GoodFuels

Nonsense Percents

Here’s a riddle for you. When does 61% become 16%?

When you are talking about the lifecycle analysis of greenhouse gas emissions for ethanol as calculated by the EPA under its proposed rulemaking for the Renewable Fuels Standard, the correct answer is when you add in presumed international indirect land use changes.

According to the Renewable Fuels Association, if you just compare “apples to apples” - that is, the direct impacts of corn ethanol’s carbon footprint compared to petroleum, ethanol is 61 percent better than gasoline at reducing greenhouse gas emissions. However, when “international land use changes” are factored into the equation, you get 16 percent - a difference of a whopping 45 percent.

RFA VP for Research Geoff Cooper explains, using one of the many tables included in the 800+ page rule promulgated by EPA that splits out the emissions by phase for both the gasoline baseline and a dry mill corn ethanol plant producing dried distillers grains. “They look at the emissions by phase from the net domestic agricultural phase, international agriculture, domestic land use change, international land use change, fuel production and transportation of fuel and feedstock,” Cooper said during a press conference after the rule was released. “When you total all of those up and subtract the international land use change emissions out of there, that’s where the 61 percent reduction comes from.”

Listen to Geoff explain here:

That is because the international land use change number is the biggest of all in terms of lifecycle GHG emissions, at over 1.9 million CO2-eq/mmBtu. Take it out and the equation is significantly different.

That’s why there is such a huge concern over the indirect land use change issue. Especially since it is based on a model that assumes specific price levels, crop yields and how much land will be put into agricultural production in countries around the world based solely on the use of a certain amount of biofuels in the United States. There is simply no way those calculations can be foolproof accurate. It therefore stands to reason that any inaccurate and unproven model should not be used to penalize ethanol to the tune of 45 percentage points, which puts it four points below the required 20 percent threshold for improvement of greenhouse gas emissions.

If you have the time or the inclination, take a look at the EPA’s proposal. The link here is to the PDF of a 549 page document on the rulemaking, not the 800+ version that Geoff references in his comments. The table he refers to is on page 315 of this document. The entire section on lifecycle analysis starts on page 268.

Huffington Post blog

RFA’s CEO, Bob Dinneen, has published his latest blog on Huffington Post.

This time, he covers California’s Air Resource Board (ARB) and their recent proposal for carbon reduction. ARB suggests that continuing to use petroleum would be preferable to using biofuels. Why is this, you ask? Dinneen explains:

Based on faulty modeling, the agency is alleging that increased demand for crops for biofuels will trigger cultivation of non-agricultural lands (like grassland and forest) in the U.S. and abroad. They call this occurrence “indirect land use change.” Cultivation of those lands would cause the release of stored carbon from the soil and vegetation, ARB says, and they argue those emissions should be debited to biofuels.

As we’ve covered before, indirect land use change science is faulty at best. In fact, just last week, 111 scientists from across the country signed a letter challenging this proposal.

Dinneen goes on to make some interesting points on why this proposal is flawed:

Yet, the agency failed to evaluate any indirect effects at all for oil production or gasoline consumption (or any other transportation fuels for that matter). Thus, ARB’s biased finding is that gasoline is slightly better than many forms of ethanol and other biofuels. This position completely ignores environmentally disruptive projects like Canadian tar sands, the impact of expanding oil production in previously pristine forest regions such as those in South America or the mangrove forests in Nigeria, or the impact of sending tens of thousands of American soldiers to protect the sea lanes for shipping oil from the Persian Gulf.

The blog ends with asking those who feel so inclined to make comments on March 23 when ARB opens the proposed regulation up for public comment.

Read the whole blog here.

Blinded By Junk Science

Two different university studies in the past few weeks have come to two completely different conclusions regarding the greenhouse gas emissions of corn ethanol, which clearly proves there is no scientific consensus on this issue.

The first study, by the University of Nebraska, concluded that “recent improvements in crop production, biorefinery operation, and coproduct utilization in U.S. corn-ethanol systems result in greater GHG emissions reduction, energy efficiency, and ethanol-to-petroleum output/input ratios compared to previous studies. Direct-effect GHG emissions reductions were found to be 48% to 59% compared to gasoline, which is two to three times greater than estimated in previous reports.”

The second study, just released last week by the University of Minnesota, comes up with a conclusion that only a rocket scientist could decipher. “If C is valued at $120 Mg_1, the societal climate-change cost from production and consumption of gasoline is $0.10 L_1 ($0.37 gal_1), between $0.08–$0.14 L_1 ($0.31 and $0.52 gal_1) for corn ethanol, but only between $0.01–$0.02 L_1 ($0.03 and $0.09 gal_1) for cellulosic ethanol.”

Unfortunately, the UMN study is getting lots of media attention because the sound bite is that corn ethanol “can be as harmful to the environment as gasoline, and that the combined costs to climate-change and health exceed that of gas.”

