Harry S' Baumes, Ph' D'

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Alternative Energy and Agriculture Spotlight or
Stoplight

• Harry S. Baumes, Ph. D.
• Associate Director
• Office of Energy Policy and New Uses
• Presented at
• Southern Association of Agricultural Scientists
• 2009 Annual Meetings
• Westin Peach Tree Plaza
• Atlanta Georgia
• February 1, 2009

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OVERVIEW

• Relevant Policy and Market Factors Interstate
  Highway, no speed limits
• 2008, stoplights and traffic congestion
• Moving Forward, intersection, or a traffic circle
  with many possible ways to go.

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BIOFRENZY
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Relevant Policy

• CCC Bioenergy Program
• Energy Policy Act of 2005
• RFS 7.5 bgpy by 2012
• Excludes liability protection for MBTE producers
  from water contamination lawsuits (MTBE 5 bgpy
  market)
• Energy Independence Act of 2007 (EISA)
• RFS2 36 bgpy by 2022
• Caps corn starch ethanol at 15 bgpy
• Focus on advanced biofuels cellulosic
• GHG Thresholds
• Research and Development
• Food, Conservation, and Energy Act of 2008 (FCEA)
• Biofuel Production Incentives
• Rural Development Programs
• Research, Development Commercialization

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Market Factor Rising Energy Prices
Gasoline
Conventional Corn Starch
WTI
RFS1
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Market Factor Corn Ethanol Prices Ethanol
Corn Price Spread Profitability Indicator
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Accelerating Investment
Source Renewable Fuels Association
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Accelerating Investment
Source National Biodiesel Board
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EISA EPACT Renewable Fuels Standard
Other Biofuels
Biobased Diesel
Cellulosic Biofuels
Conventional Corn Starch
RFS1
Years
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Source Renewable Fuels Association
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2008

• Further Run-up in Energy and Commodity Prices
• Export Bans - Weather
• Food and Fuel Debate
• Texas Waiver Request
• RFS2 Rulemaking
• Indirect Land Use
• Collapse of Financial Sector and commodity price
  bubble
• Global Slowdown

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Year Over Year Change in Commodity Prices
Petroleum
Primary Commodities
Food
Agriculture
Source International Monetary Fund
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(No Transcript)
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Bioenergy Complicated and Interdisciplinary

• Issues and Concerns
• Climate Change
• Sustainability
• Environment
• Land Use
• Consistency of Supply and feedstock quality
• Policy Objectives
• Energy security
• Food security
• Implementation EISA
• Implementation FCEA

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Energy Independence and Security Act of 2007

• Fuel categories must meet greenhouse gas life
  cycle performance threshold
• 20 life cycle reduction threshold Conventional
  Biofuels (ethanol derived from corn starch from
  new facilities)
• 50 life cycle reduction threshold Advanced
  Biofuels
• 50 life cycle reduction threshold
  Biomass-based Biofuels
• 60 life cycle reduction threshold Cellulosic
  Biofuels
• Life Cycle Analysis must include
• direct and indirect land use change due to
  biofuel feedstock production
• Baseline fuel comparison to gasoline and diesel
  fuel in 2005

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Source Michael Wang, Argonne National Laboratory
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• Ethanol Capacity
• 11.8 bg capacity
• 1.8 bg under construction
• 0.6 bg expansion projects
• 14.2 bg total capacity
• 1.8 bg idled
• RFS 2009
• 10.5 bg ethanol
• 0.6 bg advanced biofuel (0.5 biodiesel)
• 11.1 bg renewable fuels

Source Renewable Fuels Association, January 29,
2009
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Moving Forward Which Way to Go?

• Economy must improve Stimulus package help
  directly for bioenergy industry and credit
  markets
• New Administrations team is being put in place
  seems clear of support for bio or renewable
  energy commitment to alternative energy (beyond
  transportation fuels)
• Recognition that bioenergy is not independent of
  climate change, environment, and sustainability
• Alternatives to fossil based energy is a global
  concern

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Moving Forward What will it take?

• Recognize the complexity of developing,
  deploying, and using alternative bioenergy -
  Systems approach to solutions
• Interdisciplinary cooperation and collaboration
  research teams
• Commitment to Research and Development
• Continue to be a role for public policy

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Moving Forward - What we need to know

• Overcoming Infrastructure Constraints
• Blend Wall
• Vehicles
• E-85 availability
• Transport of ethanol
• Production, harvest, transport, storage biomass
• Concentrate or improve energy density of biomass

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Moving Forward - What we need to know beyond
biofuels

• Overcoming Infrastructure Constraints
• Getting Connected to the Grid
• Wind farms and solar technology
• Biomass
• NIMBY attitude

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Moving Forward - What we need to know

• Biomass Production
• Alternative Feedstocks
• Switchgrass, miscanthus, algae,
• Supply, Use Price
• Feedstocks for energy (not exclusively
  transportation fuels)
• Land Use
• Direct Indirect effects
• Life Cycle Analysis

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Moving Forward - What we need to know

• Will a sustained increase in commodity prices
  provide incentives for investment in agriculture?
• Domestic Foreign Investment
• Increase adoption of new and existing technology
  in developing (and developed) countries/regions
• Trade-offs between bioenergy and other industries
  food, forestry,

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What We Need To Know

• Technology Development
• Crop productivity across potential feedstocks
• Implications for other input use (fertilizer,
  water, chemicals,)
• Conversion

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Source USDA, Office of Budget and Program
Analysis
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THANK YOU!
Contact Information Harry S. Baumes hbaumes_at_oce.u
sda.gov 202-401-0497
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Section 9006 Funding Activity FY 2003 thru 2007
Renewable Energy/Energy Efficiency

Technology No. Amount Leveraged
Biomass 218
49,219,744 282,508,476 Wind 193
35,800,088 505,221,691 Solar 49
1,862,651 4,519,509 Geothermal 24
1,230,996
3,232,743 Hybrid 13 2,514,643
185,649,921 Subtotal 497
90,628,122 981,132,340 Energy
Efficiency 762 16,493,734
42,969,435 Subtotal 1,259
107,121,856 1,024,101,775 Guarante
ed Loans 153 91,529,855
181,321,296 Grand
Total 1,412 198,651,711
1,205,423,071