A COLD EYE ON BIOFUELS

Biofuels; Potential Effects and Challenges of Required Increases in Production and Use
August 2009 (Government Accountability Office)

SUMMARY
The U.S. renewable fuel standard (RFS) requires the nation’s fuel suppliers to include 36 billion gallons of ethanol and other biofuels into their sources by 2022. In 2008, they used 9 billion gallons.

Biofuels; Potential Effects and Challenges of Required Increases in Production and Use, written by the Government Accountability Office (GAO) at the request of Senator Barbara Boxer (D-CA), Chair of the Senate Environment & Public Works Committee, and Senator Susan Collins (R-ME), looks at (1) the effects of increasing biofuels production 4 times over on the nation’s agriculture, environment, and greenhouse gas emissions; (2) the impact of federal support for domestic biofuels production; and (3) the key challenges that must be met in order to reach the RFS’s required 36 billion gallons.

The GAO concluded its report with 3 recommendations:
(1) Congress should require the Environmental Protection Agency (EPA) to assess lifecycle environmental effects and greenhouse gas emissions (GhGs) of the coming increase in biofuels production.
(2) Congress should use the EPA lifecycle environmental impacts and GhGs information to reconsider the Volumetric Ethanol Excise Tax Credit (VEETC), a 45-cent per gallon federal tax credit, originally created to further domestic ethanol production. It is possible the VEETC could be adjusted to drive production of biofuels with more favorable lifecycle environmental impacts.
(3) EPA and the Departments of Energy and Agriculture should, in a coordinated way, address the unknowns of lifecycle environmental impacts and GhGs and give priority to R&D that develops information that will help direct future biofuel choices and increase the ability of the liquid fuels industry to blend petroleum fuels and biofuels more efficiently.

[NOTE REGARDING TODAY'S ILLUSTRATIONS: Some of these charts and graphs are not easily readable but for those interested in the subject they are worth clicking on for further study.]

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COMMENTARY
Cast a cold eye on life, on death, Horeseman pass by! (Epitaph of Irish poet William Butler Yeats)

Much is made by President Obama’s opponents of his efforts to use the financial crisis of 2008-09 to structure U.S. priorities going forward but a crisis was never more selfishly used than the way Big Agriculture used the September 11, 2001, events to promote its cause.

The enthusiasm generated by Big Ag for domestic liquid fuels produced from heartland crops, as a way of reducing U.S. dependence on imported oil, resulted in the energy bill of 2005’s huge cropland biofuels federal subsidies. The energy bill of 2007 expanded and firmed those subsidies in the form of the present renewable fuel standard (RFS).

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Big Ag’s effort was supported by environmentalists who believed biofuels were an answer to global climate change and security hawks who thought biofuels would reduce dependency on Middle East oil.

There was already a movement toward battery electric vehicles before 9-11 (See Who Killed The Electric Car?) but the panic of the period drove the population and its political leaders toward the easy if inappropriate answer of liquid biofuels.

In 2005, Big Ag’s corn ethanol propaganda met little pushback but by 2007 some degree of good sense had set in. An anti-corn-ethanol movement forced lawmakers to limit the RFS requirement for conventional ethanol at 15 billion gallons per year and create an alternate subsidy to shift biofuels away from food crops and toward next generation advanced cellulosic feedstocks.

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Now, in 2009, political leaders have come to their senses and are looking for ways to accurately determine exactly how extensively the RFS and the U.S. commitment to biofuels must be revised.

The Environmental Protection Agency (EPA) oversees the RFS and the Departments of Agriculture (USDA) and Energy (DOE) are leading the drive to make cellulosic biofuels practical.

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There are continuing reports of harm from the increased emphasis on biofuels use. The harms reported include:

(1) Increased prices on staple crops such as corn, rice and wheat
(2) Increased destruction of rainforests to make cropland
(3) Compromise of cropland and undeveloped forests by widespread planting of hardier cellulosic plants
(4) Compromise of soil quality due to overuse.
(5) Compromise of water supplies by fertilization of ever more and more remote fields
(6) A trade war between the U.S. and the EU due to differing subsidies and shenanigans of producers to take advantage of the difference.

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The EU also responded to Big Ag’s multinational campaign for more biofuels by establishing high requirements for ethanol but, in response to the emerging flood of evidence of unintended harmful consequences, re-evaluated and reduced its requirements.

