"The renewable fuels standard is ambitious," said task force chairman Norm Szydlowski, former president and CEO of Colonial Pipeline and an NCEP commissioner. "To meet its timetable, approaches to biofuels infrastructure upgrades must also be ambitious. Whether it's vehicles, pipelines or pumps, new investment will be needed to meet the 36 billion gallon mandate."
The task force report identified several key issues:
The RFS will require that the nation transition to a broad-based use of a 10% ethanol blend (E10), as well as increased use of higher-ratio blends (such as E85). Transporting and blending this much ethanol will stress existing networks and require new infrastructure investment. In the current economy it may be difficult for businesses to access capital and make large investments in new infrastructure to support national biofuels distribution. These key pieces of infrastructure include biofuel production facilities, blending terminals, pipelines, unit trains and terminals, ethanol retail facilities and flex-fuel vehicles (FFVs). National E10 saturation may occur sooner than originally expected; however, there has been little progress in developing the E85 market necessary to absorb biofuel quantities beyond what can be blended in conventional fuels. Based on these findings, the task force developed several recommendations:
A growing FFV fleet will be needed to absorb biofuels. Further consumer and manufacturer incentives may be needed to accelerate the market penetration of FFVs. Simultaneously, consumer acceptance of FFVs will depend in part on expanded access to E85 (or higher-ratio blends) retail stations in urban and rural areas. Reducing or limiting the number of different blends that fuel refiners must produce to meet state-level specifications will enable a more efficient biofuels transition. Streamlining and simplifying permitting processes along all aspects of the biofuels supply chain would help to reduce costs and lead times for infrastructure investment. Market confidence in the government's commitment to the RFS is a prerequisite for timely private large-scale biofuels investments. Refocusing current public incentives and subsidies to include a greater emphasis on biofuels transport, refueling infrastructure and related vehicle technologies makes sense given the industry's current state of development. Loan guarantees or tax credits could be effective ways to support needed infrastructure investments. "U.S. biofuels policy to date has tended to emphasize production incentives and volume mandates," said Szydlowski. "Going forward, it will be increasingly important to focus on other aspects of the equationnotably the need for safe, efficient and reliable infrastructure networks to transport, blend, and distribute biofuel. It is also important consumer demand for biofuelsand especially for higher-ratio ethanol blendsgrows at a pace commensurate with RFS mandates."
Click the Download Now button below for a list of the members of the Biofuels Infrastructure Task Force.
To read the full report, click here.
Also,click here to read the U.S. Energy Information Administration's (EIA) current "This Week in Petroleum" on the subject of biofuels.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.