America’s 21st Century Transportation FuelAmerica’s 21st Century Transportation Fuel

Ethanol From BiomassEthanol From Biomass

March 2006March 2006

Progress and Next StepsProgress and Next Steps

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

The purpose of the initiative is to significantly expand the production and use of ethanol in all regions of the nation.

Current ethanol production is about 4 billion gallons a year – 2 Current ethanol production is about 4 billion gallons a year – 2 percent of U.S. transportation fuel suppliespercent of U.S. transportation fuel supplies

The Renewable Fuel Standard essentially doubles production to The Renewable Fuel Standard essentially doubles production to 7.5 billion gallons a year by 2012 – about 4 percent of U.S. 7.5 billion gallons a year by 2012 – about 4 percent of U.S. transportation fuel suppliestransportation fuel supplies

Traditional feedstocks are available to increase production, 8-10 Traditional feedstocks are available to increase production, 8-10 percent, but beyond this corn prices and availability could be percent, but beyond this corn prices and availability could be impactedimpacted

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

A need for continued production efficiency improvements A need for continued production efficiency improvements and utilization of new feedstocks:and utilization of new feedstocks:

– corn kernel fiber, stover, and cobscorn kernel fiber, stover, and cobs

– wheat straw, agricultural residueswheat straw, agricultural residues

– switchgrass and other native dedicated energy cropsswitchgrass and other native dedicated energy crops Supply and demand measures are needed to significantly Supply and demand measures are needed to significantly

expand production and use of ethanol – including expand production and use of ethanol – including dramatically greater resources for RD&D, incentives, and dramatically greater resources for RD&D, incentives, and infrastructureinfrastructure

The Impact of Expansion

Identified the need for policy initiatives to expand the production and Identified the need for policy initiatives to expand the production and use of cellulosic-derived ethanol in order to deliver the benefits of use of cellulosic-derived ethanol in order to deliver the benefits of ethanol to all regions of the nationethanol to all regions of the nation

Obtained financial support from the Hewlett Foundation for the Ethanol Obtained financial support from the Hewlett Foundation for the Ethanol From Biomass project (September 2004)From Biomass project (September 2004)

Developed and issued the Governors’ Ethanol Coalition Developed and issued the Governors’ Ethanol Coalition recommendations (April 2005)recommendations (April 2005)

Collaborated with a range of industry, agricultural, environmental and Collaborated with a range of industry, agricultural, environmental and other organizations to ensure the other organizations to ensure the Energy Policy Act of 2005Energy Policy Act of 2005 included included the Coalition’s recommended actions (August 2005)the Coalition’s recommended actions (August 2005)

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Ethanol From Biomass Progress: 2004 - 2005

Summary of the Coalition’s Three Recommendations and Summary of the Coalition’s Three Recommendations and Corresponding Sections of the Energy Policy Act of 2005Corresponding Sections of the Energy Policy Act of 2005

1.1. National Renewable Fuels Security Standard and Incentives National Renewable Fuels Security Standard and Incentives ((Energy Policy Act, Section 1501: Renewable Fuel StandardEnergy Policy Act, Section 1501: Renewable Fuel Standard))

2.2. Research and Development Research and Development ((Energy Policy Act, Section 932 - Energy Policy Act, Section 932 - Bioenergy program enhancements; Section 941 - Biomass R&D Bioenergy program enhancements; Section 941 - Biomass R&D amendmentsamendments))

3.3. Commercialization and Production Incentives Commercialization and Production Incentives ((Energy Policy Energy Policy Act, Section 942: Production incentives for cellulosic biofuelsAct, Section 942: Production incentives for cellulosic biofuels))

