BioCycle March 2005, Vol. 46, No. 3, p. 58
Panel members stress key steps – such as increased funding, tax credits and longer-term commitments – to support emerging technologies converting organic residuals to power.
AREPORT by a blue-ribbon commission of energy experts gives significant boosts to biomass electricity and biofuels as a strategy to meet U.S. energy needs.
Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges is the product of two years of analysis by the National Commission on Energy Policy, a panel founded by the Hewlett Foundation (www.energycommission.org). Commission members were drawn from academia, industry, and the nonprofit sector; many had held elected office or leadership positions in federal agencies. The commission was cochaired by John Holdren, an environmental policy professor at Harvard University; William Reilly, former administrator of the U.S. Environmental Protection Agency; and John Rowe, chairman and CEO of Exelon Corporation.
The Commission’s report recommends policies to address energy security, exposure to fuel shortages and price shocks, an aging infrastructure, and the environmental impacts of energy production and use – particularly the risk of global climate change. To help develop its conclusions, the commission detailed technical analyses of many specific issues.
KEY INCENTIVES FOR BIOENERGY
If enacted, many elements of the report would significantly enhance prospects for renewable energy in general, and biomass electricity and biofuels in particular. Although the Commission rejected what it called the “persistent myth” that the United States could achieve energy independence by relying solely on energy efficiency and renewable energy sources, it nonetheless called for major efforts to expand renewable electricity technologies – including biomass power – and to develop biofuels that could reduce U.S. dependence on imported oil.
In the electricity area, the Commission recommended increasing Federal funding for renewable technology research and development by $360 million annually. It also proposed expanding the Federal production tax credit (PRC), which is currently in effect through 2005, through the year 2009, with total credits capped at $4 billion, and broadening eligibility to cover all noncarbon-emitting energy sources – including solar, geothermal, new hydropower, next-generation nuclear plants, and advanced fossil-fuel plants that capture and sequester carbon emissions.
The current production tax credit applies only to wind and “closed-loop” biomass generators (those that use crops planted exclusively for energy production), so an expanded PTC could potentially support many other types of biomass power generation, such as plants using wood or agricultural wastes. As the Commission noted, the current PTC has been allowed to lapse twice since the year 2000, and these stoppages have undercut renewable energy investment planning, since investors could not plan on receiving credits for generation from facilities that were placed in service while the tax credit was not legally in force. The Commission stressed the need for more certainty and longer-term commitments to help promote the growth of renewable power sources.
With respect to transportation, the Commission recommended steps to develop “a suite of domestically produced transportation fuels that can collectively help to diminish U.S. vulnerability to high oil prices and oil supply disruptions while reducing the transportation sector’s greenhouse gas emissions.” The most promising option identified by the Commission in this area was cellulosic ethanol (ethanol produced from fibrous or woody plant materials, such as corn stalks and other agricultural waste materials or dedicated energy corps such as switchgrass).
The Commission found that cellulosic ethanol offered a number of benefits relative to corn ethanol. For example, life-cycle greenhouse gas emissions from producing cellulosic ethanol are considerably lower because cellulosic feedstocks require fewer fertilizer and energy inputs than corn. Additionally, the commission assumed that cellulosic production facilities could coproduce electricity, which would displace power generated from fossil fuels. An analysis sponsored by the commission estimated that a mature cellulosic ethanol production process (which it acknowledged is at least a decade away) could produce fuel at a cost of 67 to 77 cents per gallon, compared to current production costs of about $1.40 per gallon for corn ethanol.
The Commission also found cellulosic ethanol preferable to corn ethanol on the basis of available feedstocks. According to the report, even if 100 percent of the current U.S. corn crop were used to make ethanol (about seven percent is used for ethanol today), the output would only displace 25 percent of current gasoline use on an energy-equivalent basis. An analysis conducted for the Commission estimated that with reasonable improvements in crop productivity, biomass-to-fuel conversion processes, and vehicle fuel efficiency, the United States could produce enough biomass fuel feedstocks to displace half of the gasoline currently used by the nation’s passenger vehicles, without constraining food production. (Next month’s issue of BioCycle will have a detailed report on cellulosic ethanol.)