In anticipation of this year’s fight over a big energy and climate bill, the Senate asked for a now overdue examination of the science of biofuels and the experience of researchers and producers so far.

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Here’s what the GAO found out:

(1) The effects on agriculture and the environment that will come with ramping up new biofuel production are uncertain but likely harmful.
(2) The price increases of food, livestock and poultry feed are likely to continue and expand with the requirement for more gallons of biofuel.
(3) Water demand, overuse of land and excessive fertilizing will further degrade water quality, soil richness and air quality.
(4) Compromise of water, soil and air as well as expansion of lands in production will degrade wildlife habitat.
(5) Harms may be mitigated by better selection of cellulosic feedstocks, improved yields, conservation and efficient refining.
(6) The RFS does not require EPA, as part of its oversight role, to distinguish or rank the biofuels by their environmental impacts or GhGs but GAO found the direct lifecycle impacts and GhGs from biofuel production are readily measured to wide agreement.
(7) Estimates of the indirect effects on global land use change from biofuels production vary greatly but RFS does, in fact, require EPA to assess the indirect impacts.
(8) Research especially varies on which and how much nonagricultural land will be used as world food production shifts to make room for land demands from rapidly increasing biofuels production.
(9) The Volumetric Ethanol Excise Tax Credit (VEETC) is a 45-cent per gallon
federal tax credit that was instituted by the RFS to drive domestic ethanol production. The VEETC is now thought to be too low to drive further production unless oil prices return to their highest levels but, on the other hand, the domestic corn ethanol industry, according to GAO, is mature and near the 15 billion gallons per year RFS conventional ethanol capacity target.
(10) Advanced cellulosic biofuels development is expected to be driven by a separate $1.01 tax credit.

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Key challenges foreseen by GAO if biofuels are to meet the 2022 (36-billion-gallons per year) requirement:
(1) Farmers must risk a transition to cellulosic biofuels. Switchgrass looks to be the best choice but it is not clear it will be a profitable choice. The USDA Biomass Crop Assistance Program may help by providing multi-year contracts to farmers who make the transition.
(2) U.S. ethanol consumption is up against the blend wall (the amount of ethanol that can be blended into petroleum auto fuel). EPA limits the ethanol in gasoline at 10% and there is research into expanding the U.S. blend to 15-to-20% but the use of E-85, an 85% blend used in other countries, would require huge investment in a new pipeline system and new vehicle technology for the highly corrosive fuel blend.
(3) Rather than breaking down the blend wall, GAO foresees the possibility of R&D into advanced cellulosic biofuel refining making next generation biofuels price-competitive at the gas pump and able to use existing pipelines and vehicles.

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Of the issues raised in the GAO study, the most valuable in the long run may be its emphasis on the need for an accurate assessment of the direct and indirect lifecycle GhGs from biofuels. As it becomes clear that plant-based biofuels are an inadequate tool in the fight against global climate change, it will be harder for Big Ag to sustain Washington’s commitment to them.

Already, there is widespread recognition that biomass is most efficiently used to generate electricity and the best way to fuel personal transport is electricity. There is a very good possibility that over time it will become clear the best decision is to pass by (to use the phrase from Yeats' epitaph) the biofuels craze.

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QUOTES
- Patricia A. Dalton, Managing Director, Natural Resources and Environment Department/GAO: “As requested, this report discusses the challenges and potential effects associated with the increased production and use of biofuels in the United States. We are suggesting that the Congress consider actions to address the potential environmental effects of increased biofuels production and whether revisions are needed to federal financial support for the production of conventional ethanol. We are also recommending that the Secretaries of Agriculture and Energy and the Administrator of the Environmental Protection Agency take actions to minimize the potential effects of the nation’s biofuels production efforts.”

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- From the GAO report: “The increased cultivation of corn for ethanol, its conversion into biofuels, and the storage and use of these fuels could affect water supply, water quality, air quality, soil quality, and biodiversity, but future movement toward cellulosic feedstocks could reduce some of these effects.”
- From the GAO report: “The RFS requires that the nation’s transportation fuel contain 36 billion gallons of biofuels in 2022, primarily advanced biofuels. To date, the domestic biofuels industry has achieved about 30 percent of this level, largely through the production of conventional corn starch ethanol. Going forward, federal agencies face significant challenges to ensure the domestic biofuels industry can meet the RFS’s more demanding advanced biofuel requirements, while minimizing any unintended adverse effects.”