America’s 21st Century Transportation Fuel Ethanol From Biomass

Ethanol From Biomass: America’s 21st Century Transportation Fuel The purpose of the initiative is to significantly expand the production and use of ethanol in all regions of the nation. Current ethanol production is about 4 billion gallons a year – 2 percent of U.S. transportation fuel supplies Current ethanol production is about 4 billion gallons a year – 2 percent of U.S. transportation fuel supplies The Renewable Fuel Standard essentially doubles production to 7.5 billion gallons a year by 2012 – about 4 percent of U.S. transportation fuel supplies The Renewable Fuel Standard essentially doubles production to 7.5 billion gallons a year by 2012 – about 4 percent of U.S. transportation fuel supplies Traditional feedstocks are available to increase production, 8-10 percent, but beyond this corn prices and availability could be impacted Traditional feedstocks are available to increase production, 8-10 percent, but beyond this corn prices and availability could be impacted

Ethanol From Biomass: America’s 21st Century Transportation Fuel A need for continued production efficiency improvements and utilization of new feedstocks: A need for continued production efficiency improvements and utilization of new feedstocks: –corn kernel fiber, stover, and cobs –wheat straw, agricultural residues –switchgrass and other native dedicated energy crops Supply and demand measures are needed to significantly expand production and use of ethanol – including dramatically greater resources for RD&D, incentives, and infrastructure Supply and demand measures are needed to significantly expand production and use of ethanol – including dramatically greater resources for RD&D, incentives, and infrastructure The Impact of Expansion

Identified the need for policy initiatives to expand the production and use of cellulosic-derived ethanol in order to deliver the benefits of ethanol to all regions of the nation Identified the need for policy initiatives to expand the production and use of cellulosic-derived ethanol in order to deliver the benefits of ethanol to all regions of the nation Obtained financial support from the Hewlett Foundation for the Ethanol From Biomass project (September 2004) Obtained financial support from the Hewlett Foundation for the Ethanol From Biomass project (September 2004) Developed and issued the Governors’ Ethanol Coalition recommendations (April 2005) Developed and issued the Governors’ Ethanol Coalition recommendations (April 2005) Collaborated with a range of industry, agricultural, environmental and other organizations to ensure the Energy Policy Act of 2005 included the Coalition’s recommended actions (August 2005) Collaborated with a range of industry, agricultural, environmental and other organizations to ensure the Energy Policy Act of 2005 included the Coalition’s recommended actions (August 2005) Ethanol From Biomass: America’s 21st Century Transportation Fuel Ethanol From Biomass Progress:

Summary of the Coalition’s Three Recommendations and Corresponding Sections of the Energy Policy Act of National Renewable Fuels Security Standard and Incentives (Energy Policy Act, Section 1501: Renewable Fuel Standard) 2.Research and Development (Energy Policy Act, Section Bioenergy program enhancements; Section Biomass R&D amendments) 3.Commercialization and Production Incentives (Energy Policy Act, Section 942: Production incentives for cellulosic biofuels) Ethanol From Biomass: America’s 21st Century Transportation Fuel

Section 1501– Renewable Fuel Standard Requires 4 billion gallons of ethanol use a year in 2006 increasing to at least 7.5 billion gallons in 2012 Requires 4 billion gallons of ethanol use a year in 2006 increasing to at least 7.5 billion gallons in 2012 Directs EPA to implement the RFS Directs EPA to implement the RFS Includes trading credits for refiners Includes trading credits for refiners Allows States to seek an RFS waiver under strict test Allows States to seek an RFS waiver under strict test Provides cellulosic ethanol and related ethanol to count as 2.5 gallons until 2013 Provides cellulosic ethanol and related ethanol to count as 2.5 gallons until 2013 Directs EPA to establish a “new” RFS each year after 2012 Directs EPA to establish a “new” RFS each year after 2012 Requires at least 250 million gallons of cellulosic ethanol beginning in 2013 Requires at least 250 million gallons of cellulosic ethanol beginning in 2013

Ethanol From Biomass: America’s 21st Century Transportation Fuel Section 932: Bioenergy Program Enhances existing DOE R&D program Enhances existing DOE R&D program Includes RDD&D on biofuels, bioproducts, thermo-chemical conversion,enzyme-based processing Includes RDD&D on biofuels, bioproducts, thermo-chemical conversion,enzyme-based processing Emphasizes cellulosic biofuels and co-products including demonstration of integrated biorefinery Emphasizes cellulosic biofuels and co-products including demonstration of integrated biorefinery Encourages variety of products (e.g., biobased chemicals, fuel) and demonstration applications (e.g., feedstock collection and treatment) Encourages variety of products (e.g., biobased chemicals, fuel) and demonstration applications (e.g., feedstock collection and treatment) DOE has NOPI out to solicit interest, results pending DOE has NOPI out to solicit interest, results pending Maximum of $100 million for any one biorefinery demonstration Maximum of $100 million for any one biorefinery demonstration

