Below is some information originally posted on The Oil Drum on 1/28/08 about the new energy bill’s renewable fuel mandates, which include both ethanol and biodiesel.

Apparently there is some apparatus for enforcing the mandates through penalties.  But as this piece notes at the end, there is some confusion about that.  The piece discusses waivers and how they would be obtained, but presumably the same system that is established for waivers would relate to the original system established for penalties.

API is very concerned about the mandate included in the 2007 energy legislation that requires that ethanol production be ramped up very quickly, starting in 2008. The general biofuel category, which includes corn ethanol and most biodiesel produced today, is required to ramp up as follows:

Figure 4

There are many issues involved — the difficulty in growing sufficient additional biofuels, the conflict with food production, and the difficulty in transporting all of the ethanol and blending it into the end products all around the country. When the initial mandate was passed, there was at least a little excess capacity in ground transportation that could be utilized. Adding this so much more ethanol so quickly will very badly strain the system.

According to the telephone discussion, waivers will be required if it is not possible to meet the conditions of the mandate–for example, not enough biofuels will be available on a particular date in a particular city for blending. It is not clear exactly what procedures will be required to get the waivers. It is also not clear that oil companies will know far enough in advance to request the necessary waivers. API is working on putting together a paper explaining the problems regarding the new ethanol mandate more fully.

Tags: energy investments

This entry was posted on Monday, January 28th, 2008 at 1:27 pm and is filed under Biomass. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.