Editor's Note

Cellulosic ethanol in, biomass power out of Senate energy bill
By Tom Bryan
The U.S. Senate passed an energy bill June 21 that has positive implications for one form of biomass utilization and disappointing implications for another.

On the bright side, the legislation would give ethanol production-specifically cellulosic ethanol production-a big boost. It would raise the current renewable fuels standard (RFS) from 7.5 billion gallons of consumption by 2012 to 36 billion gallons by 2022. This new RFS would contain an advanced biofuels carve-out, mainly for cellulosics, taking effect in 2016 with 3 billion gallons and increasing by that amount each year to reach 21 billion gallons by 2022.

The Senate energy bill would also boost auto fuel economy standards to 35 miles per gallon (fleet average) by 2020, a 40 percent increase over current requirements. If you look back at aggressive biofuels visions set by groups such as the Natural Resources Defense Council and others, improved fuel economy standards are as important to the future relevancy of biofuels as advancing cellulosic ethanol process technology. That is, for biofuels to be relevant in America's energy future, cellulosic ethanol production must be rapidly commercialized and rise precipitously while overall fuel consumption simultaneously falls. The Senate should be applauded for passing legislation that pairs increased biofuels production with higher fuel economy standards.

So often in the biofuels industry, we see investors practically salivating over skyrocketing fuel consumption projections. The logic is simple: Limited global oil supplies plus rising fuel consumption plus increasing reliance of foreign oil equals a better market for ethanol. The higher the demand is for fuel, the higher demand is for ethanol. I've always believed that way of thinking was flawed. We, as biofuels advocates, should never hope overall fuel consumption keeps rising to guarantee the future need for biomass-based transportation fuels. Rather, we should actively push for higher and higher fuel economy standards that ultimately make biofuels more relevant by giving them a larger share of a smaller market.

The ethanol provisions in the Senate bill are terrific, but the legislation falls short in at least one key area. A provision that would have required electric utilities to produce at least 15 percent of their electricity from wind, biomass or other renewables was shut out. What happened? The electricity provision faced strong opposition from senators who worried that such a national mandate would raise electricity costs in some states-namely Southeastern states that don't have adequate wind resources. During Senate debate on the issue, Sen. Pete Domenici, R-N.M., circulated a study commissioned by the Edison Electric Institute, showing that 27 states would be unable to comply with the 15 percent renewables requirement. However, that report was apparently based principally on wind power and didn't look adequately at the potential for biomass-based electricity generation in the Southeast. Sen. Jeff Bingaman, D-N.M., said during the debate that states in the Southeast have huge resources of biomass. Despite claims by the opposition that the renewables requirements would cause electricity prices to soar, Bingaman produced a report from the U.S. Energy Information Administration that said otherwise.

In fact, 23 states already require utilities to move toward meeting minimum renewable fuel use requirements, including nine states where standards are equal to or exceed the Senate proposal.

It's disappointing that the renewables requirement wasn't part of the Senate bill. At press time, the House was continuing to work on its own version of the energy bill. It's too early to tell, but perhaps biomass power will fare better in that version. Stay tuned.

Tom Bryan
Editorial Director

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