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Section 1501– Renewable Fuel StandardSection 1501– Renewable Fuel Standard Requires 4 billion gallons of ethanol use a year in 2006 Requires 4 billion gallons of ethanol use a year in 2006

increasing to at least 7.5 billion gallons in 2012increasing to at least 7.5 billion gallons in 2012 Directs EPA to implement the RFSDirects EPA to implement the RFS Includes trading credits for refinersIncludes trading credits for refiners Allows States to seek an RFS waiver under strict testAllows States to seek an RFS waiver under strict test Provides cellulosic ethanol and related ethanol to count as 2.5 Provides cellulosic ethanol and related ethanol to count as 2.5

gallons until 2013gallons until 2013 Directs EPA to establish a “new” RFS each year after 2012Directs EPA to establish a “new” RFS each year after 2012 Requires at least 250 million gallons of cellulosic ethanol Requires at least 250 million gallons of cellulosic ethanol

beginning in 2013beginning in 2013

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Section 932: Bioenergy ProgramSection 932: Bioenergy Program Enhances existing DOE R&D programEnhances existing DOE R&D program Includes RDD&D on biofuels, bioproducts, thermo-chemical Includes RDD&D on biofuels, bioproducts, thermo-chemical

conversion,enzyme-based processingconversion,enzyme-based processing Emphasizes cellulosic biofuels and co-products including Emphasizes cellulosic biofuels and co-products including

demonstration of integrated biorefinerydemonstration of integrated biorefinery Encourages variety of products (e.g., biobased chemicals, fuel) Encourages variety of products (e.g., biobased chemicals, fuel)

and demonstration applications (e.g., feedstock collection and and demonstration applications (e.g., feedstock collection and treatment)treatment)

DOE has NOPI out to solicit interest, results pendingDOE has NOPI out to solicit interest, results pending Maximum of $100 million for any one biorefinery Maximum of $100 million for any one biorefinery

demonstrationdemonstration

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Section 941: Amendments to Biomass R&D ActSection 941: Amendments to Biomass R&D Act Enhances existing USDA R&DD program conducted with DOEEnhances existing USDA R&DD program conducted with DOE Indicates R&D solicitation technical areas:Indicates R&D solicitation technical areas:

– advanced feedstock production and harvestingadvanced feedstock production and harvesting– overcoming recalcitrance of biomassovercoming recalcitrance of biomass– diversification of biobased products from biorefineriesdiversification of biobased products from biorefineries

Includes guidance on distribution of projects funded:Includes guidance on distribution of projects funded:– 20% applied fundamentals20% applied fundamentals– 45% recalcitrance of biomass45% recalcitrance of biomass– 30% product diversification30% product diversification– 5% strategic guidance5% strategic guidance

Increases authorization from $54 million to $200 million a year, from 2006 Increases authorization from $54 million to $200 million a year, from 2006 - 2015 (Note appropriation in FY’05 was $14M, FY’06 $12M)- 2015 (Note appropriation in FY’05 was $14M, FY’06 $12M)

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Section 942: Production Incentives for Cellulosic BiofuelsSection 942: Production Incentives for Cellulosic Biofuels Authorizes production incentive for the first billion gallons of cellulosic Authorizes production incentive for the first billion gallons of cellulosic

biofuels by 2015biofuels by 2015 Implementation by DOE in consultation with USDA, DoD, and EPAImplementation by DOE in consultation with USDA, DoD, and EPA Directs uses of a reverse auction approach for provision of the incentivesDirects uses of a reverse auction approach for provision of the incentives

– not more than 25% of the incentive for any one auction and any one not more than 25% of the incentive for any one auction and any one projectproject

– not more than $100 million a year, not more than $1 billion totalnot more than $100 million a year, not more than $1 billion total– ensure small producers and businesses are full participants in ensure small producers and businesses are full participants in

biofuels industrybiofuels industry Provides Authorization of $250 million for 10 yearsProvides Authorization of $250 million for 10 years First auction, if funded, one year after production of 1 million gallons First auction, if funded, one year after production of 1 million gallons

or 2008or 2008

• Identified implementation approach for the Coalition’s Identified implementation approach for the Coalition’s recommendations as embodied in the recommendations as embodied in the Energy Policy Act of Energy Policy Act of 20052005 (August 2005) (August 2005)

• Obtained support from the Hewlett, Energy, and Obtained support from the Hewlett, Energy, and McKnight Foundations (September 2005)McKnight Foundations (September 2005)

