Growing America`s fuel - long awaited USDA report pleases farm belt



US Agriculture Secretary Tom Vilsack today released a report outlining both the current state of renewable transportation fuels efforts in America and a plan to develop regional strategies to increase the production, marketing and distribution of biofuels.

The report provides information on current production and consumption capacities as well as projections to meet the Renewable Fuels Standard (RFS2) mandate to use 36 billion gallons of biofuel per year in America's fuel supply by 2022.

'The Obama Administration has made domestic production of renewable energy a national priority because it will create jobs, combat global warming, reduce fossil fuel dependence and lay a strong foundation for a strong 21st Century rural economy, and I am confident that we can meet the threshold of producing 36 billion gallons of biofuel annually by 2022,' Vilsack said.

'The current ethanol industry provides a solid foundation to build upon and reach the 36 billion gallon goal. As we prepare to celebrate Independence Day, we must reaffirm our commitment to bring our country closer to complete energy independence and this report provides a roadmap to achieve that goal,' he added.

USDA's report identifies numerous biomass feedstocks to be utilized in developing biofuels and calls for the funding of further investments in research and development of: Feedstock; Sustainable production and management systems; Efficient conversion technologies and high-value bioproducts, and Decision support and policy analysis tools

The report acknowledges the significant role of corn ethanol in meeting future goals, outlines a regional analysis of feedstocks that can be utilized for biofuels production, and stresses the need for more blender pumps and flex fuel vehicles (FFVs).

Renewable Fuels Association President Bob Dinneen calls the goals of the RFS ambitious, but achievable. 'Secretary Vilsack and USDA have rightfully identified the crucial areas in which the department can help accelerate the growth of the industry and ensure the RFS delivers on the goals provided when Congress passed the legislation,' said Dinneen

The report provides data on the significant impact the ethanol industry will have on job creation. It is estimated that as many as 40 direct jobs and additional indirect jobs are created with each 100-million-gallon ethanol facility built. USDA plans to adopt regional strategies that allow the placement of biorefineries in areas of economic distress through the leveraging of regional resources for transportation, labor and feedstocks. The regional strategy provides greater potential for economic benefit.

Doing so however, means building more biorefineries. 'Assuming an average biorefinery size of 40 MMgy, USDA estimates meeting the RFS2 advanced biofuels goals will require the building of 527 biorefineries, at a cost of $168 billion.' The report estimated that 'a steady cellulosic plant construction cost' to be $8 dollars per gallon.

Part of the numbers on advanced biofuels production stem from a conservative approach by the USDA on technology changes, the report said. 'The agricultural sector as a whole is incredibly productive and has consistently outpaced productivity increases in other sectors, in part, due to its investment in technology (e.g. drought resistant seeds).'

The greatest potential for production of advanced biofuels lies in the Southeast region and Hawaii including: Alabama, Arkansas, Florida, Georgia, Hawaii, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas.

The report stated that a significant amount of volume, up to 50 percent, would come from this region due to the robust growing season that supports the highest gallons per acre crops of all biofuel crops.

The Northeast region will represent 2 percent of production potential capacity, the Central East will make up 43.3 percent and the Northwest region 4.6 percent. (The Western region is less than 1 percent.)

The report concludes:

  1. A rapid build-up in production capabilities is needed to meet the RFS2 targets for cellulosic biofuels.
  2. The scope of the monetary investment for biorefineries is substantial.
  3. It is important to consider both sides of the market - the production/supply side and mandate/consumption side - and how they respond to the RFS2 mandate.
  4. There are current infrastructure needs, in the form of blender pumps and rail and trucking infrastructure which are in varying stages of being addressed by the market, though a careful assessment of barriers to their development is needed.
  5. The U.S. farm sector is capable of producing a diverse complement of feedstocks to make the biofuels industry a truly national effort.
  6. In addition, a process for identifying bottlenecks and barriers related to locating biorefineries involving the federal government, Congress, states, the industry and interested stakeholders can help facilitate a biorefinery system that is national in scope

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