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Ethanol land use change drops under new Purdue modeling

Dr. Wallace Tyner of Purdue University’s Department of Agricultural Economics made his second appearance at an American Coalition for Ethanol conference, his presentation this year a follow up to 2009 where he discussed his department’s new GTAP (Global Trade Analysis Project) modeling for biofuels and land use change. 

Dr. Tyner first discussed the E10 Blend Wall and the impact it will have on the next generations of biofuels.

“We are at the blend wall,” Tyner said.  “It is literally a wall.  You cannot technically go beyond that wall.”

Because corn-based ethanol has now filled the allowable marketplace, the break-even price is now based on corn instead of being linked with gasoline as it has been in the past, he explained.

Dr. Tyner also explained that the U.S. Environmental Protection Agency made a fundamental change in the Renewable Fuels Standard (RFS) in its February 2010 final ruling.  The agency changed the metric on the rule, effectively converting the RFS from a volumetric basis to an energy basis.  The RFS now calls for 36 billion gallons of “ethanol equivalent.”  All possible biofuels – bio-gasoline, algae, etc. – are all given an “ethanol equivalent” rating – bio-gasoline is given a 1.5 gallon rating, for example.  This could actually lower the total amount of biofuel being used in the U.S. under the RFS>

Regarding the E10 Blend Wall, Tyner said that it is firmly standing in the way of cellulosic ethanol development.

“There’s no room at the inn for cellulose-based ethanol,” he said.  “If we stay at E10, you can forget about cellulose-based ethanol.”

Even if EPA regulations are changed to allow E15, it might only increase the ethanol blending limit to 19 billion gallons.  If corn ethanol is limited at 15 billion gallons and “other advanced” biofuels are given 4 billion gallons, as stated in the RFS, there is still no room for the growth of cellulosic ethanol.

“Even if we go to E15, there’s no room at the inn for cellulose,” Tyner said.  “The implications of the blend wall are much farther than just corn ethanol alone.”

Dr. Tyner has been working on the issue of land-use change for about three years, a timeframe he says isn’t actually very long given the complexity of the issue.  He has developed the Global Trade Analysis Project (GTAP) model to study how biofuels impact land use, and this year they have made updates to the model based on some new information.

Changes to the Purdue GTAP model include:

• Three major biofuels have been incorporated into the model: corn ethanol, sugarcane ethanol, and biodiesel.

• Cropland pasture and Conservation Reserve Program (CRP) land have been added, not accounted for in previous work.

• Energy sector demand and supply have been re-estimated and calibrated to 2006.

• Distillers grain has been added to the model, including its treatment, production, consumption, and trade – Tyner called this a “significant improvement”

• The structure of the livestock sector has been modified to better reflect its actual functioning

• A corn yield response to higher prices has been built into the model.

• A change has been made to the way the model treats new land brought into production, better reflecting the actual productivity of the new land.

Dr. Tyner showed the evolution of the GTAP results, from the beginning of the model to now with these updates and improvements to the data.  The modeling in January 2009 showed that .27 hectares of land were needed (globally) for every 1,000 gallons of biofuel.  In August 2010, the improved modeling shows that only .13 hectares are needed – less than half of their earlier estimate.

“All of these changes in the model and improvements in the database have led us to conclude that the land-use implications are much smaller than we had estimated recently,” Tyner said.

He pointed out that the Purdue estimate is substantially less than Tim Searchinger’s much-publicized research on land-use change.  Searchinger’s results found that .75 hectares of land are needed, compared to Purdue’s .13 hectares.

“In terms of land use change based on greenhouse gas emissions, the results that we’re getting today are fourteen percent of the results Tim Searchinger got in his original work,” Tyner said.

