The U.S. Environmental Protection Agency (EPA) on Monday, officially cut the 2011 blending target for cellulosic ethanol, as expected.
Cellulosic ethanol is derived from perennial grasses, waste and other sources. It is cleaner than corn ethanol and is not made from food crops, but the industry is nowhere near as large as the corn ethanol industry, and the economic recession has slowed investment in the advanced refineries. As a result, EPA has scaled back the countries ambitions for the next-generation fuel.
"Overall, EPA remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead," EPA said in a release.
U.S. fuel refiners will be required to purchase and blend 6.6 million gallons of cellulosic ethanol with gasoline next year under the Renewable Fuels Standard. That level is down from the 100 million gallon target set by Congress when it updated the renewable fuel standard in its 2007 energy bill.
That bill also calls for 250 million gallons of cellulosic biofuel in 2012, enroute to 36 billion gallons of renewable fuels by 2022.
To achieve these volumes, EPA calculates percentage-based standards for the following year. Based on the standards, each producer and importer of gasoline and diesel determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.
The final 2011 overall volume and standards are:
- Cellulosic biofuel - 6.6 million gallons; 0.003%
- Biomass-based diesel - 800 million gallons; 0.69%
- Advanced biofuel - 1.35 billion gallons; 0.78%
- Renewable fuel - 13.95 billion gallons; 8.01%
Ethanol industry group Growth Energy said higher targets are needed to drive private investment. “There’s no question that the potential for cellulosic ethanol remains on track and that is why it is so important to have real targets to give confidence that there will be a market for those who are investing in the industry," the group said in a release.
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A 45 cents per gallon tax credit for ethanol (corn and cellulosic) expires at the end of the year. Congress is currently considering whether or not to extend it. Vice President Al Gore is among environmentalists and food groups opposed to the extension of the credit.
Read a Forbes blog on the issue at the link below.