The energy bill signed this week will have an enormous impact on biofuels.
Friday, December 21, 2007
By David Rotman
In case you were a bit busy this week and didn't have time to examine the 822 pages of the Energy Independence and Security Act of 2007, it is a big deal. And in particular, it is a big deal for biofuels.
The numbers speak for themselves. The legislation, which was signed by President Bush on Wednesday, creates an enormously ambitious Renewable Fuel Standard (RFS) that mandates the production of 36 billion gallons of renewable fuels by 2022; included in that is 21 billion gallons of advanced biofuels (most of which will be cellulosic biofuels). At such levels, biofuels will account for more than 20 percent of total road-transportation fuels in the United States by 2022. To give a sense of the ambition of such a mandate, it is worth noting that total biofuel production in 2007 was only 4.7 billion gallons, and almost all of that was corn-derived ethanol. There is still no commercial production of cellulosic ethanol.
The biofuel industry is, of course, thrilled. Bio, the biotechnology trade association that counts among its members numerous companies involved in various aspects of biofuels, predicts that the new mandates will mean nearly 300 new biofuel plants, including 75 new corn ethanol plants and 210 new cellulosic ethanol plants. Bio estimates that the RFS could mean $170 billion invested in advanced technology development, biofuel production, and new infrastructure to handle biofuels.
Overall, the federal mandate for biofuels appears to be a good thing. It will finally give industry and academic researchers confidence that biofuels are really going to play an important role in the country's energy future. But it is worth keeping in mind that there are still huge technology challenges in ramping up production of advanced biofuels. Achieving the ambitious standards of the new energy law will require an equally ambitious effort in researching and developing advanced biofuel technologies. (See "The Price of Biofuels.")
Comments
javs on 12/23/2007 at 9:05 PM
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devassocx on 12/26/2007 at 3:39 AM
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but if it distorts our free economy via subsidies, etc then I see that as very bad gov't policy. There is so much wrong with the current corn/ethanol effort as to be laughable.
Usually, in a truly free economy, consumers voting with their purchasing $ will guarantee a proper and efficient outcome.
It seems that the people that like subsidies are
the ones that are recieving them...not the ones paying them.
jaggspb on 12/26/2007 at 8:15 AM
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It is after a market has been established that substities should be phased out when the true price is balanced.
javs on 12/26/2007 at 1:13 PM
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But, the question is whether the time has arrived to change the prevailing system with a paradigm shift. In the example, under the new paradigm jaggspb is correct to open and develop the resources of the infant demand market of the power industry.
The new paradigm is about shifting long run contracts for central stations, where the subsidies end up for financial capital, to enable wholesale and retail competition of production capital under EWPC in a more stable environment. Such environment results, as central stations sales go to the competitive market, and part of them are displaced to the demand side, while boom bust system volatility gets mitigated by increasing demand elasticity.
sharring on 01/01/2008 at 9:53 PM
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javs on 01/02/2008 at 10:30 AM
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RD on 01/03/2008 at 5:45 PM
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dirtworks on 01/20/2008 at 6:02 PM
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Conservation is something we can all do, right now, in all aspects of our lives. Belief in the myth of some cheep renewable energy resource just over the horizon is not an answer to the problem of global climate change or our dependence on oil for countries we would prefer not to do business with. We can't consume our way out of a crisis. We have to change our wasteful behaviors founded on a sense of entitlement.
prbenoit on 02/25/2008 at 10:07 AM
3
It is currently at or near the top of invasive species lists for virtually every southern state. Kudzu, as a member of the Fabaceae family, is a natural nitrogen fixer and, thus, grows rapidly across the landscape with no inputs (e.g., fertilizers). Given its perennial growth habit, its rapid growth rate, and the fact that kudzu has a high starch content (particularly its root system), its potential as a biofuel could be tremendous. However, to date, this potential has basically gone unstudied.