A presentation to the Advisory Group covering technologies, emissions, economics and incentives related to biofuels, including ethanol and biodiesel.

1. BIOFUELS - Primer
• Biofuel – Ethanol
– Made from almost any grain
• Critics and competition with food
– Process
• Feedstock, enzymes, heat = ethanol plus waste for mulch/animal feed
– Excitement
• Cellulosic and biomass – avoid competition with food sources
– Corn stubble, corn cobs, wood chips, straw
– Included in national RFS but not commercially proven
– Lone oxygenate for EPA CAA
• Replaces MTBE
• NAAQS intermittently require E10
– Under the radar
• Miscanthus
– Order of magnitude more efficient than corn
– Not edible, higher yields/less land, marginal soil, broader climate range
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

2. BIOFUELS - Primer
Ethanol Production by Feedstock, 2006
Capacity (million
Plant Feedstock galllons/year) % of Capacity No. of Plants % of Plants
Corna 4,516 92.7% 85 83.3%
Corn/Grain Sorghum 162 3.3% 5 4.9%
Corn/Wheat 90 1.8% 2 2.0%
Corn/Barley 40 0.8% 1 1.0%
Milo/Wheat 40 0.8% 1 1.0%
Waste Beverageb 16 0.3% 5 4.9%
Cheese Whey 8 0.2% 2 2.0%
Sugars & Starches 2 0.0% 1 1.0%
Total 4,872 100.0% 102 100.0%
Source:
Environmental Protection Agency, Office of Transportation and Air Quality "Renewable Fuel Standard Program - Draft Regulatory Impact
Analysis," September 2006, EPA420-D-06-008.
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

3. BIOFUELS - Primer
Feedstock as Percentage
100%
80%
60%
40%
20%
0%
Corn Corn/Grain Corn/Wheat Corn/Barley Milo/Wheat Waste Cheese Sugars &
Sorghum Beverage Whey Starches
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

4. BIOFUELS - Primer
• Biodiesel
– Made from vegetable or animal fats
• Soy (80%), rapeseed, some canola
• Virgin
– Competition with food arguments
• Waste
– Used fryer grease (18%), must be filtered first, limited supply
– Process – Transesterfication
• Oil or fats react with alcohol in presence of catalyst to yield mono-alkyl-esters
• Waste used as mulch, animal feed
– Excitement
• Algae - Carter administration, huge potential spurring VC, not commercial ready
• Final ASTM Standards for B5 – B20 recently released
– Under the radar
• Camalina
– Non-edible, marginal lands, less water/fertilizer
– Used in bio-jet-fuel demonstration
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

5. BIOFUELS – Energy Density
FUEL BTU (based on volume)
Diesel (No. 2) 129,500
B2 129,276
B20 127,259
Gasoline (mid-grade/premium) 125,000
B100 118,296
Gasoline (clear) 115,000
E10 111,500
E85 81,800
E100 75,700
CNG (3600psi) 38,000
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

6. BIOFUELS – Energy Density
BTU by Volume
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Diesel B2 B20 Gasoline B100 Gasoline E10 E85 E100 CNG
(No. 2) (clear) (3600psi)
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

7. BIOFUELS – Energy Density
• Caveats Translation into “vehicle range”
– LHV and HHV – Driving conditions
– Winter and Summer • Road conditions
– Quality variations among Producers • Headwinds
and Suppliers • Hills
• Traffic congestion
– Vehicle Conditions
• Engine efficiency
• Tire pressure
• Roll resistance
• Wheel alignment
– Driving habits
• Acceleration
• Cruising speed
• Air conditioning /defroster
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

8. BIOFUELS – Emissions
Fuel gCO2e/MJ Source
Coal (scrubbed) 266.66 Nature reports (10/2008)
Natural Gas 123.05 Nature reports
Midwest 20% dry mill, 20% wet mill, dry 99.40 Ethanol Producer Magazine (04/2009)
distiller grains - Citing CARB’s LCFS calculations
Diesel 97.28 ICBE and ODOE
Gasoline 95.86 Ethanol Producer Magazine (04/2009)
Oregon E10 using local ethanol 93.49 ODOE
California dry mill, wet distiller grain, 77.40 Ethanol Producer Magazine (04/2009)
biomass
Brazilian sugarcane 73.40 Ethanol Producer Magazine (04/2009)
B20 71.28 ICBE and EPA
Oregon dry mill, dry distiller grain, natural 67.60 ODOE
gas
Oregon dry mill, wet distiller grain, natural 49.90 ODOE
gas
Nuclear 18.33 Nature reports (10/2008)
PV 8.33 Nature reports (10/2008)
Wind 2.77 Nature reports (10/2008)
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

