costs and benefits of a biomass-to-ethanol production industry in california pat perez- energy...
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COSTS AND BENEFITS OF ACOSTS AND BENEFITS OF ABIOMASS-TO-ETHANOL BIOMASS-TO-ETHANOL
PRODUCTION INDUSTRY IN PRODUCTION INDUSTRY IN CALIFORNIACALIFORNIA
Pat Perez- Energy CommissionPat Perez- Energy Commission
May 8, 2001May 8, 2001
23rd Symposium on Biotechnology for 23rd Symposium on Biotechnology for Fuels and ChemicalsFuels and Chemicals
Breckenridge, ColoradoBreckenridge, Colorado
Purpose of PresentationPurpose of Presentation
Discuss why California is looking at Discuss why California is looking at biomass-to-ethanol opportunitiesbiomass-to-ethanol opportunitiesPresent Major Findings and Present Major Findings and Recommendations from March 2001 Recommendations from March 2001 StudyStudyPresent Key Challenges & Present Key Challenges & Uncertainties Facing Ethanol IndustryUncertainties Facing Ethanol Industry
State Budget Directive State Budget Directive FY 2000/01 (Chapter 52)FY 2000/01 (Chapter 52)
Determine the economic costs and benefits Determine the economic costs and benefits of a biomass-based ethanol production of a biomass-based ethanol production industryindustryAssess the impact on consumer fuel costs Assess the impact on consumer fuel costs from an in-state ethanol production industry from an in-state ethanol production industry and from importsand from importsEvaluate the impact on rice straw burningEvaluate the impact on rice straw burningProvide recommendations on future stepsProvide recommendations on future steps
Why is California Looking at Why is California Looking at an In-state Ethanol Industry?an In-state Ethanol Industry? Need to replace MTBE in GasolineNeed to replace MTBE in Gasoline
No MTBE after December 31, 2002
Capture economic and environmental Capture economic and environmental benefits for California’s citizensbenefits for California’s citizens
Reduced wildfire riskReduced air emissions from fires and agricultural burningReduced landfilling of waste materials
Lower dependence on imported Lower dependence on imported ethanolethanol
Major Study FindingsMajor Study Findings What are the economic impacts?
• $1 billion over 20-year period, assuming state government incentives totaling $500 million for a 200 million gallon per year industry.
What is the impact on rice straw burning?• Rice straw burning in California will be curtailed in the
near future under current air quality regulations. • Ethanol production would provide rice growers with an
option to plowing rice straw into the ground to meet air quality regulations.
Major Study FindingsMajor Study Findings What are the potential impacts on consumer
fuel prices?• Near-term: Uncertainty in securing adequate supplies of
ethanol to meet needs could lead to escalating ethanol market prices with resultant increase in the cost of gasoline to consumers.
What are the potential forest and emission impacts?
• Reduction in the frequency and intensity of forest fires and improved forest health.
• Reduced emissions from wildfires and agricultural burning.
Major Findings - Economic ImpactsMajor Findings - Economic Impacts
($1,000) $0 $1,000
No State Cost,High Ethanol
Price
Base Case(10% Capital$0.20/gallon)
20% Capital,$0.40/gal
Personal Income ($ million NPV) over 20 years
State Cost(Assumed) Economic Forest Air
Major Findings - Price of Ethanol Delivered Major Findings - Price of Ethanol Delivered to Californiato California
1.00
1.20
1.40
1.60
1.80
2.00
2.20
400 600 800 1000 1200 1400
Ethanol Supply ( Million gal/year)
Eth
ano
l P
rice
($/
gal
) Near term price with US Ban on MTBE (45 U.S. facilities)
Long term price (75 production facilities)
RecommendationsRecommendationsState Investment in Cellulosic EthanolState Investment in Cellulosic Ethanol
The state should co-fund activities to advance commercially unproven technologies towards market readiness on an accelerated schedule.
The state should provide technical and financial support for one or more biomass-to-ethanol production projects to verify technical and economic performance of commercial scale demonstration facilities.
RecommendationsRecommendationsState Investment in Cellulosic EthanolState Investment in Cellulosic Ethanol
The state should fund activities to enhance the availability and quality of cellulose resources for ethanol production.
The legislature should direct an appropriate state agency to develop and implement a market incentives program to increase the certainty of markets for California produced ethanol.
RecommendationsRecommendationsOther Steps to Foster Cellulosic EthanolOther Steps to Foster Cellulosic Ethanol
Facilitate the communication among stakeholders for harvesting of forest materials for ethanol feedstock.
Develop appropriate revisions to state laws affecting use of agricultural and municipal waste and residues for ethanol feedstocks.
Siting, permitting and environmental impact assessment assistance to prospective biomass ethanol projects.
RecommendationsRecommendationsExploring Opportunities for Conventional Ethanol ProductionExploring Opportunities for Conventional Ethanol Production
The legislature should direct the Energy Commission together with the California Department of Food and Agriculture to study the costs and benefits, assess state resources, and determine appropriate forms of state support (if needed) for this type of ethanol industry.
RecommendationsRecommendationsMitigating Consumer Fuel Price ImpactsMitigating Consumer Fuel Price Impacts
Due to the potential for price increases in ethanol imported into California with MTBE phase-out in California by December 31, 2002, actions are appropriate to reduce impacts on consumer’s fuel costs: The legislature should direct the Energy Commission
to explore means to increase the state’s ethanol import options, balance ethanol demand growth with available supplies, and limit ethanol price fluctuations.
RecommendationsRecommendationsExamining Other Renewable Fuel OptionsExamining Other Renewable Fuel Options
California’s potential biomass energy opportunities include a variety of other approaches to producing liquid fuels, other forms of energy and co-products from waste and residual materials and agricultural commodities: The state should continue to actively explore other
technological paths that offer attractive means of supplying portions of the state’s future energy needs from renewable biomass resources.
Key Issues and UncertaintiesKey Issues and Uncertainties
Ethanol Supply Issues Federal Action on California Request for
Waiver to Oxygenate Requirement Can the U.S Ethanol Industry Meet
California’s Needs by January 1, 2003?
Ethanol Demand California could use over 40% of the Nation’s
total ethanol capacity in 2003Ethanol from California cellulose biomass will not
be available until 2004 - 2005
For More Information about For More Information about Biomass-to-Ethanol Activities...Biomass-to-Ethanol Activities...
Call Pat Perez, Project Manager
Biomass-Ethanol Project (916) 654-4527 (916) 653-4470 [email protected]
or visit our web site at:
www.energy.ca.gov/mtbe/ethanol/