Dr. Tyner said he is a proponent of changing the way the emissions of gasoline and biofuels are compared.  Currently the law in California and at the U.S. EPA compares averages, not marginals.  He believes it’s more fair to compare the most recent ethanol plant built with the most recent oil extracted, which is likely oil from the Canadian tar sands.  Using averages ignores the fact that ethanol is increasingly efficient while oil is increasingly damaging to the environment as it becomes harder and more costly to extract.

Dr. Tyner acknowledged that land use change is a controversial topic.  Some say it’s not even possible to measure these things, but he believes that with one-third of the corn crop going to ethanol, it is important to use the best science available to try to accurately measure any land use change. 

“What we’ve tried to do to the best of our ability, and to the best data available, is to estimate these,” Tyner said.  “They are still highly uncertain.  I do this work all the time, and I’m the first to tell you that these estimates are highly uncertain.”

Dr. Tyner said that, in terms of public policy, this GTAP modeling work can be helpful in how the EPA is implementing the Energy Independence and Security Act (EISA) and the threshold tests for greenhouse gas emissions.  However, what the California Air Resources Board is doing with its Low Carbon Fuel Standard is an entirely different story, he said, because they are using the measure in the value of implementing the policy.  Every tenth of a percent of carbon under the CARB rules can make a huge difference. 

“We cannot measure it accurately enough to withstand almost any court case test,” Tyner said.  “It depends on how you use the information, in my view, whether or not it’s something that’s useful in the debate.”

Cellulosic ethanol producers talk about meeting the Renewable Fuels Standard

A panel discussion at the ACE Ethanol Conference, “Cellulosic Ethanol: When Can it Meet the RFS?”, gathered industry leaders focused on the advancement of cellulosic ethanol.

ICM, Inc. Director of Research and Development Doug Rivers said that the integration of grain-based and cellulose-based ethanol production is essential. Rivers suggested that the industry must leverage existing operations and pursue feedstocks with high yield (8-20 tons/acre) and high carbohydrate content, ideally gathered from a 50-mile radius. He points out that we can expect significant developments in this industry in the next five years.

Jeff Passmore of Iogen Corporation pointed out that the successful production of cellulosic ethanol is currently taking place at demonstration plants and pilot projects across the country, but the trick is to scale that up to commercialization. He pointed out that players in the renewable energy field must successfully launch one billion gallons of commercial cellulosic ethanol and then work on fortifying a toolbox that includes tax, policy, and infrastructure components.  Passmore emphasized that we’re going to have to be innovative to get policies launched and act quickly to realize the goals of the RFS. 

Jim Imbler, CEO and President of Zeachem, Inc., stressed that flexibility is key for this industry to grow. You’ve got to have the ability to use flexible feedstock, he said, and focus on a cost-effective process that can scale up to large production.

According to Range Fuels, Inc. Sr. Vice President Bill Schafer, ethanol and other biofuels will be increasingly derived from non-food biomass. He said that weather and market dynamics play a role in the volatility of feedstock, but the strategic management of these components can help the industry tap into three of its great opportunities: energy independence, environmental benefits, and economic development.

Empowering fuel choice, remarks by ACE's Brian Jennings

“We’ve chosen ‘empowering fuel choice’ as our theme for this year’s conference,” said Brian Jennings, Executive Vice President of ACE, “and it really embodies what ACE has been about for a long time.”

Jennings cited several years of progress on the idea of fuel choice and multiple fuel blends.  In 2007, ACE published an “optimal blends” study which found that blends like E20 and E30 can perform well in cars, and in some cases get mileage as good as with straight gasoline.  In 2008, ACE published the first technical guide for petroleum marketers on the topic of blender pumps.  Last year, ACE was proud to sign on to the E15 waiver application along with other groups, ACE launched the “Blend Your Own Ethanol” national campaign, and bi-partisan legislation was introduced in Congress to improve access to flexible fuel vehicles and blender pumps.

However, with all this progress, ethanol has been forced against a wall.

“The blend wall is real, and it’s here,” Jennings said.