9. BIOFUELS – Emissions
gCO2e/MJ Comparison
Well to Wheel
300
250
200
150
100
50
0
Coal Natural Midwest Diesel Gasoline Oregon California Brazil B20 Oregon Oregon Nuclear PV Wind
Gas Mill E10 Mill #1 #2
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

10. Biofuels – Note on gCO2e
• CO2e and Global Warming Potential (GWP)
– CO2 1
– CH4 21
– N2O 310
– SF6 23,900
• Biodiesel
– Greatly reduces CO
– EPA assumes CO2 emitted in WTT is reabsorbed
• CARB LCFS calculations are controversial
– NOx increases slightly, but with greater GWP
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

11. BIOFUELS – Incentives
• Federal
– State
• Funding to assist states develop and maintain emission reduction programs,
including grants for clean bus fuel and technology
• Funding to help states develop RE and energy efficiency programs
• Funding for the Clean Cities program
– Retailers and Suppliers
• Tax credit for cost of installing alternative fueling equipment
• Tax credit for Small Ethanol Producer (60mm gal) and cellulosic biofuel producer
• Tax credit for blending ethanol and biodiesel
• USDA Section 9006/9008 funding for rural renewable energy systems and R&D
• Funding for biomass proof of concepts and R&D
• Funding for community-based producer planning or working capital
• Funding for public transportation in parks and commercial airport ground equipment
• Improved Energy Technology loan guarantees
– Consumers
• Tax credit for cost of installing alternative fueling equipment
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

12. BIOFUELS – Incentives
• State
– Retailers and Suppliers
• Zoning exceptions for on-farm biofuel production
• Tax credit for feedstock collectors and producers
• Property tax credit for biofuel producers
• BETC for alternative fuel production and fueling infrastructure
• Energy Loan Program (SELP)
– Consumers
• Tax credit for purchase of biofuels
• RETC for alternative fuel vehicles and infrastructure
• SELP
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

13. BIOFUELS – Mandates
• Federal
– Require percentage of federal fleets to be alternative fuel vehicles (AFV)
• DOE in rulemaking process determining if local government and private fleets must
do the same
– Incremental costs of AFV spread across entire fleet
– Renewable fuel standard for federal fleets
• Reduce petrol use by 2% per year
• Increase alternative fuel use by 10% per year
– Renewable Fuel Standard
• EPA rule set it at 7.76% for 2008 (9 billion gallons)
• 15 billion by 2015
• 36 billion gallons required by 2022
• 30% by 2030
• Beginning in 2013, certain percentage must be biomass / cellulosic
• 2mm FFV on road today, very small percentage
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

14. BIOFUELS – Mandates
• State
– Agency fleets and transit districts must purchase AFVs and use alternative fuels
• Except when not economically of logistically feasible
– Renewable Fuel Standard
• E10 ethanol after production reaches 40mm gallons
• B2 biodiesel after production reaches 5mm gallons
– B2 is considered an additive
• B5 after production reaches 15mm gallons
• Production capacity surpassed thresholds as of September, 2008
– Ethanol 297mm
– Biodiesel 27mm
• Air and maritime exceptions
– Airlines voluntarily pursuing petrol blended with biodiesel
• City of Portland
– City vehicles must use at least E10 or B20, FFV must use E85
– Solid waste collectors must use B20
– All gas sold must be E10
– All diesel sold must be B5 (B10 by July, 2010)
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