In addition to cellulosic ethanol, the report advocated increased support for emerging technologies to produce clean, low-sulfur synthetic diesel fuels from organic materials, such as crop wastes and vegetable oils. The Commission expressed particular interest in thermal depolymerization (TDP), a process for converting wastes into clean fuels, fertilizers, and specialty chemicals, noting that a commercial facility operated by Changing World Technologies in Carthage, Missouri has been constructed to use TDP to convert 200 tons per day of wastes from a nearby Butterball Turkey processing plant into fuel oil and other products.
To promote advances in biofuel production, the Commission recommended increasing federal funding for research and development from the 2004 level of $25 million to $150 million annually for the years 2006-2011. Key areas for federal investment include improving process efficiencies for converting plant material and wastes to ethanol and biodiesel, and improving the productivity per acre of energy crops. The Commission also recommended providing $750 million from 2008 through 2017 to encourage early deployment of new cellulosic ethanol and biofuel systems nationwide using a variety of feedstocks.
Beyond specific steps to develop biomass energy technologies, the Commission made broader recommendations that would benefit bioenergy if enacted. The report calls for greater public support for energy research, development, demonstration, and deployment (ERD3), coordinated with industry activities, in order to stimulate greater public and private investment and innovation in these areas. This effort, the Commission argued, should give high priority to technology options that have the potential to help address multiple U.S. energy challenges – including technologies to produce biofuels for the transportation sector.
In the area of energy facility siting, the Commission recommended reforms to current processes for constructing critical infrastructure elements such as transmission lines. Transmission access can be a major constraint for renewable power generation, which, as the Commission noted, is often tied to specific sites where wind speeds, solar radiation, or fuel sources are optimal.
PROSPECTS FOR ENACTMENT
The Energy Commission report has attracted significant attention from media and policy makers, but prospects for enacting its recommendations – especially in a package, as urged by the report – are unclear. In an effort to offer a balanced, bipartisan set of recommendations, the Commission endorsed positions that were immediately rejected by advocates on both ends of the political spectrum. For example, environmental and consumer organizations criticized the report for supporting production tax credits and federal funding for advanced, next-generation nuclear power plants. Many conservative critics rejected the Commission’s call for a significant increase in corporate average fuel economy (CAF…) standards for passenger vehicles, and its proposal for a national cap-and-trade system that would impose what the Commission acknowledged was a modest initial price on greenhouse gas emissions (initially $7 per ton of carbon dioxide equivalent).
“I don’t suggest that this is the best imaginable set of energy policy prescriptions for the United States at this moment in history,” says Commission co-chair John Holdren of Harvard University. “But it is the best that this bipartisan, multisectoral set of commissioners could reach agreement on in the course of more than two years of argument. What I am proudest of in this report is that it contains the two key ingredients of a sensible national energy strategy that have been missing from all of the major Congressional energy bills of the past few years – a mandatory scheme for reducing carbon emissions and a ramping up of automobile fuel economy standards – along with a significant boost for the shamefully small federal investments in R&D on advanced energy supply and end use efficiency technologies.”
The Energy Commission was established as a three-year initiative, with a goal of working through 2005 to persuade Congress to implement its proposals. Congress has failed several times to pass major energy policy legislation in recent years, partly because of the difficulty of integrating policies capable of satisfying a range of political and regional demands on issues such as increasing energy supply and addressing global climate change. Polarizing subjects, such as the Bush administration’s effort to open the Arctic National Wildlife Refuge to oil exploration, are likely to dominate debate once again when the current Congress turns to national energy policy.
“I doubt that any of us on the Commission thinks this set of recommendations is going to be swallowed verbatim by the Administration or the Congress,” says Holdren. “But it offers an ‘existence proof’ that a reasonably comprehensive and coherent set of energy policy proposals can be agreed upon by a bipartisan group united by the notion that total paralysis is a bad strategy. One may hope that it will help prod the Administration and the Congress into doing something that’s at least approximately as good.”
Jennifer Weeks is assistant director of energy projects in the Center for Business and Government of Harvard University’s John F. Kennedy School of Government.
March 28, 2005 | General
NATIONAL ENERGY COMMISSION REPORT ENDORSES BIOFUELS
BioCycle March 2005, Vol. 46, No. 3, p. 58