Cellulosic industry faces long, steep climb — GAO

Source: Marc Heller, E&E News reporter • Posted: Friday, December 2, 2016

The cellulosic ethanol industry is “many generations” of production plants away from commercial viability, the author of a government report on the federal renewable fuel standard told a Senate panel yesterday.

Frank Rusco, the Government Accountability Office’s director of natural resources and the environment, said the next generation of cellulosic ethanol plants may bring costs down by 25 percent — but that the business needs to trim much more than that to compete in an industry dominated by petroleum.

The uphill climb for cellulosic ethanol — made from grass, cornhusks and similar material — is emblematic of the challenges facing the renewable fuel standard, or RFS, Rusco told the Senate Homeland Security Subcommittee on Regulatory Affairs and Federal Management.

Echoing a pair of reports the GAO produced last week, Rusco said neither the renewable fuel mandates set by Congress nor the reduction in greenhouse gases envisioned by lawmakers are likely to be met anytime soon. That’s especially true for cellulosic ethanol, which has a long way to go to compete economically, he said (Greenwire, Nov. 29).

“You’re many generations away from achieving the efficiencies,” Rusco said. He wouldn’t say how many years he thinks that will take, but added, “Not by 2022,” the last year of the targets set by Congress.

A “second generation” plant would take as long as five years to build and could be 25 percent more efficient than plants in operation now, which isn’t enough to compete, Rusco said.

The slow progression of advanced biofuels is holding back the RFS’s goals, said Rusco, who blamed a combination of uncertainty around government policies such as tax breaks and the basics of competition with oil, which has been relatively cheap lately.

Subcommittee Chairman James Lankford (R-Okla.), a critic of the RFS, requested the reports. At the hearing, he said eliminating ethanol mandates wouldn’t end the use of the fuel, which is mostly corn-based.

“It’s in the market, it’s out there,” Lankford said. “If we were to remove the mandates, we’d still be using it.”

While EPA can reach overall renewable fuel volumes by relying on corn-based ethanol, the law calls for an increased share of alternatives each year.

EPA’s acting assistant administrator for air and radiation, Janet McCabe, didn’t dispute Rusco’s conclusion that the targets set by Congress may have been overly optimistic.

“It was a tall order,” McCabe told the panel. “It was a vision, and an ambitious one.”

The incoming Trump administration will be faced with whether to try to change the program. As early as this year, the law allows EPA to “reset” the targets in each category, including advanced biofuels, biomass-based diesel, cellulosic biofuel and total renewable fuel.

Were EPA to seek a reset, McCabe said, the agency “would have a public process on that so everybody could weigh in.”

Efforts in Congress to repeal the RFS haven’t gone far, in light of strong support in the Midwest where ethanol supports the economy.

“It is certainly not time to hit the panic button and pull the rug out from under this burgeoning industry,” said Sen. Joni Ernst (R-Iowa).