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Biofuels 101
What Every American Should
Know about Biofuels
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Definitions and Benefits Biofuels are a type of transportation fuel whose energy is derived
from biomass conversion, as well as solid biomass, liquid fuels and various biogases.
Biofuels are gaining traction as a transportation fuel because of: oil price hikes the need for increased energy security concern over greenhouse gas emissions from fossil fuels support from government subsidies
Biofuels emit fewer greenhouse gases than gasoline refined from oil.
They are made from renewable sources.
Key Takeaway: Biofuels can play a key role in reducing our dependence on oil and reducing greenhouse gas emissions.
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Biofuels: 1st and 2nd Generation
1st Generation
The most commercially viable biofuel today is grain ethanol (corn or sorghum).
90% of gasoline today contains 10 percent ethanol (E10). EPA recently approved the use of 15% ethanol in our vehicles (E15).
In 2011, the U.S. produced more than 13 billion gallons of ethanol (the vast majority corn based).
2nd Generation
Advanced or Next Generation Algae fuel Cellulosic ethanol (made from
wood chips, corn cobs, corn husks, citrus waste)
Biodiesel (Used mainly in Europe and in busses)
Reduces greenhouse gas emissions by 86%.
Cellulosic ethanol production is predominantly in pilot phase.
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Food Vs. Fuel In 2008, the Grocery
Manufacturers Association (GMA) launched a smear campaign to blame the rising cost of food on American ethanol producers.
Studies have found that the causes of food spikes in 2008 were due to: speculation in the commodity
market high oil prices the cost of shipping and
manufacturing
Ethanol is made from Yellow 2 corn which is used primarily for animal feed.
A by-product of ethanol production is Distillers Grains, a nutritious feed for animals. Approximately a third of every
bushel of grain that goes into ethanol is returned as Distillers Grains.
Key Takeaway: Grain ethanol production has a small impact on food prices but the main driver is non-commercial speculation and high oil prices. Cellulosic and advanced ethanol will not compete with any food or feed sources.
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Subsidies and the RFS The Volumetric Ethanol Excise Tax Credit (VEETC)
Subsidized the production of ethanol in the United States. Originally set at $0.54/gallon to offset the $0.54 ethanol
tariff on imported ethanol, then reduced to $0.45/gallon. The VEETC and import tariff were completely eliminated on
December 31, 2011.
The Renewable Fuel Standard (RFS) 2005 Standard required 7.5 billion gallons of transportation
fuel to come from renewable sources by 2012. The Energy Independence and Security act of 2007 set a
goal of 36 billion gallons of renewable fuel by 2022 (21 billion gallons must be from advanced or cellulosic ethanol, 15 billion from grain).
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Future of the RFS
The RFS has been attacked by Big Oil as an “ethanol mandate”.
RFS is only energy policy in
place to reduce dependence on oil.
Billions of dollars have been invested in advanced biofuels with the expectation that Congress will stay committed.
Dismantling the RFS would choke funding for advanced
ethanol production.6
Key Takeaway: The RFS has been critical driver of innovation and investment in next generation ethanol. Eliminating RFS will send wrong signal to investors.
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Challenges and Opportunities
The Blend Wall: Majority of cars on the road can only run on gasoline with E10. Vast majority of our gas stations only dispense gasoline with E10. Ethanol industry is producing more ethanol than it can legally dispense.
Solutions: Short Term Fix: E15 Long Term Fix: Flex Fuel Vehicles and Flex Fuel Pumps
A full move to E15 temporarily alleviates blend wall problem by opening up market to more ethanol (1st and 2nd generation).
Flex Fuel Vehicles run on higher level blends of ethanol (E0 to E85). Flex Fuel Pumps dispense these levels. U.S. Auto Makers have committed to building more Flex Fuel vehicles at the same time that U.S. ethanol trade groups are working to put more Flex Fuel pumps in the ground.
Choice at the pump will create competition in the fuels market, reduce prices and break Big Oil’s monopoly on the fuels market.
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Energy 101:
Energy
Efficiency
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Energy efficiency is about using electricity, natural gas, and liquid fuels
more wisely to
improve the nation’s energy security, economic
competitiveness, and environment
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An upfront investment of $520 billion
by 2020 would unlock $1.2 trillion in energy
savings.
