Governors’ Ethanol Coalition

June 21, 2004

Madison, Wisconsin

James Kendell

Energy Information Administration

james.kendell@eia.doe.gov

Outlook for Gasoline and Fuel Ethanol Through 2025

Average Prices of Gasoline and Ethanol at the Plant Gate(2002 dollars per gallon)

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Conventional

RFG

CARB Ethanol

Miles Traveled and Miles Per Gallon for Light-Duty Vehicles

(percent growth year-by-year)

-1.0-0.50.00.51.01.52.02.53.03.54.0

2002 2005 2008 2011 2014 2017 2020 2023

Miles

Miles Per Gallon

U.S. Petroleum Consumption by Sector, 1970-2025 (million barrels per day)

0

5

10

15

20

25

1970 1980 1990 2000 2010 2020

Transportation

Industrial

Residential and commercial

Electricity generation

History Projections

Consumption of Petroleum Products, 1970-2025(million barrels per day)

1970 1980 1990 2002 2015 20250

5

10

15

20

25

30

Total

Motor gasoline

Distillate

ResidualJet fuel

Other

History Projections

Projected U.S. Carbon Dioxide Emissions by Sector and Fuel,1990-2025 (million metric tons)

1990 2002 2010 20250

2,000

4,000

6,000

8,000

IndustrialCommercial

Residential

Transportation

Natural gas

Coal

Petroleum

U.S. Petroleum Consumption and Production, 1970-2025 (million barrels per day)

0

5

10

15

20

25

30

35

1970 1980 1990 2000 2010 2020

History Projections

Consumption

Production

Reference

High price

High priceReferenceLow price

Low price

Never used RFG with MTBE

Used RFG with MTBE

States That Ban MTBE

U.S. Oxygenate Consumption, 1993-2025 (million gallons)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023

History Projections

RFS Schedule

Ethanol for Gasoline Blending

Ethanol for E85

MTBE

Sales of Advanced Technology Light-duty Vehicles by FuelType, 2010 and 2025 (thousand vehicles sold)

Alcohol

Electric

Gaseous

Hybrids

Turbo directinjection diesel

Fuel cell

2010 20250

500

1,000

1,500

The Chemistry of Ethanol Production

Corn Glucose Ethanol

Amylase

Enzyme Yeast

Cellulose5- and 6-

carbon

sugars

Cellulase

Enzyme or

Strong AcidEthanol

Genetically

Modified

Yeast or

Bacteria

Corn and Cellulose Ethanol Production, 2010-2025(million gallons per year)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010 2012 2014 2016 2018 2020 2022 2024

Corn

Cellulose

Economic Hurdles to Cellulose Ethanol Commercialization

• Iogen estimates that a commercial plant using its technology would cost $4.80 per annual gallon of capacity to build. (Wall Street Journal, April 21, 2004)

• A dry-grind corn ethanol plant can be built for about $1 per annual gallon of capacity.

• Banks are reluctant to back petroleum refinery projects that cost more than $1 per annual gallon of capacity.

• Cellulose ethanol producers may eventually face competition from electric generators for supplies of crop residues and other cellulosic materials.