December 24, 07
US Congress Mandates 36 Billion Gallons of Biofuel

The Energy Independence and Security Act of 2007, which was signed into law Wednesday, increased the volume of renewable fuels that must be sold annually in the United States to 36 billion gallons by 2022.

For the first time, the socalled “renewable fuels standard” carves out a minimum usage requirement for biodiesel starting in 2009.

“The creation of a specific renewable requirement in the nation’s 60-billion-gallon pool of diesel fuel has been a top priority for the U. S. biodiesel industry,” said Larry Schafer, a Washington-based senior adviser with the National Biodiesel Board.

Previously, only ethanol production had been mandated — in the Energy Policy Act of 2005. The new standards call for ethanol production to reach 15 billion gallons by 2015.

The fastest-growing renewable fuel will be cellulosic biofuels — fuels manufactured from a variety of organic materials such as logging debris, agricultural residues and dedicated energy crops such as switchgrass. The new mandate starts with a modest 100 million-gallon requirement in 2010, increasing to 16 billion gallons by 2022.

Cellulosic fuels have been touted as preferable to both ethanol and biodiesel because adequate supplies of raw materials or feedstock exist and are widely dispersed throughout the country. Cellulosic feedstock production also is viewed as environmentally friendly given its net energy balance, energy produced compared to energy consumed.

There is a catch, though. To date, no commercially viable method of making fuel from cellulosic biomass has been proven.

“Clearly the cellulosic biofuels represent a near-term opportunity that is really enormous,” especially for a biomass-rich state such as Arkansas, said Jim Wimberly, president of Fayetteville-based BioEnergy Systems LLC, a bioenergy consulting firm.

“We have lots of forest resources, which is an important feedstock, and we have outstanding land resources in the Delta, some of which eventually could be used for cellulosic biofuels production,” Wimberly said. “We need to take the necessary steps right now to get ready to capitalize on this opportunity.” Wimberly is optimistic the technological hurdles can be overcome.

“I think there’s enough evidence out there to give people confidence that the cellulosic conversion technologies will materialize,” he said.

Potlatch Corp., however, has retreated from its plan to build a first-of-its-kind biorefinery at the company’s Cypress Bend pulp and paperboard mill in Desha County. The company decided not to apply for federal grant money to help finance the project and then had difficulty finding investors and technical partners.

On Feb. 28, the Department of Energy said $ 385 million would be awarded to six biorefinery projects designed to produce more than 130 million gallons of cellulosic biofuel. Those projects include: Abengoa Bioenergy Biomass of Kansas LLC, $ 76 million; ALICO Inc., LaBelle, Fla., $ 33 million; BlueFire Ethanol Inc., Irvine, Calif., $ 40 million; Broin Cos., Emmetsburg, Iowa, $ 80 million; Iogen Biorefinery Partners LLC, Shelley, Idaho, $ 80 million; and Range Fuels, Soperton, Ga., $ 76 million.

Currently, the only biofuel being produced in Arkansas is biodiesel. FutureFuel Chemical Co. near Batesville can produce up to 24 million gallons of biodiesel annually and Patriot BioFuels Inc. in Stuttgart can produce 3 million gallons.

The plants use soybeans — one of the state’s leading crops — for the majority of their production. Soybeans also are the leading source nationally for biodiesel.

The 2007 output by the two Arkansas companies, however, will be far below their production capacities because of the high cost of soybean oil.

The entire U. S. biodiesel industry is expected to produce approximately 400 million gallons of fuel in 2007. The new biodiesel mandate will increase the domestic use of biodiesel from 500 million gallons in 2009 to 1 billion gallons in 2012.

Beyond 2012, the administrator of the Environmental Protection Agency and the secretary of the Department of Energy will determine the exact breakdown between biomass-based diesel and all other so-called “advanced biofuels,” which are neither corn-based ethanol nor cellulosic biofuel, said Schafer, the National Biodiesel Board adviser.

The new 310-page energy act was shorn of all proposed tax policy regarding biofuels before it was finalized. A $ 21 billion package that included tax incentives for such renewable energy sources as wind energy and biodiesel production was dropped to gain support necessary for passage in Congress, Schafer said.

“We’re going to have to go find another way to get that done,” he said. “It’s going to take a big bipartisan approach.” Schafer said the biodiesel industry will continue to pursue the extension of the federal biodiesel tax incentive: a $ 1 excise tax credit for every gallon of pure biodiesel (known as B 100 ) that is produced from virgin feedstock and then blended with petroleum-diesel fuel.