• Formed the Governors’ Renewable Fuels Security Formed the Governors’ Renewable Fuels Security Roundtable to gain input (November 2005)Roundtable to gain input (November 2005)

• Set priorities for implementation (December 2005)Set priorities for implementation (December 2005)

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Implementation of the Provisions:Implementation of the Provisions:

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Priorities:Priorities:• Ensure adequate federal funding:Ensure adequate federal funding:

• $200 million annually for DOE’s Biomass Program$200 million annually for DOE’s Biomass Program• $100 million annually for USDA’s Biomass Program$100 million annually for USDA’s Biomass Program• Reduce the proportion of “earmarked” biofuels fundingReduce the proportion of “earmarked” biofuels funding

• Explore the creation of a Biofuels Trust FundExplore the creation of a Biofuels Trust Fund• Educate and inform the policy making process (e.g., further Educate and inform the policy making process (e.g., further

enhancements to the RFS, coordinated research, refined enhancements to the RFS, coordinated research, refined commercialization)commercialization)

• Support state, federal, and private-sector education efforts to Support state, federal, and private-sector education efforts to dispel ethanol myths and raise visibility of the strategic, dispel ethanol myths and raise visibility of the strategic, economic, and environmental benefits of biofuelseconomic, and environmental benefits of biofuels

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Status and Challenges:Status and Challenges:

Renewable Fuel Standard – Renewable Fuel Standard – EPA implementation is underwayEPA implementation is underwayPresident’s FY’07 Budget Request –President’s FY’07 Budget Request –DOE Biomass Program $150 million,DOE Biomass Program $150 million,and USDA Biomass Program $12 millionand USDA Biomass Program $12 million

Challenges:Challenges:• Building support to obtain Building support to obtain appropriationsappropriations for priority programs for priority programs

authorized authorized by the by the Energy Policy Act of 2005Energy Policy Act of 2005• Reducing the proportion of “earmarks” to aid in effective management Reducing the proportion of “earmarks” to aid in effective management

of federal programsof federal programs• Improving coordination of state, federal, local and industry activities Improving coordination of state, federal, local and industry activities

to leverage resources and expedite delivery of biofuelsto leverage resources and expedite delivery of biofuels

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Next StepsNext Steps• Develop outreach and advocacy strategy in coordination with Senators Develop outreach and advocacy strategy in coordination with Senators

Daschle and Dole for the Coalition and others to implementDaschle and Dole for the Coalition and others to implement• Support Coalition members advocacy efforts with policy and Support Coalition members advocacy efforts with policy and

appropriations informationappropriations information• Coordinate with partners in Washington, DC as they conduct Coordinate with partners in Washington, DC as they conduct

advocacy and develop policy (e.g., appropriations, biofuels trust fund)advocacy and develop policy (e.g., appropriations, biofuels trust fund)• Provide educational materials to demonstrate the value of ethanol and Provide educational materials to demonstrate the value of ethanol and

need for RD&D efforts (e.g,. state case studies, respond to federal need for RD&D efforts (e.g,. state case studies, respond to federal requests for state information, presentations)requests for state information, presentations)

• Conduct research for the Coalition as it implements provisions and Conduct research for the Coalition as it implements provisions and considers new positionsconsiders new positions

• Engage Roundtable members to build support and gain inputEngage Roundtable members to build support and gain input

Ethanol From Biomass: America’s 21st Century Transportation FuelEthanol From Biomass: America’s 21st Century Transportation Fuel

Ethanol From Biomass Funding UpdateEthanol From Biomass Funding Update

Foundation Funds Designated for the Governors’ Ethanol Coalition, Inc.

Hewlett Grant: Governors’ Recommendations $75,000.00-Less contractor, travel, and meeting costs 74,781.78-Balance $218.22

Hewlett and McKnight, Energy Foundation Grants: Implementation of cellulosic provisions in Energy Policy Act of 2005 $375,000.00-Less contractor, travel, and meeting costs 99,013.21-Balance $275,986.79