Of Peace and Politics

The Basics of Biofuels

Posted on 06/22/2011 @ 05:24 PM

Tags: Government, Environment, subsidies

Nick Mann

This aim of this blog post is to give a very general and basic overview of Biofuels. Last week the Senate voted 73-27 on an amendment to end the VEETC Ethanol Tax Credit, because of this it seemed like an opportune time to jump into the issue. There will very likely be more debate on Biofuels, particular Ethanol, in the remaining months of the 112th Congress.

BioFuels 101

Biofuels are part of the larger category known as Biomass – biological material from living organisms used to generate electricity or produce heat. Biomass energy can be produced from a variety of sources: trees and forest waste; food crops (corn, sugarcane, and soybeans); energy crops (switchgrass, miscanthus, and sweet sorghum); and municipal and industrial waste that includes organic materials.

Biomass energy is, in theory, renewable. Carbon that is held in plants and released when burned comes from the sun – through photosynthesis – thus any plant that is used for the production of energy can be replaced with another plant that is also powered by the sun.

In reality, the process for turning organic material into energy is not so simple. The energy consumed in transforming plant material into power often comes from nonrenewable fossil fuels, negating some of the intended benefits of biomass energy. Full life-cycle analyses are necessary to fully determine the costs and benefits to ensure that biomass energy is moving us towards achieving goals of carbon reduction and mitigating our dependence on fossil fuels.

Biofuels in particular are liquid fuels made from biomass inputs. Most commonly, Biofuels have been developed as an economical substitute for petroleum-based fuels. The Biofuel that has received the most attention in the United States is corn-based Ethanol, which is used to reduce gasoline consumption. Even though policy debates have focused on the production of food crop Biofuels several other types of Biofuels exist, which can avoid some of the serious problems that have arisen with the production of ethanol from corn.

Biofuels can be broken down into first, second, and third generation technologies:

First generation technology is used to convert corn, palm oil, soy and various other food crops into liquid fuels. The most common type is known as Ethanol, named for the ancient process of fermenting. Ethanol is most commonly blended into gasoline in order to reduce the overall volume of gasoline used in vehicles.

These forms of BioEthanol have been at the center of enormous controversy because repeated life-cycle tests have shown that the production process emits almost as much carbon as that of the fossil-fuel being replaced. Other criticisms are that the production of ethanol has contributed to rising food prices by diverting scarce cropland from food production to fuel production. Critics also point to the large amounts of water (4 gallons of water for 1 gallon of corn ethanol) and fertilizer required, as well as soil erosion.

Even though first generation Ethanol production has come under heavy criticism for the above reasons the United States government has continued its support of the industry through various types of federal subsidies.

Renewable Fuel Standard (RFS) mandates a fivefold increase in the total amount of Biofuels blended into gasoline and is thus a major driver of the industry.

Volumetric Ethanol Excise Tax Credit (VEETC): applicable to companies that blend Ethanol into gasoline ($0.45 cents/gallon).

Volumetric Biodiesel Excise Tax Credit: applicable to companies that blend diesel into gasoline ($1.00 per/gallon).

Small Producer Tax Credit: applicable to any producer of Ethanol or Biodiesel at $0.10 cent/gallon for the first 15 million gallons produced.

Production Tax Credit for Cellulosic Ethanol: applicable to producers at $1.01 dollar/gallon.

Second generation technology referred to as “Cellulosic” Biofuels, are produced from energy crops such as switchgrass, miscanthus, fast growing trees, organic waste, and other plants with a higher cellulosic content. The principal benefits of this second generation process are that ‘energy crops’ can grow on land that is unsuitable for food crops, eliminating the competition for food-growing land. Moreover, many of these crops do not require petroleum-intensive fertilizers, since they are perennials. Cellulosic Ethanol also yields a greater net energy benefit and results in lower green house gas emissions.

As of now the primary technical challenge is economically converting the cellulose into Biofuels before it can be placed into the market at a competitive price. In order to speed the process and help producers the United States government has enacted a Production Tax Credit for Cellulosic Ethanol.

Third generation Biofuels consist of advanced jet fuels, biodiesels, and algae, which are still in the development stages. Preliminary analyses show that Algae could produce up to 300 times more oil per acre than conventional crops, can be grown in places not suitable for food crops, and grows much quicker than other crops.

In order to make intelligent policy decisions about Biofuels, steps should be taken to ensure that Biofuels are produced in the most sustainable way possible. This means Carbon emissions should be minimized in the growing, transportation, and overall production of Biofuels; Plants other than food crops should be used to minimize land issues and rising food prices; water use should be sustainable; and federal subsidies should be re-assessed to make sure we are taking the correct steps towards a carbon-free economy.

Stay tuned for more information about Biofuels, and especially the debate on Ethanol subsidies which will surely come up again in the 112th Congress.

Check out these links for more information on Biofuels:

National Renewable Energy Laboratory

U.S. Department of Energy

EPA: Economics of Biofuels


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