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Why We Need a Strong Renewable Fuel Standard

Politicians and consumers alike are expressing surprise that oil has topped $100 a barrel and stayed there. But they shouldn’t. A median line drawn through oil price changes over the past two decades points directly at $100 per barrel. Energy prices have been steadily pushed higher by countries competing for resources to fuel growing economies and increasing consumer demand. Oil’s deceptively low price in 2009 came only after the longest economic recession since the end of World War II.

Continued reliance on petroleum threatens our economic, energy and national security. We need to follow through on the national goal of reducing reliance on oil – particularly in transportation – and for that we need biofuels. In short, the United States must remain committed to the Renewable Fuel Standard (RFS) because it provides the guiding policy and necessary support for the industry to begin bringing innovative new technologies for advanced and cellulosic biofuels to the marketplace.

Energy security is imperative for new jobs and economic growth. Uncertainty over future energy supplies and prices can undermine businesses’ confidence in making the investments needed for growth and job creation, significantly hampering continued recovery from the recent recession. High oil prices could also undermine the buying confidence of consumers forced to spend more of their paychecks at the pump, fueling a downward spiral of business confidence in growth.

The United States must hurry the future in developing alternatives to oil use in transportation. It’s unlikely that the free market by itself can direct the resources needed to commercialize vital and innovative new technologies without a consistent, forward-looking federal policy as a guide. A recent study in the journal Environmental Science & Technology shows that it could take 131 years for alternatives to fully displace oil if we rely solely on the free market. Global oil would run out years before alternatives are fully developed, the study authors show.

Cellulosic and advanced biofuels can in the near future increase energy security, provide economic development opportunities, and reduce greenhouse gas emissions. A study by Bio Economic Research Associates, “U.S. Economic Impact of Advanced Biofuels Production: Perspectives to 2030,” shows that building advanced biofuel biorefineries could create hundreds of thousands of new jobs throughout the economy. The direct annual contribution to U.S. economic growth could reach $37 billion by 2022.

The RFS is the consistent, forward-looking energy policy needed to expand the market for advanced and cellulosic biofuels and give clear signals to companies and investors that innovative technologies will have every opportunity to succeed. The Environmental Protection Agency’s careful implementation of the standard provides assurance that these biofuels will be used in the transportation fuel market. It also provides price certainty to motivate investment in cellulosic biofuels.

The RFS has been very successful at spurring innovation. The advanced biofuels industry has made significant progress in bringing technology to the point of commercial-scale development. The key missing ingredient has been the financing required to build new, large-scale biofuel production facilities. Every company has been hard pressed to secure investments and loans during the recession. But with the RFS in place, advanced biofuel companies have made significant investments, starting or planning more than 70 advanced and cellulosic biorefineries across the United States. The industry is growing at a rate faster than many predicted it would, and the technology developments will be on full display at BIO’s upcoming World Congress on Industrial Biotechnology and Bioprocessing, in Toronto, May 8-11.

Because competition for tight supplies in worldwide oil markets is expected to continue, cellulosic and advanced biofuels can offer investors a more certain return. Crude oil prices are projected to continue an upward trajectory through 2035, according to the U.S. Energy Information Administration (EIA). On the other hand, continued innovation in cellulosic and advanced biofuels will drive their costs down.

Advanced biofuels can protect us from future oil price shocks, which promise to get worse over time. Enduring federal commitment to the RFS is vital to driving private investment toward research, development and deployment of innovative new technologies. Congress and the Obama administration must maintain the RFS to help turn innovation into solid economic and energy achievements.

Brent Erickson is Executive Vice President of Biotechnology Industry Organization’s Industrial & Environmental section.

Brent Erickson
Brent Erickson is Executive Vice President of Biotechnology Industry Organization’s Industrial & Environmental section.
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10 thoughts on “Why We Need a Strong Renewable Fuel Standard

  1. Manure to methane has been around for years NYC has opened it’s first sewage to methane the by product is fertilizer Ge is building the largest ever manure to methane plant in China European countries are starting up many methane plants 825 million Americans and all the animals in America contribute to this renewable every day LET”S PUT POOP TO WORK

  2. Free market and private solutions can be found if the government gets out of the way. I agree that a combination of alternative energy sources and fossil fuel can be used. When you talk of biofuels, what are the ramifications of removing one biomass and replacing with another as its effect are worldwide. Corn and ethanol for example. The big problem here is this – we already have spent trillions of dollars on infrastructure to support our abundant energy sources (fossil) and currently taxpayer subsidized solar and wind. WHO IS GOING TO PAY FOR IT. However, the bigger problem is that Politicians need to stay out! In the end we need to use energy smartly and not be mandated by government or any other body. What we need is the ingenuity and “honest” (wishful thinking) solutions by the private sector.