“Congress is arguing over everything, and EPA continues to dither on the E15 waiver,” Jennings said.  “This is gravely serious for us in the ethanol industry, but it’s also important for every American.”

If regulations allowed more ethanol to a gallon of gasoline, every consumer would be able to save money at the pump.  This is being blocked today by 30-year-old regulations, and Jennings says the Administration doesn’t recognize the mixed signals it is sending.

“The RFS sends a signal to produce more ethanol, but a thirty-year-old Clean Air Act restriction that limits ethanol to ten percent per gallon of gasoline is sending a signal to limit the use of ethanol,” Jennings said.

He expressed the industry’s frustration over the multiple delays in the U.S. EPA’s decision on the E15 waiver.  After 270 days, they said they needed more time.  In June they said they needed even more time, and now they are leaning toward approving up to E15 only in 2007 and newer vehicles.

“We could say the EPA is slow-walking the E15 issue, but that would imply that some progress is being made,” Jennings said.

He points out that if EPA approves E15 in only 2007 and newer vehicles, only 2 out of 10 vehicles would be able to use it.  How many petroleum retailers are going to change their fuel slate for that small market?

A main focus right now is the ethanol tax credit, the Volumetric Ethanol Excise Tax Credit (VEETC).

“If VEETC expires, jobs will be lost and prices will rise for consumers,” Jennings said.

Jennings said that Members of Congress are expressing to ACE that, with only 20 days left in the Congressional calendar, we need to focus on what’s doable.  Part of that depends on grassroots advocates and their willingness to talk to their Members of Congress – especially during the August Congressional recess.

“The very best ethanol lobbyists are sitting here,” Jennings said.  He encouraged ACE members and all ethanol supporters to take advantage of the August recess and meet with their Representatives, invite them to visit your ethanol plant or meet with your board of directors.  “That’s how we get things done,” he said.

Join the conversation about ethanol, E15, and EPA

What do you think about the EPA's delay of a decision on E15?  Join the conversation happening right now on the social network site, Ethanol Collective: www.ethanolcollective.com

EPA delays E15 decision once again

EPA is required by law to make a decision on the request to allow the use of cleaner burning blends of up to 15 percent ethanol, and by the time they actually make a decision, it will be a full year later than the law requires. Every addict needs enablers, but frankly we could not have imagined the Environmental Protection Agency would be one of the major defenders of the status quo that is now fouling beaches from Louisiana to Florida.

We also have to wonder who is influencing EPA when they agree it will be impossible to meet the Renewable Fuels Standard but refuse to remove the requirement that fuel contain a minimum of 90 percent petroleum. That decision can only be good news for the likes of BP and ExxonMobil, and anyone else who chooses to ignore the dangers of relying on unstable and hostile foreign regimes for our fuel, or the dangers of drilling two miles below the ocean.

EPA could be accused of slow-walking this E15 decision, but that would imply that progress is being made. This decision has been pushed back an entire year, and has gone from making cleaner burning E15 available to all cars, to only 2001 and newer cars, and now possibly to only those made after 2007. Those vehicles were practically fresh off the assembly line when the data was submitted proving blends beyond E10 are safe for all vehicles, and now two years and millions of dollars have been wasted as EPA defends the status quo. Meanwhile, oil has been spilling from the Gulf of Mexico for 60 days and counting. What do government bureaucrats need to see to be convinced that our nation desperately needs take action to reduce our use of oil?

When ACE met with EPA in March of this year, we were told that by mid-year EPA was planning to approve E15 for 2001 and newer vehicles, a commitment the Agency put in writing in a December 1 letter. While there are many practical challenges to implementing E15 for only 2001 and newer vehicles, it may have been better than the status quo of being limited to only E10. But to add insult to injury, EPA is now indicating that they will consider E15 for only vehicles made after the 2007 model year – only 20 percent of the U.S. fleet. Even if every single vehicle made after 2007 used E15 every time it filled up, it would barely allow the U.S. to meet the 2012 Renewable Fuels Standard requirement.

