As part of his plan to reduce America's dependence on foreign oil, President Obama this week directed the Environmental Protection Agency and the Agriculture Department to invest in biofuels.
The president called on the agencies to develop a comprehensive biofuel market development program. He also wants them to create grant and loan programs to spur development, construction and retrofit of U.S. biorefineries. And Obama called for redirecting funds earmarked for renewable fuels to preserve jobs in the biofuels industry.
The EPA made headlines of its own this week proposing a revised renewable fuels standard. Facing a lofty production mandate of 36 billion gallons of biofuel production by 2022, EPA is calling on the industry to reduce its greenhouse gas emissions or GHGs.
The new Renewable Fuel Standard, known as RFS2, requires the biofuels industry to cut greenhouse gas emissions along the entire production pathway. Using gasoline as a baseline, biofuels like ethanol and biodiesel would be required to lower GHG emissions from feedstock to gas pump. EPA's goal is to reduce the output of greenhouse gasses like carbon dioxide by 4.5 billion tons over the next 30 years -- the equivalent of taking 24 million cars off the road.
According to EPA figures, ethanol production is expected to release 16 percent fewer GHGs into the atmosphere than gasoline over the next 100 years. Nevertheless, corn-based ethanol will have to reduce the output of heat-trapping pollution by 20 percent to remain eligible for use in U.S. automobiles. This is true even when using the controversial indirect land-use theory, where more ground is torn-up to increase biofuel production, is factored into the equation. But other EPA scenarios show ethanol producing five percent more greenhouse gasses into the air than conventional petroleum-based fuels over the next 30 years.
Environmental groups are calling the statistics favoring ethanol an accounting trick. Even with their reservations the same groups praised EPA for including indirect land-use in its environmental impact calculations.
The Renewable Fuels Association, or RFA, had mixed reactions to the new rule. RFA officials agree with EPA's method of calculating GHGs. Using the government's formula, they were able to show grain-based ethanol reduces harmful emissions by 60 percent. Despite the accolades the RFA wants EPA to eliminate the indirect land-use theory once the rule is finalized because they believe the science behind the idea is faulty.
Whether or not biofuel producers are able to meet the EPA's proposed GHG limits will be the least of their concerns if the amount of ethanol mixed with gasoline is left at E10 -- a blend of 10 percent ethanol in each gallon of gasoline. Well aware of the potential problem, the dilemma of when U.S. motorists will hit the so-called "blend wall" is to be addressed. The new rule also requires biofuels distribution issues as well as ways to increase ethanol use through mid-level blends like E15.
The final rule is expected to be released at the end of November.