Energy efficiency in the buildings sector represents a largely uptapped economic opportunity
“
”…but only if the nation can craft a
comprehensive and innovative approach to unlock it.
- McKinsey analysis from “Unlocking Energy Efficiency in the U.S. Economy”
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President Obama has focused heavily on energy efficiency
Make non-residential buildings 20% more efficient by 2020
Reduce greenhouse gas emissions by 17% by 2020 and 83% by 2050 (compared to 2005 levels)
Reduce oil imports by one-third by 2025
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Buildings consume 40% of the nation’s energy
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The Administration works to improve efficiency in the residential, commercial, vehicles market through: • industrial and funding research
and development of new technologies,
• Setting energy performance standards for appliances, and
• supporting states in policy development
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The states are the leaders in setting policies to improve energy efficiency
More than 30 states have legislated or voluntary targets for efficiency improvements that the utilities are directed to achieve state-wide.
Source: C2ES
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Increasing vehicle efficiency is the most effective near- and mid-term policy solution to reducing oil consumption
INSERT Graphic to demonstrate that 3 out of every 4 barrels of oil goes into the transportation sector
INSERT Graphic to demonstrate that 80% of oil use within transport goes into ground transportation (as opposed to air or sea)
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Over the last 30 years, vehicle technology advances have gone into making heavier & faster vehicles at the expense of improving fuel economy
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Along with replacing fossil fuels with non-food-based biofuels, the most effective strategies to reduce fuel consumption are to:• Improve efficiency through developing
advanced, lightweight materials• Improve the efficiency of internal
combustion engines, and• Electrify the vehicle fleet
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The Administration’s new fuel economy standards will improve our energy security and result in large savings at the pump
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Energy 101:
Electric and
Hybrid
Vehicles
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Electric and Hybrid Electric VehiclesUS Government subsidies of up to $7500 to per purchase (based on fuel economy efficiencies) have improved electric and hybrid vehicle sales. In addition, some states, such as California offer up to $5,000 in tax credits per purchase to further enhance the value proposition.
Different technologies yield different fuel economy / emission results:
Definitions: Electric Vehicle: A vehicle which contains no petroleum
powered internal combustion engine. Battery technology is utilized to store the power used to propel the drive train.
Hybrid Vehicle: A vehicle that combines petroleum and electric power to propel the drive train. There is a spectrum of technologies that alter the ratio of battery to petroleum utilized, and thus, the emissions and fuel economy savings.
Electric / Hybrid Vehicle Spectrum
Petroleum Internal Combustion Engine
Parallel / Mild Parallel Hybrid Engine
Series Parallel Hybrid Engine
Series Hybrid Engine
Plug-in Hybrid Electric Engine
Fuel Cell Engine
Electric Engine
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There are multiple types of viable hybrid electric vehicle configurations available, each with their own markets, benefits and challenges
Vehicle Type Description Example
Parallel / Mild Parallel Hybrid
Single electric motor is coupled with ICE (internal combustion engine). Electric motor assists with acceleration. Regenerates during braking
Honda Insight Honda CRZ Mercedes S400
BlueHYBRID
Series Parallel Hybrid
One electric motor coupled with one ICE motor. Each are capable of powering the vehicle, and each is used in different ratios as driving conditions require as controlled by on-board computer
Toyota Prius Ford Escape Ford Fusion
Series Hybrid or Extended Range Electric Vehicle (EREV)
Electric motor powers the drive train with a ICE to power generators that feed power back into the electric motor as conditions require
Chevy Volt
Plug-in Hybrid Electric Vehicle (PHEV)
Similar to a Mild Parallel Hybrid with extended range electric capacities due to Lithium-ion batteries
Ford Escape Plug-in Honda Civic Plug-in
Fuel Cell
Similar to Series Parallel however, instead of ICE, a fuel cell engine is coupled with an electric motor. Zero emission vehicle
Chevy Equinox FCEV Ford Edge Hyseries
Electric Vehicle
Vehicle powered solely by an electric motor. Currently range of vehicle per charge is limiting wide adoption. Zero emission vehicle.
Tesla Motors Nissan Leaf
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There are currently two prevailing operating models for electric vehicles Currently, battery range per charge for vehicles remains below 50
miles for most affordable electric vehicles. Tesla Motors has a luxury sedan that boasts a 300 mile range per charge, however, it is priced well above the median auto purchase price of $28,000
After driving to destination, vehicle is plugged in to charge and is back on the road. Current recharge times are 4-8hrs depending on voltage and battery depletion.