15. BIOFUELS – Retailers
• Cost of Converting (E85)
– Profit margins have decreased $0.005/gal/year since 1994
– Average: 3.3 tanks @ 12,000 gallons each
• Assume 2 regular, 1 premium
• Truck stops along shipping corridors have higher percentage of diesel tanks
– Once a tank is blended, can’t go back, must be permanently marked
– Biofuels require dedicated blended tank, can’t blend with petrol through pump
• Blending equipment not UL approved yet
• Requires zoning variances or fire marshall exceptions
• Ethanol becomes more dense in quantity affecting weights and measures
– Profit margins justifying voluntary conversion are driven by throughput, not conversion
cost
• though conversion cost could be psychological barrier
– Option: take out the premium grade fuel tank
• Premium is higher margin fuel, but throughput has been decreasing
• Replace premium tank with biofuel removes medium and high grade
• Presents less options to customers – regular and biofuel
– Option: take out 1 regular grade fuel tank
• Now have less volume of higher throughput fuel grade
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

16. BIOFUELS – Retailers
• Market Experiences
– Since throughput is the most important factor
• Sufficient local demand must exist
– Tax incentives, fleet vehicles, government mandates
• Customers require information about their choices
– Ethanol vs. driving habits re: mpg and range
– Petrol vs. Ethanol price differential of 20% maximizes profit margin
• Influenced by price of petrol and dependable, long term, favorably priced,
local wholesale supply of ethanol
– Pricing Ethanol:
• Retail gas price -> use as starting point
• E85 retail price -> subtract 20%
– Profit margin -> $0.10 - $0.30 per gallon
» Taxes -> reduced property and income tax
» Transportation to retailer -> local vs. distant
» E85 wholesale price -> feedstock price - influenced by RFS and
incentives
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

17. BIOFUELS – Consumers
• Need OEM options
– FFV, diesel, serial PHEVs with diesel or FFV ICEs
• Magnusson-Moss Act – manufacturers must warrant materials and
workmanship of vehicles. If engine problems are caused by a fuel, such
problems are not related to the materials or workmanship of the engine, but
are the responsibility of the fuel supplier and not the engine manufacturer.
– Hence the excitement over the ASTM B5 – B20 standards making it easier to
avoid dirty biodiesel
– But, still unclear whether B5 or higher blends degrades modern diesel emission
equipment
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

18. BIOFUELS – Points of Interest
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

19. BIOFUELS – Points of Interest
• Rural Areas
• Power source
• Steady biodiesel supply/demand
• Overlapping state/fed incentives
• Low fuel transportation costs
• Double as EVCN
• transmission constrained rural areas
• Urban Areas
• Standby or peaker power source
• Peaker power source for am/pm EV commute
• State government
• Standby power already required to go biodiesel
• Caveat
• More efficient if combined cycle
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

20. BIOFUELS – Review Executive Order
• Applicable to Biofuels
– EO #5
• compile, review, evaluate market and policy research
• review current and future opportunities for leadership and growth
– EO #7.c
• develop plan to work with private sector to build/maintain alt fuel stations
• assist in public awareness campaign
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

21. BIOFUELS – Recommendations
• Vehicles
– PHEV
• ICE in serial PHEV running on biofuels
• Scale state incentives based on technology
– EV
• Biodiesel charging stations in rural areas
– Heavy-duty
• I-5 truck stops providing higher biodiesel blends
• Fuel
– Implement RFS now
– Raise biodiesel blend requirement from B5 to B20
– Support retailers by requiring gov fleet vehicles to fuel at local, not state, fueling stations
• Tax
– Manipulate price differential between petrol and biofuel with gas tax that decreases as
cost of petrol goes up
• Feedstock
– Incentivize Miscanthus and Camelina
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009

22. BIOFUELS – Recommendations
• Biodiesel
– New ASTM standards make product more reliable
– Superior BTU to emissions ratio compared to all other fuels
– Unfortunately, existing fleet is mostly gas, not diesel
– Incentivize new PHEV ICE’s to be serial and diesel (but see E85 below)
– Easier to blend at pump with forthcoming UL certification of parts
– Educate, invoke OR RFS mandate and encourage broader use at
• Diesel truck stops
• Backup power
• Rural EVCNs as range extenders for EVs in transmission constrained areas
• Biofuel – Ethanol
– Lower energy content may not be a concern in serial PHEV ICE
– Educate and assist retailers overcome poor blending attributes
Governor's Alternative Fuel Vehicle Infrastructure Workgroup - Oregon 2009