But cellulosic ethanol projects have had trouble gaining traction. One project after another has been shelved. In October, for example, BP canceled plans it had announced in 2008 to build a cellulosic ethanol plant in Florida. Last year, there was virtually no cellulosic ethanol consumed nationwide.
So Thursday, the Environmental Protection Agency proposed a new standard, slashing the amount of cellulosic ethanol that refiners would need to use to just 14 million barrels a year. At the same time, the EPA said refiners would still need to use high levels of “advanced biofuels.”
The EPA move did nothing to calm the storm of lobbying and litigation over the fuel standard: Corn-based ethanol producers see new opportunity, the American Petroleum Institute vows to continue to fight against the standard and environmentalists are worried about the use of crops such as corn or sugarcane, cultivation of which requires higher levels of greenhouse gas emissions than cellulosic feedstocks.
The new proposed standard also comes in the shadow of a D.C. Court of Appeals ruling last week that threw out the standards the EPA set in 2010 and 2011. The agency had set a mandate of 5 million gallons of cellulosic ethanol use for 2010 and 6.6 million gallons for 2011 and none was produced. The court said there was no basis for those figures.
“EPA points to no instance in which the term ‘projected’ is used to allow the projector to let its aspirations for a self-fulfilling prophecy divert it from a neutral methodology,” the court said.
The agency’s new projection of 14 million gallons of cellulosic ethanol matches the amount that venture capital investor Vinod Khosla, in an interview in October, said would be produced this year at a small commercial plant in Mississippi by Kior, a company he is backing. Another company, Ineos, expects to produce some, too. And POET, one of the world’s largest corn-based ethanol producers, is constructing a cellulosic-based plant that might be done this year.
But the oil industry, which runs the nation’s refineries, says that even the new standard is arbitrary and optimistic. And the Energy Department’s Energy Information Administration has forecast nationwide production of just 9.6 million gallons.
“This entire mess underscores the need to look under the hood at what works, what doesn’t and adjust the volumes” in the renewable fuel standard, said Stephen H. Brown, vice president of government affairs for Tesoro, a San Antonio-based refining company. He estimates that Kior and Ineos, together, will fall short of the EPA’s new target. “If you believe in Santa Claus and the Easter Bunny, you believe in 14 million gallons,” he said.
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