As oil is ruining livelihoods and closing businesses, the economic and job-creation benefit of ethanol is being told it must wait in the wings. With the price of ethanol being almost a dollar less per gallon than gasoline today, EPA’s approval of a 5 percent increase in the ethanol content could save the U.S. more than $19 billion in fuel expenditures every year – almost as much as BP has committed so far to clean up the damage that oil has done in the Gulf.

ACE is encouraging all ethanol supporters to contact their Members of Congress to urge their support of legislation for more flexible fuel vehicles and blender pumps, such as S. 1627, the Harkin-Lugar ‘Consumer Fuels and Vehicles Choice Act.’ More FFVs and blender pumps would bring flexibility into the U.S. fuel system and give consumers greater fuel choice, while bypassing the bureaucracy that is preventing the cleaner alternative fuels from reaching the marketplace.

Posted by: Brian Jennings

U.S. EPA announces RFS2 rules, improved GHG emissions rating for corn-based ethanol

The U.S. Environmental Protection Agency has announced the proposed regulations for the Renewable Fuels Standard 2, including a revision in the calculation of lifecycle emissions from corn-based ethanol. Hear from the American Coalition for Ethanol's Brian Jennings:

Sound science and a fair playing field

The American Coalition for Ethanol recently submitted official comments to the U.S. Environmental Protection Agency on the proposed rule for the Renewable Fuels Standard.  This "RFS2" has been a point of concern, specifically the EPA's inclusion of the controversial "international land use change" (ILUC) theory in the proposed rule.  It's also concerning that EPA appointed Tim Searchinger, the lawyer who is the very architect of the ILUC theory, a seat on the peer-review panel.  These so-called "indirect effects" are new, untested, unreliable, and controversial computer-generated predictions that are, at this time, being selectively applied only to corn ethanol. 

In our comments, ACE asked that EPA insist on greater scientific consensus and real-world data before moving forward to apply these penalties to biofuels in the final rule.  And if EPA insists on applying indirect effects, these effects should be applied to all fuels – not just ethanol.  This includes undertaking a complete lifecycle assessment of the indirect emissions association with petroleum.  Sound science and fair playing field is all we’re asking. 

Experts debate methods for calculating international land use change

At the American Coalition for Ethanol's national conference last week in Milwaukee, experts in the field of studying international land use change debated the different methods behind the calculations.  Wally Tyner, professor and energy economist in the Department of Agricultural Economics at Purdue University, and Tom Darlington, President of Air Improvement Resource (AIR) Inc. addressed the conference's general session on "Theory vs. Science: The Role of Biofuels in Low Carbon Policies and Calculating Direct and Indirect Emissions."

Tyner noted that prior to 2007, the general consensus was that corn ethanol had a 20% reduction in greenhouse gas (GHG) emissions, but then in the Energy Independence & Security Act of 2007 came the requirement that indirect land use change be considered in estimating total GHG impacts.  He stated that there are a number of issues involved in developing a lifecycle model to quantify these international changes, including how to define the boundaries, deciding what to include and not include, and working with uncertain numbers. "How uncertain are these numbers?  And they are uncertain, believe me," Tyner said.

He also mentioned the E10 blend wall, calling it "the biggest issue" facing the ethanol industry.  "It's a total block to cellulosic ethanol," Tyner said. "Cellulosic ethanol will never appear without getting over the blend wall."

Tyner believes that, based on Purdue's "GTAP" model, the range today for corn ethanol is minus 9 to minus 23 in terms of lower lifecycle emissions than gasoline.

Tom Darlington has studied the international land use change (ILUC) issue and sees what California has done with its low carbon fuels standard as potentially problematic.  Other states are looking to take up the banner on a low carbon fuels standard after California, he noted, saying "I still believe how we do a low carbon fuels standard or RFS2 is a pretty big issue."