Operating Model 1: Use and Recharge
Operating Model 2: Battery Swap Out / Subscription
Drivers pull into battery changing stations to have battery removed and replaced. Battery swap currently takes 5-10 minutes depending on model
Not sure this is accurate
anymore. Just saw a Ford
announcement for the Focus Electric with 76mpc, and
operational tests for over 100.
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The greatest challenge to the viability of hybrid and electric vehicles lies in the establishing lost cost supply-chain to meet consumer price pointsThe established automotive supply chain requires time to reach economies of scale and experience to drive down the costs of hybrid / electric vehicles. However, as a mature industry, the supply chain’s ability to adapt to changing consumer demands should be realized by 2015.
A look at a typical automaker’s supply chain representing hundreds of thousands of jobs:
Auto Company Manufacturer
Tier 1 Supplier Tier 1 Supplier Tier 1 SupplierTier 1 Supplier
Tier 2 Supplier
Tier 2 Supplier
Tier 2 Supplier
Tier 2 Supplier
Tier 2 Supplier
Tier 2 Supplier
Tier 2 Supplier
Tier 2 Supplier
Hundreds of Tier 3 Suppliers feeding into Tier 2 Suppliers
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Electric vehicles are the key to reducing oil consumption and vehicle-borne carbon emissions in the transportation sector
Electric and hybrid-electric vehicle technology have become viable technologies for the personal transportation market and sales are expected to reach 65% of all auto sales in 2030
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2012
2020
Global Small Vehicle Sales
Global Electric Hybrid Sales
2025
2015
2030
By 2030, oil consumption is reduced by 18% of 2010 consumption levels. U.S. fleet turnover rate is currently 12-15 years. At this projected rate, adoption is expected to accelerate beginning 2018.
Note: Based on 2009 McKinsey study of electric vehicle adoption rates and auto industry growth. Electric vehicle adoption numbers verified by Becker/Sidhu UC Berkeley 2009 study: “Electric Vehicles in the United States”
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Energy 101:
Oil
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The U.S. imported 45% of its petroleum from foreign countries in 2011
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Rank Country Million bbl/d1 Canada 2.22 Saudi Arabia 1.23 Mexico 1.14 Venezuela 0.95 Nigeria 0.8
Source: EIA, U.S. Imports by Country of Origin, 1/2007-12/2011
Nearly 69% of U.S. imports originated from five countries
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Crude oil is produced in 31 U.S. states and U.S. coastal waters.
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Source: Energy Information Administration
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Oil is traded on a world market, and oil price is impacted by global supply and demand
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Source: Energy Information Administration
Demand for oil is expected to grow, especially in Asia and developing economies
Geopolitical events, such as the Arab Spring and U.S. sanctions on Iran, can lead to supply disruptions
Supply in the future is expected to come from the MENA region
Companies are increasingly turning to difficult and more costly sources to unlock supply, such as the ArcticSource: Energy Information Administration, International Energy Agency
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National Oil Companies hold about 90% of the world’s oil reserves
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•International Oil Companies, including U.S. companies like ExxonMobil, account for less than half of global production
•National Oil Companies are owned partly or in whole by a national government, such as Saudi Aramco (Saudi Arabia) and Petrobras (Brazil)
•States use revenues from NOCs for government programs and/or objectives
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Energy Security: Spare Capacity, Strategic Petroleum Reserves
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Spare capacity can act as a cushion to insulate the world oil market from supply shocks. EIA defines spare capacity as the volume of production that can be brought on within 30 days and sustained for at least 90 days. Global spare capacity is currently tight.
Saudi Arabia, the largest oil producer within OPEC, and the world's largest oil exporter, historically has had the largest spare capacity (usually keeping more than 1.5 - 2 million barrels per day of spare capacity on hand)
The U.S. President can tap into the Strategic Petroleum Reserve (capacity of 727 million barrels) for a “severe energy supply interruption,” not necessarily high gasoline prices•The Department of Energy oversees the SPR, located at four Gulf Coast sites•A presidentially-directed release has occurred three times: 1) 1991 during the first Iraq War, 2) 2005 after Hurricane Katrina and 3) 2011 to offset global supply disruption from political events in Libya and other countries.
Source: Energy Information Administration, U.S. Department of Energy
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