Without exception, everyone interviewed for the special report beginning on p. 20, Agrifuels-Promise and Progress, expressed a desire to avoid unintended consequences.
They were talking about both economic and environmental consequences.
Chares T. Drevna, executive vice-president of the National Petrochemical & Refiners Association, acknowledged “universal agreement” that biofuels represent a strong, growing component of the US transportation fuel mix.
“However, NPRA opposes the mandated use of biofuels and supports the sensible and workable integration of biofuels into the marketplace based on market principles and as the market demands,” Drevna said. “Energy policy based on mandates is no recipe for success.”
NPRA always has opposed mandates that limit refiners’ flexibility to meet demand, Drevna said.
He advises “caution and prudence” as Congress considers proposals for unprecedented expansion of ethanol and other biofuels. He said blending grain ethanol into gasoline or soy biodiesel into diesel is not always economic or energy-efficient.
Ethanol creates potential ozone emission problems, especially in warm weather. Concerns about biodiesel include nitrogen-oxide emissions and low-temperature reliability.
Drevna said Congress should preempt state and local biofuels mandates, which are not covered by a review of the Department of Energy or the Environmental Protection Agency.
“The existing federal renewable fuels standards mandate with its credit-trading provisions contains a degree of freedom that allows the distribution system to operate at a low-cost optimum by avoiding infrastructure bottlenecks (such as lack of storage or rail capacity). Mandating ethanol usage in specific areas forces a distribution pattern that is less flexible and therefore has less capability to minimize costs,” he said. “These additional costs will be borne by consumers.”
State or local biofuels mandates limit refiners’ choices and create boutique markets, which can “balkanize the national fuel market,” he said.
Drevna also called for biofuels to be developed with a clear realization of their impact on air quality. Blended ethanol increases the Reid vapor pressure of gasoline, raising evaporative emissions of volatile organic compounds (VOCs), which are ozone precursors, in the summer.
“Given that 8-hr ozone national ambient air quality standards (NAAQS) will result in many new ozone nonattainment areas, it is unlikely that the mandated level of ethanol can be distributed in 9.0 rvp conventional gasoline areas without exacerbating ozone problems in nonattainment areas or creating new nonattainment areas,” Drevna said.
He believes expansion of nonattainment areas will impose constraints on ethanol use. Drevna wants Congress to defer a renewable motor fuels mandate pending analysis of additional summer VOC emissions and their effect on maintaining attainment with the 8-hr ozone NAAQS.
He notes that President George W. Bush’s proposal to cut gasoline use by 20% by 2017 would drop gasoline use below current production levels and transform the US into a net gasoline exporter.
The Energy Information Administration projects that gasoline demand in 2017 will be 161 billion gal. A 20% reduction of that would result in 129 billion gal of demand. In 2006, US gasoline production was 136 billion gal supplemented by 7 billion gal of net imports.
One possible unintended consequence of proposed higher national biofuels mandates is a potential increase in the natural gas price, Drevna said. Ethanol production uses large amounts of gas.
“Converting corn and potentially cellulosic material into a usable fuel requires energy, and natural gas currently provides much of that necessary energy,” Drevna said. In addition, higher volumes of fertilizer are apt to be needed if farmers are to grow more corn or soybeans for biofuel feedstocks.
“Natural gas serves as the key feedstock in fertilizer production,” he said. “As natural gas demand rises due to demand from ethanol and fertilizer production, the already tight domestic market will be pressured.”
Proposed mandates for higher volumes of ethanol nationwide raise logistic questions.
Drevna questions how the country will transport the ethanol to be blended at the racks. He also questions where that ethanol will come from and how much it will cost
