WGA TRANSPORTATION FUELS FOR THE FUTURE INITIATIVE Biofuel Report Summary Biofuels Team - David Terry Transportation Fuels for the Future Workshop Denver, CO September 7, 2007

Fuel Potential in the West  Point 1 – A recent report by the U.S. Department of Energy and Department of Agriculture found that land resources in the U.S. are capable of producing a sustainable supply of 1.3 billion tons per year of biomass  Point 2 – Western feedstock opportunities for biomass conversion include agricultural crops; agricultural residues; non-food crops, such as sorghum and switch grass  Point 3 -Studies indicate that the current sustainable production of corn for fuel may be no more than 15 billion gallons per year and perhaps only billion gallons.[1] Beyond that amount, the nation’s food supply would be significantly impacted in the near term.[1]

Unique Challenges  Challenge 1 – There are many limitations to starch-based ethanol. As discussed above, producing more than 12 billion gallons a year would require an unacceptable use of crop-land and would impact food supply, including food for cattle.  Challenge 2 –Larger scale conversion systems will require larger scale feedstock handling and delivery. Transporting feedstocks to biorefineries will be an increasing challenge as the quantity increases.  Challenge 3 –Infrastructure and education to support E85 is limited. There are less than 3,000 E85 stations in the U.S. currently, compared to 180,000 gas stations.  Challenge 4 –While financing has been available for corn-based ethanol production in the recent past, obtaining venture capital for cellulosic ethanol has been challenging, especially for the stage between R&D and commercialization, the so-called “valley of death.”

Priority Recommendations  Consider establishing a regional ethanol reserve to maintain an assured supply.  Re-evaluate the USDA risk management program and adjust, as necessary, to meet the needs of evolving bioenergy crops.  Advocate for full funding of USDA’s Biomass Research and Development Program at its authorized level. Funding to allow this program’s complementary focus on feedstock collection and other agricultural issues is essential or it becomes a weak link in the national effort to move toward cellulosic-derived fuels and other biofuels  Advocate for full funding of the Department of Energy’s research and demonstration activities, including its genomic work aimed at achieving dramatic changes in how ethanol and other biofuels are produced  Federally sponsored research needs to be complemented by state efforts in delivering appropriate feedstock production and residue removal. Potential resource inventories need to be expanded and evaluated in terms of agricultural science.

Key Actionable Recommendations  Establish a low carbon renewable fuels loan guarantee program. The GEC recommends that this be an expansion of the USDA loan guarantees and that it be competitive and performance-based.  States should consider adoption of a low-carbon fuel standard similar to that adopted by California, which is a reduction of 10 percent in the carbon intensity of transportation fuels by 2020.[1] This goal addresses multiple policy objectives, including climate change, health and environmental impacts, such as air quality.[1]  Expand immediately the RFS to create a floor under current and planned production achievements, with a short-term target of 12 billion gallons a year renewable fuels utilization by 2010, and to establish longer- term BTU-based targets of 15 percent of total motor fuels consumption by 2015 and 25 percent by 2025, with equal incremental steps provided for each year in between.