WASHINGTON—The U.S. must increase incentives for a wide variety of biofuels infrastructure investments if the nation is to meet federal renewable fuels goals, according to a new report released today by a task force of leading energy infrastructure experts. In the new study, the Biofuels Infrastructure Task Force, convened by the National Commission on Energy Policy (NCEP), examined the infrastructure implications of the federal Renewable Fuels Standard, which commits the US to 36 billion gallons of biofuels production by 2022 from a current level of about 9 billion. The bipartisan group composed of experts from relevant industries found that the relatively swift shift in the composition of the nation’s transportation fuel supply has profound implications.
“The renewable fuels standard is ambitious,” said Task Force Chairman Norm Szydlowski, Former President and CEO, Colonial Pipeline and an NCEP Commissioner. “To meet its timetable, approaches to biofuels infrastructure upgrades must also be ambitious. Whether its vehicles, pipelines, or pumps, new investment will be needed to meet the 36 billion gallon mandate.”
The Task Force report identified several key issues:
- The RFS will require that the nation transition to a broad-based use of a 10 percent ethanol blend (E10), as well as increased use of higher-ratio blends (such as E85). Transporting and blending this much ethanol will stress existing networks and require new infrastructure investment.
- In the current economy it may be difficult for businesses to access capital and make large investments in new infrastructure to support national biofuels distribution. These key pieces of infrastructure include biofuel production facilities, blending terminals, pipelines, unit trains and terminals, ethanol retail facilities, and flex fuel vehicles.
- National E10 saturation may occur sooner than originally expected; however, there has been little progress in developing the E85 market necessary to absorb biofuel quantities beyond what can be blended in conventional fuels.
Based on these findings, the Task Force developed several recommendations:
- A growing flex fuel vehicle (FFV) fleet will be needed to absorb biofuels. Further consumer and manufacturer incentives may be needed to accelerate the market penetration of FFVs. Simultaneously, consumer acceptance of FFVs will depend in part on expanded access to E85 (or higher-ratio blends) retail stations in urban and rural areas.
- Reducing or limiting the number of different blends that fuel refiners must produce to meet state-level specifications will enable a more efficient biofuels transition.
- Streamlining and simplifying permitting processes along all aspects of the biofuels supply chain would help to reduce costs and lead times for infrastructure investment.
- Market confidence in the government’s commitment to the RFS is a prerequisite for timely private large-scale biofuels investments. Refocusing current public incentives and subsidies to include a greater emphasis on biofuels transport, refueling infrastructure, and related vehicle technologies makes sense given the industry’s current state of development. Loan guarantees or tax credits could be effective ways to support needed infrastructure investments.
“U.S. biofuels policy to date has tended to emphasize production incentives and volume mandates,” said Szydlowski. “Going forward, it will be increasingly important to focus on other aspects of the equation—notably the need for safe, efficient and reliable infrastructure networks to transport, blend, and distribute biofuel. It is also important consumer demand for biofuels—and especially for higher-ratio ethanol blends—grows at a pace commensurate with RFS mandates.”
Copies of the full report may be found at the http://www.bipartisanpolicy.org/
The Members of the Biofuels Infrastructure Task Force are:
Norm Szydlowski—Former President and CEO, Colonial Pipeline and NCEP Commissioner
Charles Banks—President, RL Banks & Associates
Lou Burke—Manager, Biofuels Technology, ConocoPhillips
Chuck Corr—Manager, Biofuels Technical Service, Archer Daniels Midland Company
John Eichberger—Vice President, Government Relations, National Association of Convenience Stores
Julie Fields—Manager, Government Relations, National Association of Convenience Stores
Larry Goldstein—Member of the Board, Energy Policy Research Foundation
Eric Gustafson—Senior Vice President, Buckeye Pipelines
Brian Hazen—Manager, Advanced Technologies & Alternative Fuels, Environment, Energy and Safety Policy, General Motors Corporation
Peter Lidiak—Director, Pipeline Segment, American Petroleum Institute
Mike Mears—Senior Vice President, Magellan Midstream Partners
Richard Moskowitz—Vice President and Regulatory Affairs Counsel, American Trucking Association
Shirley Neff—President and CEO, Association of Oil Pipe Lines
Raymond Paul—Director, Government Affairs, Association of Oil Pipe Lines
Lou Pugliaresi—President, Energy Policy Research Foundation
Dr. Art J. Ragauskas—Professor, School of Chemistry and Biochemistry, Institute of Paper Science and Technology at Georgia Institute of Technology
Bob Reynolds—President, Downstream Alternatives
John Schmitter—President KEP, LLC Economic and Management Consulting
Pat Veith—Senior Vice President, Integrity of Materials, CC Technologies
Judith Vincent—Manager of Commercial Development & Joint Ventures, Transportation, ConocoPhillips
Eric Washburn—Washington Representative, American Coalition for Ethanol
David Woodruff—Senior Director for Government Relations, Archer Daniels Midland Compa