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    1. Technology

    Focus on biofuels infrastructure investments is crucial for nation to meet its renewable-fuel goals

    May 1, 2009
    The United States must increase incentives for a wide variety of biofuels infrastructure investments if the nation is to meet federal renewable fuels

    The United States must increase incentives for a wide variety of biofuels infrastructure investments if the nation is to meet federal renewable fuels goals, according to a new report released by a task force of energy infrastructure experts.

    In the new study, the Biofuels Infrastructure Task Force, convened by the National Commission on Energy Policy (NCEP), examined infrastructure implications of the federal Renewable Fuels Standard (RFS), which commits the United States to 36 billion gallons of biofuels production by 2022 from a current level of about 9 billion gallons. The bipartisan group composed of experts from relevant industries found that the relatively swift shift in the composition of the nation's transportation fuel supply has profound implications.

    The task force report identified several key issues:

    • The RFS will require that the nation transition to a broad-based use of a 10% ethanol blend (E10), as well as increased use of higher-ratio blends (such as E85). Transporting and blending this much ethanol will stress existing networks and require new infrastructure investment.

    • In the current economy it may be difficult for businesses to access capital and make large investments in new infrastructure to support national biofuels distribution. These key pieces of infrastructure include biofuel production facilities, blending terminals, pipelines, unit trains and terminals, ethanol retail facilities, and flex fuel vehicles FFVs).

    • National E10 saturation may occur sooner than originally expected; however, there has been little progress in developing the E85 market necessary to absorb biofuel quantities beyond what can be blended in conventional fuels.

    Based on these findings, the task force recommends:

    • A growing FFV fleet will be needed to absorb biofuels. Further consumer and manufacturer incentives may be needed to accelerate the market penetration of FFVs. Simultaneously, consumer acceptance of FFVs will depend in part on expanded access to E85 (or higher-ratio blends) retail stations in urban and rural areas.

    • Reducing or limiting the number of different blends that fuel refiners must produce to meet state-level specifications will enable a more efficient biofuels transition.

    • Streamlining and simplifying permitting processes along all aspects of the biofuels supply chain would help to reduce costs and lead times for infrastructure investment.

    • Market confidence in the government's commitment to the RFS is a prerequisite for timely private large-scale biofuels investments. Refocusing current public incentives and subsidies to include a greater emphasis on biofuels transport, refueling infrastructure, and related vehicle technologies makes sense given the industry's current state of development. Loan guarantees or tax credits could be effective ways to support needed infrastructure investments.

    Copies of the full report are at www.bipartisanpolicy.org.