"At this point I believe the numbers are not as high as the GTAP model and some of the other models are saying, and I'm not in one camp or the other," Darlington said.  He studied the ILUC issue about a year ago for the Renewable Fuels Association and determined that land use change could indeed be zero.

Darlington believes a higher credit should be given for the ethanol co-product distillers grain, which goes back into the livestock feed market.  He said that other models traditionally believe distillers grain replaces corn on a pound for pound basis, but a new study shows that especially in dairy cattle, swine, and poultry, distillers may replace some soy, too.  One pound of distillers grain replaces nearly 1.3 pounds of corn.  Properly accounting for that soy offset should have a land use change credit, Darlington said. 

When the models are tweaked according to Darlington's recommendations, the outcome is much more favorable for corn ethanol than under the California model, for example.

"Land use modeling is in its infancy," Darlington said.  "Regulations requiring these to be estimated are still far ahead of the models.  We believe there is great risk in making bad decisions, and they may be irreversible."

During the Q&A with the audience, Tyner said he has a couple of issues with Darlington's model, but "we have made tremendous progress in the science.  We're all working to improve all of this stuff."

The California low carbon fuels standard is another question, Tyner said, stating that "it's really tough to create a policy that puts millions of dollars on every percentage point on every different type of fuel."  Measurement becomes absolutely critical, he said, adding that "I don't think we're going to get there," to a point where we can be absolutely certain of each percentage point.

 

Rice University study misses some facts on ethanol

A new Rice University study misses some facts on ethanol, and more specifically corn-based ethanol production.  The report ("The Water Footprint of Biofuels: A Drink or Drive Issue?") says that "to meet the mandated increased production of biofuels, increased agricultural activity such as tilling more land and higher agrichemical application is inevitable."  This statement misses a couple of important facts.

First, the Renewable Fuels Standard in the 2007 energy bill was written in such a way to recognize the role of biofuels produced from different sources, and to balance those sources according to their potential size.  The RFS calls for 36 billion gallons of biofuel use by 2022, with corn-based ethanol being capped at 15 billion gallon of that total by 2015.  The balance will come from cellulosic sources.  There is a limit to how much corn can and should be used for ethanol production, and the RFS schedule respects that.  This amount of corn-based ethanol can be made available in a sustainable way, keeping an ample supply of corn for feed and food purposes.

Also, the production of corn has changed dramatically, with farmers achieving higher yields with fewer inupts.  Farmers are growing five times as much corn as they did in the 1930s on 20 percent less land.  Irrigation, soil loss, emissions, and net energy inputs per bushel of corn are all down double-digits in the last 20 years.  The ethanol production process itself has dropped its water consumption per gallon of biofuel by more than 26 percent since 2001.  There are lots of new efficiencies both in farming and in ethanol production that need to be recognized.

And please note: the Rice University study comes via funding from Shell Oil's "Center for Sustainability."

EPA needs to schedule some time in the Heartland

A recent Congressional hearing shed some light on the many unknowns surrounding how the Environmental Protection Agency's biofuels regulations will affect American farmers and ethanol producers. 

A May 21st hearing held by the House Small Business Committee, "The Impacts of Outstanding Regulatory Policy on Small Biofuels Producers and Family Farmers," included testimony by Margo Oge, the Director of the EPA's Office of Transportation and Air Quality. Ms. Oge was asked by Congressman Lynn Westmoreland (R-GA) how much time during her 29-year career with EPA she'd spent on farms in the United States seeing first-hand the impact of the agency's rule-making.  Her answer: "I have not spent any time on farms in the United States."  View a video clip here.

Since the hearing, Senator Chuck Grassley (R-IA) has invited EPA employees including Ms. Oge to visit his family's farm in Iowa to see first-hand the impressive things farmers are doing to produce food, feed, and fuel.  The American Coalition for Ethanol seconds this request and urges EPA officials to schedule a visit soon to some of America's family farmers and ethanol plants.