  3. Mr. Erickson does a nice job identifying the problem but, his proprietary solution misses the mark. The correct alternative fuel for transportaton is compressed natural gas (CNG). It is abundant and cheap. It can be used with existing reciprocating engine technology with only minor modifications. All we need to implement this changeover NOW is a fueling infrastructure which is vastly easier and less expensive to fund that creation of an unproven biofuels industry. We attack the carbon used in electricity through solar power, the only readily available working technology that is completely safe, renewable and proven technology available today. These two technologies can have an immediate impact in reducing imports of energy within a matter of months if the political will is found.

  4. The problem with biofuels, in the short term, that is before they are adopted in a widespread manner, is that they currently suffer from a net energy loss, given the amount of petroleoum involved in the production of a similar quantity of biofuel. The Private sector may have the ingenuity to implement them, but will not do so in a timely fashion. The broad infrastructres built on petroleum use hold us hostage to the very resource that we are trying to wean ourselves from. To think that the dumping of this cash cow will happen anytime soon by the people that fuel the day to day activities of our country is in the very least, unlikely. Prices will continue to rise, until markets shift dramatic demand, but without subtle investment by the govt, be assured that the combustive fuel energy market will stay firmly within the grasp of those that control petroleum.

  5. What I would like to know is how much a barril of biofuel costs, will it be cheaper? How much biofuel is needed to be as you say independent and have cheap fuel? Wouldn’t the biofuel have a market? Who would be the producer? How would caresty or hale affect the production? How’s algae doing?
    These are questions which should be answered.
    I doubt biofuels will make petrol cheaper, they will only shift speculation.
    What we need is a total paradigm shift from combustion engines to another type of engine, electric? Yes if the level of service and its cost is comparable to nowadays cars.

    Liquid gas as someone mentioned in a letter is widely used in Italy as well as in PEru and many other countries, and the distribution infrastructure is an added module to the fuel pump.

  6. Matt, the government is not “in the way”. Indeed, were it not for the government involvement to date, little that is good would have happened in the whole arena. Just one example is the recent ARRA investments the Obama administration made in many sectors related to renewable energy. Another is the recent agreements to increase CAFE – which would not have occurred were it not for government involvement.

    As far as “the ramifications of removing one biomass and replacing with another” are concerned, petroleum does not represent a part of the current biome – it is fossil fuel, and the carbon it injects into the system when burned is a crucial part of the problem.

    And “WHO IS GOING TO PAY FOR IT?” – well, for starters, we could try removing the current taxpayer subsidies still enjoyed by the fossil fuel industry despite decades of profits and growth; that amount to some $72B every ten years or so.

    Industries do in general need to be mandated by the government. Since they are motivated solely by profit, they will refuse to change the status quo until forced to do so – by mandate or by some catastrophic consequences of their course of action.

    Peter, your focus on the cost of biofuel misses the point. The need to get off petroleum is not driven by any perceived need to reduce fuel prices. It is driven by the environmental consequences of all that extra carbon, by the perceived need to reduce our reliance on foreign sources of energy for the sake of security and stability, and by the fact that petroleum will likely run out worldwide in the not so distant future.

    Will biofuels make petrol cheaper? Well, if biofuels are used in large quantities to replace the use of petroleum, then the demand for petroleum will be significantly less than it would otherwise be, which will in fact affect the price.

  7. Gary thomspn’s argument about biofuels being a net-energy loss is simply wrong. Even the worst biofuels, like corn ethanol, have passed this mark as efficiencies like use of process heat, etc. have been added. While old technologies may have suffered that problem, it simply isn’t reality anymore. With addition of more stringent Clean Air Act regulations on stationary sources, Mr. Thompson’s concern is simply a non-issue.

  8. Maybe if some African countries could produce biofuels, i.e., ethanol and others, enhancing their agriculture in places where it is non-existent…In the process this would even boost their agriculture for food, because agriculture is a good contagious thing. No doubt if this is done much CO2 will be arrested.

  9. re: Kristian’s question about cost

    It totally depends on the type of biofuel. Corn ethanol currently goes for roughly $3/gallon (fluctuates with ag prices), but suffers in energy equivelent to gasoline.

    I typically hear companies state short/mid-term goals of ~$60-80/barrell equivelent for advanced biofuels from algae and wood if they can reach commercialization stage. My semi-informed guess is they are running $100-$120 currently at the pilot scale… But we’re getting close to cost competitive, if not there already.

    At minimum, the biofuel cost trend is definitely going down, while the oil is most definitely pointed up so it is really just a matter of time.

  10. I really hope the costs of biofuels go down; if they could be produced in Africa and other plenty of sun countries, alongside with agriculture for food, this would be great.

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