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22 nd Annual EPAC Biofuels Conference

22 nd Annual EPAC Biofuels Conference. June 24-26, 2012 Billings, Montana. Douglas A. Durante Executive Director Clean Fuels Development Coalition www.cleanfuelsdc.org. Federal Policy and Programs Recapturing the High Ground E30, FlexFuel Vehicles, CO 2 /Carbon Reduction.

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22 nd Annual EPAC Biofuels Conference

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  1. 22ndAnnual EPAC Biofuels Conference June 24-26, 2012 Billings, Montana Douglas A. Durante Executive Director Clean Fuels Development Coalition www.cleanfuelsdc.org

  2. Federal Policy and Programs • Recapturing the High Ground • E30, FlexFuel Vehicles, CO2/Carbon Reduction

  3. The Mood in Washington • Anything the government supports must be a boondoggle • Anything the government pays for must be wasteful • If it was here it needs to go • For ethanol, an industry literally created and sustained by public policy, i.e., the Government, that's not good news. • However justifiable, the tax exemption/credits, import duties, environmental requirements, loans/loan guarantees, etc. all were criticized as everything that was wrong with government. • Ethanol has gone from hero to villain. • Expiration of the tax exemption and duty has helped tremendously

  4. D4: Total Disconnect, Discord, and Dysfunction in DC Complete lack of consensus w/regard to renewables, alt fuels, env. RFS is the law of the land and by definition it is the policy of the US Government to develop & use renewable fuels, Supported by EPA RIS How do we meet that requirement and goal? - A Republican House denying funding for EPA Labels on E15, blender pumps, etc. - Legislation to define Nat gas and coal as renewables - ILUC Policy that cripples ethanol - Administration that is force feeding electric vehicles in a square peg/round hole approach requiring massive subsidies--10K per car - Eliminating FFV Credits that cost nothing!

  5. Dysfunction, continued Solar, Wind, Geothermal, Biomass, Hydro all being whipsawed Any Environmental or Green Initiative being painted as job killing Dueling Polls - Just last week-- Gallup says 65% pro GHG - Previous week ABC-NY Times says 70% feel EPA Over- reaching Suspension of stationary CO2 rule Opposing Solar in the Mojave Desert -- $45 mill to preserve Nat'l Wildlife Opposing Energy Crops as too invasive Environmental Groups (Friends of Earth) hailing expiration of VEETC as first step with elimination of RFS next $3-4 gasoline here to stay . . . . . . . . . . . . AND NOT A SINGLE SERIOUS EFFORT TO REPEAL OIL SUBSIDIES!!

  6. Key Federal Policy and Programs Affecting Ethanol Legislative: RFS, Tax Credits (alt fuel, cellulose, ITC, etc.), Farm Bill - Possible Collaborative Opportunities: -- EV Incentives, Nat Gas Act, FFV Mandates/ Open Fuel Standard Regulatory: E15, CAFE, Tier 3, (EPA), Biorefinery Assistance, BCAP, REAP (USDA) -- Ethanol need not apply (DOE) FOR ETHANOL THE PLAY IS EPA!! CAFE/GHG/Fuel Quality ILUC Extraordinary authority to redefine RFS

  7. RFS Requirements

  8. Cellulose Requirements VS Reality 13 Million Gallons 13 Million Gallons 6 Million Gallons

  9. Cellulose Requirements VS Reality

  10. Adjusting the RFS EPA Required (Shall) to Promulgate a Rule if... - 20% of volume is waived for 2 years - 50% for one year Administrator can modify volumes for all years following the year of the waiver-- any time after 2016. EPA/DOE/USDA to consider - Environment - Energy Security - Infrastructure - Rate/Status of Commercialization - Cost - Jobs, ag/food impacts, prices, etc.

  11. Adjusted RFS Scenario

  12. RFS Requirements

  13. Adjusted RFS?

  14. Solution

  15. Recapturing the High Ground: The Case for More Ethanol & More FFVs Obvious energy security/diversity; agriculture/economic benefits, Less obvious are environmental/health benefits- ethanol has great resume in CO, Ozone/RFG - New CAFE standards will require small bore, high compression engines needing more octane - Air Toxics/Aromatic content likely to increase to meet octane needs, resulting in particulates & CO2 Mid-level blends e.g. E30 could reduce aromatic content by substituting clean, low carbon, renewable octane for these air toxics New standards make reducing carbon critical!

  16. The Case for More Ethanol (Continued) Mobile source controls remain lowest cost per ton to reduce most pollutants Ethanol increases gasoline yield at refineries from the oil barrel

  17. Illustration of a 10% increase in gasoline yield when substituting ethanol for aromatics at 30%

  18. Air Toxics – Aromatics - Particulates • Aromatics are hazardous air pollutants and linked to many cancers and respiratory problems • Benzene – Toluene – Xylene • They are in gasoline and the concentration goes up as refiners produce higher octane fuels • They form secondary organic aerosols and bond with carbonaceous material to form PM – 10, 2.5, and now ultrafine particulates • PM of all types identified by EPA as major health threat • EPA has clear authority to regulate air toxics

  19. Mobile Source Provisions of CAAA Established as Minimum Threshold –EPA declined to further tighten aromatic restrictions “…use maximum achievable control technology to reduce levels of both benzene and non-benzene aromatics in gasoline to protect the public health and environment.” • Even back in 1990, Congress directed the EPA to periodically review available technologies to reduce air toxics as much as possible • In a 2007 Ruling, the EPA recognized ethanol as a substitute for aromatics, acknowledging “high octane quality” • EPA declined to further tighten aromatic restrictions, pointing to economic challenges and not enough ethanol supply. • Cost benefit assessment was conducted with oil at a range of $17-$35 a barrel • Before RFS2

  20. Reduction in Aromatic Compounds withScheduled Increase in Ethanol

  21. E30 Scenario--Creating a Sea Change in Just One Decade Current Gasoline Pool of 135 BGPY, 25% aromatic content= 34BGPY Modest, i.e. "achievable" reduction in aromatics of 50-60% = demand for a new 15BGPY of ethanol--exactly what is called for in the RFS!! Gradual reductions in aromatics, replaced with ethanol, coupled with gradual increase in FFVs, with gradual replacement of pumps with FlexFuel pumps--(10%, or 7700 per year wear out, 245 million vehicle fleet turnover in 13-17 years) CFDC, Nebraska Ethanol Board, Growth Energy, ACE and others called on EPA in our comments to connect all the dots and do something about it!!

  22. Lets make these guys irrelevant!BILAL QABALAN/AFP/Getty Images. Saudi Crown Prince Abdullah bin Abdel Aziz inaugurates the Al-Qatif new oil production plant

  23. Thank you! For more information log on to www.cleanfuelsdc.orgwww.ethanolacrossamerica.net

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