That simplistic conclusion is based only on certain hypotheses, including the baseless assumption that additional corn demand for increased ethanol production will cause conversion of large amounts of grassland enrolled in the Conservation Reserve Program.

The paper itself states that if the authors’ assumed land use change emissions are removed from the analysis, average corn ethanol reduces greenhouse gases by 30% compared to gasoline and advanced corn ethanol reduces GHGs by 46%. According to the report, “Whether corn ethanol has lower life-cycle GHG emissions than gasoline depends on biorefinery heat source, assumptions about technology, and land-use change.”

In other words, the authors of the UMN study considered several different land use scenarios and process heat sources, and came up with DIFFERENT CONCLUSIONS. The headlines come from the worst possible scenario which assumes all corn ethanol is produced in one way and relies on debatable methodologies for which no scientific consensus exists, including land use change and carbon social cost.

The sad thing is that journalists get blinded by all this junk science and report whatever translates into a simple sound bite. It is imperative that the industry constructively engage in this issue to insist that it is driven only by sound science.

Consumer Group Refutes Texas Claim

The Consumer Federation of America calls the argument by Texas Governor Rick Perry that cutting ethanol production will lower gasoline prices “strange.” I call that an understatement.

The CFA submitted comments to EPA today in advance of the decision coming down this afternoon on the request by Gov. Perry to cut the RFS by half.

The comments were filed in response to a study prepared for the state of Texas by Phillip K. Verleger and Darrel B. Chodorow who erroneously claim increasing demand for gasoline and crude oil would lower prices.

“The suggestion that increasing demand will lower oil and gasoline prices is not only contrary to Economics 101 and what independent analyses by Wall Street firms, government agencies, and academic institutions have concluded,” said Dr. Mark Cooper, CFA’s Director of Research, “but the study’s authors do not provide one shred of evidence to support their strange argument.”

In fact, CFA says cutting ethanol production as requested would increase gas prices by almost 50 cents a gallon.

“We looked at the movement of refinery output, imports, exports and inventories, as well as recent price changes and could find no evidence that the market is or would behave in the bizarre, counterintuitive way that the Texas theory predicts,” Cooper concluded. “It is critical that the EPA base its decision on the waiver request on a proper understanding of how current energy markets work in the real world.”

A New Argument for Cutting Ethanol Mandate Surfaces

Energy economist Philip Verleger has a new contention that U.S. refiners are producing less gasoline thus less diesel due to increased ethanol demand. “Demand for diesel is rising in the U.S. and Europe, and its price has been shooting up much faster than that of petrol [gasoline],” he said recently.  Here is his argument and why it doesn’t stand.

Verleger said refinery operators were responding to the rapid increase in diesel prices by bidding more and more for light, low-sulfur crude. The U.S. could increase the light-crude supply — thus reducing the quantum of the price hikes — by putting some of its reserves on the market.

“Most crude, when refined, produces diesel and petrol; the lighter the crude, the bigger the share of diesel. Refinery upgrades to get more diesel from heavier crudes could take two years to relieve the pinch,” Mr Verleger said.

“Until then, refiners don’t want to produce more diesel from cheaper heavier crude because that would mean producing more petrol — sales of which have dropped,” he added.

Here’s the good part.

“The U.S. could also ease the diesel squeeze by adjusting the federal requirement that 9 billion gallons of ethanol be blended with US petrol supplies this year.

“The ethanol mandate is reducing the amount of petrol used. And so are petrol prices in excess of $4 a gallon. The side effect of less petrol use is less production of diesel — and more pressure on crude oil prices.

“Easing the ethanol mandate would also slow the increase in food prices. Ethanol, a biofuel, is made mostly from corn, the cost of which has also been soaring,” Verleger contends.

His remarks about food prices will have to wait. There’s plenty of evidence that corn is not the primary driver of higher food costs. That has much more to do with oil prices.

Verleger’s obsession with diesel demand and production is rooted in a recent paper where he seeks to explain the real story behind soaring crude oil prices this year. The paper, titled “Explaining the 2008 Crude Oil Price Rise” can be found here. In it he predicts that crude oil prices could reach $200 per barrel, but does not offer a timeline.

The U.S. slate of crude oil is a mixture of light and heavy crudes, low and high sulfur grades. In fact many U.S. refineries are well equipped to process heavier crudes, and have been for years. Worldwide and domestically, all available “sweet” crudes are most likely sold out as they are produced. It is true that the U.S. and the IEA hold vast quantities of “sweet” or light crudes in reserve, but it is clear neither is willing to offer the barrels on the market.

Verleger’s contention that this is the primary reason, along with ethanol mandates in the U.S., for rising crude oil prices borders on the absurd. (more…)