Wall St. Journal
New Forms of Biofuel Fall Short
By RYAN TRACY
Hopes for a surge in production of alternative biofuels are falling flat, and the U.S. expects to continue to rely on corn- and sugarcane-based ethanol to meet a national mandate for renewable fuels in 2012.
The Environmental Protection Agency said Tuesday that a tiny fraction—less than one-tenth of 1%—of renewable fuels required to be used in the U.S. next year will come from cellulosic biofuel, based on projected production volumes, despite a congressional target that the fuel made from plant stalks and other inedible materials account for more than 3% of the total.
The agency sets volume requirements for renewable fuels every year to implement a 2007 law that requires refiners to use increasing amounts of renewable fuels in gasoline.
Cellulosic fuel, which can be made from plant waste such as corncobs, is still far from being able to meet volume mandates laid out by Congress, the EPA said Tuesday, confirming a draft analysis it had published earlier this year. Instead, the agency will require refiners to use other types of advanced biofuels, including sugarcane ethanol, to meet the national standard.
The EPA said it would set the required volume of cellulosic fuel at 8.65 million gallons for 2012. Congress had set a goal of using 500 million gallons next year, on the way to 16 billion gallons in 2022. The EPA has the option to cut the cellulosic-fuel target based on industry capacity to produce the more advanced fuels.
Although the EPA set the requirement well below Congress's goal, its decision still irked refiners. Companies will have to buy credits from the EPA if they can't find enough cellulosic ethanol to purchase—even though the fuel may not be available. "The [EPA's] cellulosic number is still conjecture-based fantasy," said Stephen Brown, vice president for government affairs for refiner Tesoro Corp.
The credits cost about $1.20 per gallon, according to Charles Drevna, president of the National Petrochemicals and Refiners Association. "Once again, refiners are being ordered to use a substance that is not being produced in commercial quantities—cellulosic ethanol—and are being required to pay millions of dollars for failing to use this nonexistent substance. This makes no sense," he said.
Brooke Coleman, executive director of the Advanced Ethanol Council, which represents advanced-biofuel companies, said Congress built flexibility into the mandate because "there was always a chance" the industry wouldn't meet the schedule.
"It shouldn't surprise anyone with the state of the economy, the state of the financial world, the state of the banks…that there are delays in implementation of new technologies," Mr. Coleman said. He argued that financing for more cellulosic-biofuel capacity would come as long as the renewable-fuels standard remains in place.
Overall, the 2007 law says the U.S. must use 36 billion gallons of renewable fuels per year by 2022, including 16 billion gallons of cellulosic biofuel. According to a National Academy of Sciences report published this year, the latter target won't be met "unless innovative technologies are developed that unexpectedly improve the cellulosic biofuels production process." Refiners are pushing for Congress to make changes to the mandate.