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Beyond Ethanol

This article discusses the current trends and government policies regarding biofuels, including ethanol and biodiesel production, crude oil prices, population growth, and liquid fuel usage. It also explores the challenges and potential solutions in the biofuel industry.

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Beyond Ethanol

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  1. Beyond Ethanol Siouxland Bankers Meeting Storm Lake, Iowa February 17, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. Crude Oil Prices Source: Energy Information Administration

  3. Ethanol Production Jan. – Oct. 2008 Sources: Renewable Fuels Association, Energy Information Administration

  4. Biodiesel Production Jan. – Sept. 2008 Sources: National Biodiesel Board, Energy Information Administration

  5. Projected Crude Oil Prices Source: NYMEX

  6. Population Source: U.S. Bureau of the Census, International Data Base

  7. Liquid Fuel Usage Source: U.S. Dept. of Energy, Energy Information Administration

  8. Countries Pursuing Biofuels • US • Brazil • Argentina • Colombia • Paraguay • Canada • Uruguay • Mexico • Thailand • New Zealand • South Africa • South Korea • Philippines • Indonesia • Pakistan • China • India • Malaysia • Australia • Japan • EU • Russia • Not a complete list

  9. Government Policies for Biofuels Ethanol • Ad valorem tariff of 2.5% • Import duty of $0.54 per gallon • Volumetric Ethanol Excise Tax Credit (VEETC) • $0.45 per gallon starting in 2009 Biodiesel • Biodiesel Mixture Excise Tax Credit • $1.00/0.50 per gallon Cellulosic • Cellulosic Biofuel Producer Tax Credit • $1.01 per gallon

  10. Renewable Fuels Standard (RFS) 50% GHG Emission Reduction 60% GHG Emission Reduction 20% GHG Emission Reduction If construction started after Dec. 2007

  11. Currently Available Biomass Source: NREL, 2005

  12. Spectrum of Biofuels • Grain/Sugar Ethanol • Biodiesel • Green Gasoline/Diesel • Cellulosic Ethanol • Butanol • Pyrolysis Liquids • Syngas Liquids Most Mature Least Mature Source: NREL, 2006

  13. Biofuel Challenges • Production costs • Conversion, ag. production, etc. • Infrastructure barriers • Developing supply chain for biomass • Continued development of biofuel distribution system • Growth in biofuel-compatible vehicles

  14. Biofuel Challenges • Investment risks • Higher capital costs, emerging technology • Biomass production shifts • Inducing farmers to produce new crops • Consumer understanding • About the fuels • About the tradeoffs

  15. Cellulosic Biofuel Waiver Provisions • EPA (in consultation with DOE and USDA) can reduce the cellulosic biofuel mandated volume • Waiver trigger based on EIA projections • EPA will also sell cellulosic biofuel credits • Price set at Max($0.25 per gallon, $3.00 – Average wholesale gasoline price per gallon)

  16. Components of 2007 Energy Act • Up to $500 million per year in grants for the production of advanced biofuels (with at least an 80% reduction in GHG emissions relative to current fuels) • Up to $25 million per year in grants for R&D for biofuel production in states with low rates of biofuel production

  17. Energy in the Farm Bill • Grants for the development and construction of advanced biofuel biorefineries, up to 30% of the cost of the project • Loans for the same, up to $250 million or 80% of the cost per project

  18. Biomass Crop Assistance Program • To support production of crops for bioenergy and assist with collection, harvest, storage, and transportation of biomass to conversion facilities • Excluded materials • Farm program crops, animal byproducts, food waste, yard waste, algae

  19. Biomass Crop Assistance Program • Requires producers and conversion facilities to submit proposal establishing a project area • Establishes contracts between USDA, producers, and facilities to promote project • Sets up establishment payments for perennial crops and annual payment to biomass producers

  20. Biomass Crop Assistance Program • Payments are also authorized for biomass collection, harvest, storage, and transportation • Matching payments • $1 for each $1 per ton paid by conversion facility, up to $45 per ton, for 2 years

  21. Thank you for your time!Any questions?My web site:http://www.econ.iastate.edu/faculty/hart/Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/ Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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