This document summarizes a presentation on beneficial biofuels policies that deliver real environmental performance. It discusses four critical objectives for sustainable biofuels, the biophysical potential for biomass production in the US, current US policy context regarding biofuels, and asks that policies accurately account for carbon emissions, define renewable biomass, and reform biofuel tax credits. Specifically, it proposes reforming tax credits to be budget neutral, streamlined, and performance-based on climate and environmental impacts.
2. Four Critical Objectives for Sustainable Biofuels Energy security Greenhouse gas emissions Biodiversity Sustainability of the food supply Tilman, D., et al. (2009) “Beneficial Biofuels—The Food, Energy, and Environment Trilemma” Science. Online: http://www.sciencemag.org/
3. Biophysical Potential According to studies by the National Research Council and the Union of Concerned Scientists, the U.S. can produce between 370 and 550 million tons of biomass for energy use by 2020 from sustainably sourced lands and feedstocks.
4. U.S. Policy Context 1978 Energy Tax Act restructured into the Volumetric Ethanol Excise Tax Credit (VEETC) in 2005. 2005 EPACT EPA Renewable Fuel Std. (“RFS-I”) in 2007 2007 California Executive Order S-01-07 California Air Resources Board (CARB) finalizes comprehensive lifecycle GHG performance accounting framework for CA Low-Carbon Fuel Std. (CA-LCFS) in 2009 2007 EISA EPA Renewable Fuel Std. (“RFS-II”) in 2010 2009 Waxman-Markey Climate Bill (ACES 2009) … Proposed carbon offsets and federal renewable electricity standard 2010? Senate Proposed Comprehensive Energy and Climate Legislation …
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6. A sound definition of “renewable biomass” in potential Clean Energy Legislation
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8. Today’s corn ethanol: not good enough Doesn’t meet the 20% RFSII requirement Today 2022
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10. A Sound Definition of Renewable Biomass “Renewable biomass” in EISA 2007 was a positive step to preclude the most destructive sources of biomass from being used to make biofuels—avoiding sensitive habitat and ecosystem destruction. More sustainability safeguards are needed to protect critical wildlife habitat, soil productivity, and biodiversity in natural forests and grasslands. We should protect the natural forests that remain from conversion to less diverse, planted forests or energy crops.
11. Reform the Biofuel Tax Credit (1) Despite original good intentions, incentives like the Volumetric Ethanol Excise Tax Credit (VEETC) for biofuels development are outdated RFS mandate Emerging environmental concerns 2009 GAO Report on the VEETC Pays oil company blenders $0.45 for each gallon of ethanol used Subsidy pays industry to comply with federal law under the RFS At a cost to American taxpayers of $4 billion in 2008, est. $5.3 billion in 2010 and $6.7 billion by 2015. What is missing from current tax policy is a requirement for real, measured performance in delivering expected environment and climate benefitsabove and beyond those already required under the RFS.
12. Reform the Biofuel Tax Credit (2) A technology-neutral, performance-based credit will lead to better biofuels To remedy this, we propose reforming the mix of existing federal biofuel tax credits—including the ethanol blender’s credit—into one performance-based tax credit that is Budget neutral Streamlined Specific components of a greener biofuels tax credit Climate performance first ½ of the new tax credit (up to $0.50/gal) Environmental performance second ½ of the credit (up to $0.50/gal) Convertible tax credits (from production-based to refundable investment tax credits) for the first billion gallons for best performing biofuels (those qualifying for $0.80/gal)
13. Contact Info Pierre Bull pbull@nrdc.org 212-727-4606 http://www.nrdc.org/renewables
Editor's Notes
NRDC cares about the future of bioenergy because it directly relates our top institutional priority to find economically-workable solutions to rapidly mitigate the global climate change problem; while not trading off the other environmental values (like clean air and water) and invaluable ecosystem services that we are blessed to have in the U.S. Beyond climate, we must all find a way to contribute to the longer-term goal of making the U.S. more energy secure and independent and show to the world that the U.S. can be a leader in the global clean energy economy.
According to the National Research Council study, 384 million dry tons is available from agricultural and forestry residues andmunicipal solid waste. Early studies suggest that today cover crops could produce between 2 and 3.6 tons per acre of biomasswhen harvested and up to 5 tons with good weather and soil fertility. If 10 percent of the nation’s 220 million acres of field cropland was cover cropped and the biomass harvested, this would produce between 44 and 110 million tons per year. If incentivesboosted cover crop adoption rates to 30 percent, we could expect 66 million acres of land to be planted in cover crops, yieldingbetween 132 and 330 million tons per year of biomass. Because cover crops are best managed as a system with agriculturalresidues, these numbers may not be entirely additive to the NRC’s 130 million tons of residues. Thus, combining innovate farmpractices such as double cropping and winter cover crops with potential dedicated energy crops on marginal or abandoned lands,,an additional 40-330 million dry tons could be available. These estimates do not include the potential from biofuel productionfrom algae.
… and lays out a clear plan to further refine these tools through an NAS study that EPA has requested.Some reduce global warming and some pollute more than gasoline and diesel.
Like paying people to obey the speed limit!The tax credit provides little benefit at a great cost to taxpayers. The federal government has promoted biofuels as an alternative to petroleum based fuels since the 1970s, and production of the most common U.S. biofuel—ethanol from corn starch—reached 9 billion gallons in 2008.
Apply to all fuels and all feedstocksReformulates within the existing budget for the tax creditUse workable reporting systems for farmers, biofuel refiners, and the IRSRef EPA values in the RFS to reward lifecycle carbon emission reductionsReward soil, water, and wildlife conservation on the farm where feedstocks are producedConvertible tax credits for eligible advanced biofuel production sourced by sustainable feedstocks:Feedstocks are contained in the definition of renewable biomassFeedstock comes from farms meeting USDA Conservation Compliance requirements (erosion, wetlands and grassland conversion) Feedstock comes from lands not converted from perennial species to annual crops Feedstock is not from intact ecosystems like forest, wetland and grassland Feedstock is not irrigated No invasive or noxious species Crop residue is removed at sustainable levels Biorefineries meet the greenhouse gas reduction threshold for the category of renewable fuel
These policies are needed to ensure that promised benefits materialize and we prevent unintended adverse environmental effectsas we grow and scale biofuels.