Washington – The results of a new National Academies of Sciences (NAS) study, entitled “Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy”, should be interpreted with extreme caution, the Renewable Fuels Association (RFA) warned today. Specifically, the NAS study released this morning and the executive summary reviewed by the RFA largely assesses ethanol and other biofuels in a vacuum and fails to appropriately compare the costs and benefits of renewable fuels to the impacts of the marginal petroleum sources they are displacing.
“Global demand for energy continues to escalate yet this report chooses to focus with laser-like precision on the perceived shortcomings of conventional and next-generation biofuels. Instead, we should be comparing the relative costs and benefits of all future energy options,” said RFA Vice President Geoff Cooper, who presented oral testimony last year to the NAS National Research Council (NRC) committee tasked with drafting this report. “Biofuels are increasingly displacing and delaying the need for marginal sources of petroleum—like Canadian tar sands and shale oil—that come with extreme environmental and economic costs. Moreover, American ethanol production continues to evolve, reducing water and energy requirements while producing increasing amounts of fuel and livestock feed. While today’s NAS report does recognize some of the improvements in biofuels production, it also rehashes many of the well-worn criticisms that have been discredited time and again.”
As for the report’s key finding, the RFA does share the committee’s view that commercializing advanced and cellulosic ethanol technologies will require more policy certainty and a recommitment to reducing oil import dependency. The RFA has longed called for an extension of cellulosic ethanol tax incentives and a repeal of decades-old subsidies for the oil industry, totaling at least $4 billion a year in direct benefits. Stable policy will provide a foundation for the technology innovation that the NAS study says is needed to commercialize advanced biofuels.
“The report’s suggestion that unstable government policy could discourage investment in advanced biofuels shouldn’t come as a surprise to anyone,” Cooper said. “Commercialization of next-generation biofuels will continue to be a challenge as long as the industry and investment community receive mixed signals from policymakers about whether there will be enduring support for biofuels. It is true that the goals of the RFS could go unmet if we continually keep telling ourselves that we can’t do it. Instead of wringing our hands about the challenges associated with revolutionizing our energy supply, we should immediately end the billions in subsidies channeled every year to the mature fossil fuel industry and invest in the advanced and cellulosic ethanol technologies and related infrastructure that are needed to get us over the hump.”
While the RFA has not had the opportunity to review the entire 446-page report in detail, a review of the key findings raises several red flags.
• At the report’s outset, the committee co-chairs state that “…our clearest conclusion is that there is very high uncertainty in the impacts we were trying to estimate.” They go on to write that, “[t]he bottom line is that it simply was not possible to come up with clear quantitative answers to many of the questions.” Despite these admissions, many of the report’s findings are stated definitively and will undoubtedly be interpreted by some as being conclusive in nature.
• Numerous studies have determined that corn-based ethanol and other biofuels provide large reductions in greenhouse gas (GHG) emissions compared to gasoline. Several of those studies are acknowledged in the NAS report, but they are significantly overshadowed by discussion of highly speculative and uncertain indirect GHG effects. However, even with the inclusion of the prescriptive indirect land use change emissions, the latest research published in Biomass & Bioenergy by Purdue University economists (including one of the NRC committee’s co-chairs) and the Department of Energy states “…at present and in the near future, using corn ethanol reduces greenhouse gas emission by more than 20%, relative to those of petroleum gasoline.” Further, they found “…second-generation ethanol could achieve much higher reductions in greenhouse gas emissions.” The NAS study refers to this report, but still inexplicably suggests the RFS may be ineffective in reducing GHGs.
• Equally troubling is this committee’s reliance on out-of-date ethanol efficiency data. For instance, the committee concludes that ethanol production could take up to 1,500 gallons of water per gallon of ethanol. This is simply untrue and extremely misleading. Attributing the feedstock’s consumptive water needs that are met by rainfall to the biofuel is disingenuous. According to the latest research published in Biotechnology Letters, ethanol production today requires less than three gallons of water per gallon of ethanol. This value compares quite favorably to the water requirements for conventional gasoline production and is superior to the water requirements for unconventional sources like tar sands. Unlike the oil industry, ethanol’s water demands continue to fall, decreasing some 30% in the last decade.
• The committee’s assertion that biofuels are only cost-competitive in an environment with high oil prices and an active carbon market is at odds with the realities of today’s transportation fuels market. Today, U.S.-produced grain ethanol is the lowest-cost liquid transportation fuel in the world. As such, global demand for U.S. ethanol is increasing dramatically and exports are booming. The efficiency gains that have enabled cost reductions in grain ethanol production are likely to apply to next-generation biofuels as well as the industry grows and matures.