Ethanol From Biomass: America’s 21st Century Transportation Fuel Section 941: Amendments to Biomass R&D Act Enhances existing USDA R&DD program conducted with DOE Enhances existing USDA R&DD program conducted with DOE Indicates R&D solicitation technical areas: Indicates R&D solicitation technical areas: –advanced feedstock production and harvesting –overcoming recalcitrance of biomass –diversification of biobased products from biorefineries Includes guidance on distribution of projects funded: Includes guidance on distribution of projects funded: –20% applied fundamentals –45% recalcitrance of biomass –30% product diversification –5% strategic guidance Increases authorization from $54 million to $200 million a year, from (Note appropriation in FY’05 was $14M, FY’06 $12M) Increases authorization from $54 million to $200 million a year, from (Note appropriation in FY’05 was $14M, FY’06 $12M)

Ethanol From Biomass: America’s 21st Century Transportation Fuel Section 942: Production Incentives for Cellulosic Biofuels Authorizes production incentive for the first billion gallons of cellulosic biofuels by 2015 Authorizes production incentive for the first billion gallons of cellulosic biofuels by 2015 Implementation by DOE in consultation with USDA, DoD, and EPA Implementation by DOE in consultation with USDA, DoD, and EPA Directs uses of a reverse auction approach for provision of the incentives Directs uses of a reverse auction approach for provision of the incentives –not more than 25% of the incentive for any one auction and any one project –not more than $100 million a year, not more than $1 billion total –ensure small producers and businesses are full participants in biofuels industry Provides Authorization of $250 million for 10 years Provides Authorization of $250 million for 10 years First auction, if funded, one year after production of 1 million gallons or 2008 First auction, if funded, one year after production of 1 million gallons or 2008

Identified implementation approach for the Coalition’s recommendations as embodied in the Energy Policy Act of 2005 (August 2005)Identified implementation approach for the Coalition’s recommendations as embodied in the Energy Policy Act of 2005 (August 2005) Obtained support from the Hewlett, Energy, and McKnight Foundations (September 2005)Obtained support from the Hewlett, Energy, and McKnight Foundations (September 2005) Formed the Governors’ Renewable Fuels Security Roundtable to gain input (November 2005)Formed the Governors’ Renewable Fuels Security Roundtable to gain input (November 2005) Set priorities for implementation (December 2005)Set priorities for implementation (December 2005) Ethanol From Biomass: America’s 21st Century Transportation Fuel Implementation of the Provisions:

Ethanol From Biomass: America’s 21st Century Transportation Fuel Priorities: Ensure adequate federal funding:Ensure adequate federal funding: $200 million annually for DOE’s Biomass Program$200 million annually for DOE’s Biomass Program $100 million annually for USDA’s Biomass Program$100 million annually for USDA’s Biomass Program Reduce the proportion of “earmarked” biofuels fundingReduce the proportion of “earmarked” biofuels funding Explore the creation of a Biofuels Trust FundExplore the creation of a Biofuels Trust Fund Educate and inform the policy making process (e.g., further enhancements to the RFS, coordinated research, refined commercialization)Educate and inform the policy making process (e.g., further enhancements to the RFS, coordinated research, refined commercialization) Support state, federal, and private-sector education efforts to dispel ethanol myths and raise visibility of the strategic, economic, and environmental benefits of biofuelsSupport state, federal, and private-sector education efforts to dispel ethanol myths and raise visibility of the strategic, economic, and environmental benefits of biofuels

Ethanol From Biomass: America’s 21st Century Transportation Fuel Status and Challenges: Renewable Fuel Standard – EPA implementation is underway President’s FY’07 Budget Request –DOE Biomass Program $150 million, and USDA Biomass Program $12 million Challenges: Building support to obtain appropriations for priority programs authorized by the Energy Policy Act of 2005Building support to obtain appropriations for priority programs authorized by the Energy Policy Act of 2005 Reducing the proportion of “earmarks” to aid in effective management of federal programsReducing the proportion of “earmarks” to aid in effective management of federal programs Improving coordination of state, federal, local and industry activities to leverage resources and expedite delivery of biofuelsImproving coordination of state, federal, local and industry activities to leverage resources and expedite delivery of biofuels

Ethanol From Biomass: America’s 21st Century Transportation Fuel Next Steps Develop outreach and advocacy strategy in coordination with Senators Daschle and Dole for the Coalition and others to implementDevelop outreach and advocacy strategy in coordination with Senators Daschle and Dole for the Coalition and others to implement Support Coalition members advocacy efforts with policy and appropriations informationSupport Coalition members advocacy efforts with policy and appropriations information Coordinate with partners in Washington, DC as they conduct advocacy and develop policy (e.g., appropriations, biofuels trust fund)Coordinate with partners in Washington, DC as they conduct advocacy and develop policy (e.g., appropriations, biofuels trust fund) Provide educational materials to demonstrate the value of ethanol and need for RD&D efforts (e.g,. state case studies, respond to federal requests for state information, presentations)Provide educational materials to demonstrate the value of ethanol and need for RD&D efforts (e.g,. state case studies, respond to federal requests for state information, presentations) Conduct research for the Coalition as it implements provisions and considers new positionsConduct research for the Coalition as it implements provisions and considers new positions Engage Roundtable members to build support and gain inputEngage Roundtable members to build support and gain input