credit (or grant) for the installation of E85. • In most cases, this is in addition to the federal tax credit.

  18. Ethanol Standards • A handful of states have passed ethanol standards, setting the minimum amount of ethanol to be blended in their state. • This increases the distribution and location of ethanol storage, which allows for lower transportation costs for E85.

  19. Retails Sales Incentive • Quarterly incentives based on gallons of E85 or biodiesel sales. • Must be 10% of overall sales for E85, 2% of overall sales for biodiesel.

  20. Other Possible Sources • Some ethanol producers have started funding infrastructure to get E85 stations open. • Loans that are paid back as fuel is purchased. • Grants • Both require long-term contract.

  21. Additional Information Alternative Fuels and Advanced Vehicles Data Center’s State & Federal Incentives & Laws: www.eere.energy.gov/afdc/incentives_laws.html

  22. Public Relations Key Messages: • Ethanol is an American resource. • Ethanol is an important part of the solution to our energy problems. • Ethanol has clear environmental benefits. • Ethanol is ready and available today.

  23. Public Relations The Big Three: • Food vs. Fuel • Subsidies • Water Consumption

  24. Food vs. Fuel • Energy Prices number one! Many other factors also involved. • Not using food grade corn, demand is stagnate. • Increasing yields, both in ethanol plants/corn fields. • Just use the starch, vitamins & minerals remain. • Cap of 15BGPY from corn.

  25. Subsidies • VEETC – cost of ~$4B. • Ethanol Plants do not receive! • Will likely be reduced. • Almost all industries are subsidized somehow, petroleum industry has been for 100+ years…

  26. Water Consumption 50MGPY Plant: • Less water than an average 18-hole golf course. • Less water than 200 average households. • Same/Less than refining gasoline. • Water usage is down 27% since 2001. Example: Average Sunday newspaper takes 150 gallons of water.

  27. Reality Check • Ethanol saves consumers between $.50 - $1/gallon, whether they use it or not. • Consumers would pay an additional $200M/day for gasoline. • This has no inclusion for all other factors and the increased price of oil.

  28. Questions?

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