The hand-wringing and soul-searching that has gone on at the
US EPA regarding a proposed reduction in the amount of ethanol to be blended in
the gasoline in 2014 is emblematic of a policy based on optimistic projections
divorced from reality.
It began with establishment of the Energy Policy Act (EPACT)
of 2005 with the desire to reduce the US dependence on imported oil and to
reduce emissions of anthropogenic CO2. Ethanol could be considered a
“carbon-free fuel,” since its combustion would only be emitting the CO2
the plant had used in the photosynthesis process. Ethanol is produced by the
fermentation of sugar using yeast. The sugar may be obtained by expressing it
from sugarcane, or by hydrolyzing the starches from crops such as corn.
In the US ethanol is produced mostly from corn, and there is
an inherent attraction to the notion of growing one’s own fuel instead of
importing it. An additional benefit of EPACT was that it provided US farmers
with an opportunity to grow a lucrative cash crop and thereby support the
farming industry. There was already a movement afoot in the US to eliminate the
use of MTBE in gasoline, and using ethanol as an alternate oxygenate provided a
straightforward mechanism to increasing the use of ethanol.
The EPACT required that 10% by volume of ethanol be blended
into gasoline. The 10% level was in practice at many locations, and was found
to work well with the existing automobile fleet. US gasoline consumption in
2004 was about 130 billion gallons a year, and that meant that ethanol
production should rapidly increase from the then 3.4 billion gallons a year to about
13 billion gallons. The act spurred major investments in the biofuels industry,
and the installed capacity for corn ethanol grew rapidly.
Over the next few years it became abundantly clear that
production of corn ethanol required substantial quantities of fossil energy:
fertilizers to grow the corn, diesel for the tractors and other farm machinery,
and natural gas or coal for the distillation. Depending on the specifics of the
farming practice and processing details the energy return on fossil energy
invested (EROI) was found to vary between 0.8 and 1.5, which meant that corn
ethanol hardly added to the total pool of energy, although it did provide a
storable liquid fuel. Likewise, studies on the life-cycle emissions of CO2
from using corn ethanol showed that CO2 emissions could range
between 0.7 and 1.3 times that of petroleum-based gasoline. In other words,
greenhouse gas emissions could be marginally better or somewhat worse than
petroleum, a far cry from the promise of being a carbon-free fuel. Moreover,
production of corn ethanol competed for the land and water resources used for
growing food or feed, and thus contributed to increasing food prices.
Ethanol can also be produced from lignocellulosic materials,
and life-cycle analyses showed that cellulosic ethanol had a markedly lower
carbon footprint and a more favorable EROI. The estimated availability of a billion
tons of sustainably harvested lignocellulosic materials such as agricultural
and forestry residues raises the potential for producing over 200 billion
gallons of ethanol, sufficient to displace all gasoline consumed in the US.
The Energy Independence and Security Act of 2007 (EISA) tried
to aggressively promote the development of cellulosic ethanol by setting new
standards for renewable fuels (RFS 2). Under it the total volume of biofuels
would be steadily increased to 36 billion gallons a year by 2022, which would
correspond to 25% of the projected gasoline consumption. The larger fraction of
blending would also require more flex-fuel vehicles that could operate with 15%
or more of ethanol. To limit the potential conflict of food versus fuel and
other negatives of corn-based ethanol, no more than 10 billion gallons of corn-based
ethanol would qualify under RFS 2. Most of the rest would be made up by
alternate biofuels, notably 16 billion gallons of cellulosic ethanol. Commercial
production of cellulosic ethanol in 2007 was in its infancy. The dramatic
increase in the production of ethanol, from essentially zero in 2208 to 16
billion gallons by 2022, as envisaged under EISA is illustrated in the graphic
below from the Energy Information Administration.
The question before
the EPA was whether to increase the mandate of ethanol as required by EISA, or
to propose a cut to it in face of the reality. It issued a draft rule last
November to cut the mandated volume of biofuels and opened it for public
comment. The EPA has received more than 340,000 comments, and although it has
made its final recommendation, as of this writing (Nov. 4, 2014) the final
ruling has not been announced. Despite that, the mere announcement of possible
cuts led to a drop in the price of corn, and many commentators hailed it as a
win for Big Oil over Big Corn. However, the important issue is whether the
nation wins—whether this action will help in achieving the original objectives
of reducing dependence on imported oil and reducing CO2 emissions.
Given the very
limited benefit of corn ethanol and the potential to do environmental harm and
raise food prices, EPA had already capped its use to 10 billion gallons. The
corn ethanol industry is lobbying hard against any cut back and also promoting
the use of higher blends of ethanol. In the absence of cellulosic ethanol, that
demand would be met by corn ethanol. Because the installed capacity of all the
plants in the US already breaches the blend wall of 10%, higher blends will
have to be permitted. The auto industry is opposed to the idea because higher
percentages of ethanol in gasoline are not compatible with the fuel storage and
delivery systems and could cause engine damage, and there are too few Flex-Fuel
vehicles that can use the high ethanol blends.
The only reason for
the EPA to stick to the RFS 2 mandates would be to keep the pressure on the
advanced biofuels industry, but the installed capacity for cellulosic ethanol
is so low that the law would end up penalizing gasoline vendors for non
compliance with when there is no way that could comply. In any case, there is
no justification to increase the use of corn ethanol.