By ANN HINCH
Associate Editor

URBANA, Ill. — Is the federal Renewable Fuel Standard (RFS2) the best influence on the growth of biofuel production in the United States? Is it best for improving climate here and globally? These were questions posed at Friday’s third annual Biofuels Law and Regulation Conference at the University of Illinois.
The conference’s goal is to examine legal and regulatory challenges for those in the biofuel industry. Attorney Jocelyn D’Ambrosio, an associate with Fried, Frank, Harris, Shriver & Jacobson LLP, noted the RFS2 is an incremental policy, stepping up the amount of different biofuels on a yearly basis until 2022 to meet national-use goals.

By locking RFS2 biofuel types and amounts into law, she said it fosters a continued reliance on cornstarch as feedstock, which directly affects how much corn is grown here and overseas as well as how much fertilizer and fossil fuel are burned/used its planting, harvest and ethanol-making. (It could also indirectly affect land use overseas, she said – a controversial debate for those involved in corn ethanol.)

What if in a few years we learn corn isn’t the most efficient, best stock for ethanol? Having this kind of financial stake in the RFS2 makes it difficult for the federal government to change its requirements later, if large investments in certain kinds of feedstock, manufacturing and infrastructure are already made, D’Ambrosio said.

And more investment is being called for. She said General Motors has pledged to make more than half its 2012 fleet flex-fuel, but for the vehicles to be fueled as intended, customers would need about 12,000 higher-ratio ethanol-gas pumps within two miles of their homes. There are only about 2,500 now. (Nationally, there are a million or so total gas pumps.)

It’s difficult to make a big difference in reducing greenhouse gas (GHG) emissions, D’Ambrosio said, with such an incremental policy as RFS2. GHGs are distributed globally no matter where they originate, she pointed out, and now would be the time – nearer its beginning than its end – to discuss whether we as a nation want to stick with the RFS2 as it is.

She wonders if a more comprehensive program like cap-and-trade would be better policy-wise for climate change, to require emissions reduction and allow the biofuel industry to figure out the best product(s) to do that. She said it wouldn’t “lock in” technology like the RFS2 does; it would allow for innovations we can only now envision, or not even foresee.

As an economic policy, the RFS2 may not be needed across the board, said Dr. Bruce McCarl, professor of agricultural economics at Texas A&M University. Right now, biodiesel’s manufacturing capacity is far higher than actual production, mostly because it can’t be sold much cheaper than regular diesel. Soy oil is around $4.21 per gallon, he said, plus 50 cents for refining into fuel and $1 per gallon for facility costs. Blenders receive a $1 federal credit per gallon.

“The RFS may be needed for an industry like this,” McCarl said – that is struggling, compared to the corn ethanol industry, which is going strong and already manufacturing to RFS2 yearly standards.

Biofuel research and manufacture in response to high gas prices isn’t new. “When I worked on all this in the (19)70s, there was all this excitement (for development),” he said, “but then gas went from $50 a barrel back down to $20.”

Demand worldwide for oil and biofuel is rising – more than yearly crop yields alone can currently keep up with, McCarl said, even though the popular blend wall of E10 is being pushed. Cellulosic biofuel from non-food crops has been called a promising technology, but he’s hearing the same comments from chemical engineers now than he did more than 30 years ago – that they’ll have it “in two or three years.”

“We have to have this technological progress,” he said of better yields in the field.

Not ethanol?

There are other biofuel possibilities besides ethanol, said Joshua Fershee, associate professor at the University of North Dakota School of Law, but also psychological hurdles to overcome in using them – and in people getting used to using a mix of oil-based and biobased fuels, in fact.

Ethanol has a psychological advantage, he said, because it’s physically similar to the gasoline people have always used. It’s liquid; they can buy it at the same stations, put it in their cars the same way; and the corn comes from our own soil. Plus, there’s already a fueling infrastructure in place, and economic practicalities dictate we have to work with that.

“Every time we change that, we change the market itself,” Fershee said.
The hypothesis of Peak Oil – that there’s a finite amount of oil in the planet and that we’ve passed the “peak” of what’s available – is a significant question. Fershee said while he does not believe we’ve hit the peak of the world supply, the cost of getting it may continue to increase.

“We have something of a schizophrenic view” of renewable versus conventional fuel, he explained. In a June 2010 Pew/National Journal poll, he said 68 percent of people polled supported exploration of new sources of oil, coal and natural gas … but 87 percent also supported renewable fuel. He calls this “the BP effect,” pointing out the poll took place two months after the BP/Deep Horizon explosion and spill in the Gulf of Mexico.

So, what are the alternatives? There’s biodiesel (for diesel engines, of course), but it doesn’t do so well in cold weather. There’s natural gas, which would be an easy transition, but like oil, it is subject to supply and price volatility.
There’s electricity; Fershee pointed out some of the first vehicles invented were electric. But going to an electric-based system, he said, has its own problems. The one he immediately mentioned was less need for liquid fuel, making gas stations “food stops instead of fuel stops.”

There’s hydrogen, but while he thinks it has psychological appeal, it and fuels like it beg the question if people are comfortable with shorter-range vehicles. Still, it’s an idea he likes – “I grew up with ‘Back to the Future;’ I still hold out hope,” he said, to laughter.

Something else to keep in mind is it’s not just cars and trucks using fuel. Jet fuel is needed, and while there are technologies being researched to supply renewable aviation fuel, it’s a question of whether petroleum can be replaced or supplanted in an economical fashion.

Because we have alternatives, Fershee said no national policy such as RFS2 should be picking winners right now – as it’s already done with corn ethanol.
Finally, he returned to the topic of last year’s Gulf oil problems and pointed out there’s risk in pursuit of any kind of energy, whether it’s an explosion at a Gulf drilling platform or a Midwest wind turbine throwing a huge, broken blade.
“It may have been avoidable,” he said of the oil spill,” but we can’t eliminate the risk” altogether.