What's going on with biofuels?

In this episode, Dan Lashof of the World Resources Institute
discusses the trajectory of biofuels since the early 2000s and
the implications of new biofuel standards recently proposed by
the US EPA.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


My fellow olds will recall that, back in the 2000s, biofuels were
an extremely big deal in the clean-energy world, one of a tiny
handful of decarbonization solutions that seemed viable. Biofuels
— and the many advanced versions thereof allegedly on the horizon
— dominated discussions of climate change policy.


Much has changed since then. Principally, it has become clear
that electrification is the cheapest path to decarbonization for
most sectors, including the transportation sector. The Biden
administration has explicitly put electrification at the center
of its transportation decarbonization strategy.


Biofuels, in the meantime, have gone exactly nowhere. Advanced
biofuels remain almost entirely notional, old-fashioned corn
ethanol remains as wasteful as ever, and new scientific evidence
suggests that the carbon costs of biofuels are much larger than
previously appreciated.


It's not clear if anyone has told the EPA. For the first time in
15 years, the agency is on the verge of updating biofuels
production mandates first established by the Energy Independence
and Security Act of 2007, and its proposed standards do not
appear cognizant of these recent developments, or of the
administration's larger transportation strategy.


To discuss the latest developments in biofuels and the EPA's
puzzling blind spot, I talked to Dan Lashof, director of the
World Resources Institute. We discussed how biofuels have
developed since the early 2000s, the lack of progress in advanced
biofuels, and the stakes of EPA's coming decisions.


Alright then. Dan Lashof. Welcome to Volts. Thank you so much for
coming.


Dan Lashof


Really happy to be here.


David Roberts


I've been wanting to do an episode on biofuels forever because I
often just pause to think, whatever happened to biofuels? Because
old people like you and I will recall way back in the day, in the
early times, biofuels used to be a very big deal. They used to be
the top line item, the sort of the hot subject of conversation,
and it's really flipped since then. So maybe just to start, let's
use our little time machine squiggly squiggly fingers, time
machine, go back to say 2005 to 2010, the early 2000s, and just
sort of tell us what was the state of the decarbonization
conversation then and what role did biofuels play in it?


Dan Lashof


Right, well, back then, Tesla hadn't built its first car.
Photovoltaics cost ten times or more what they do today. And the
big fight was to prevent hundreds of new coal plants from being
built. So the idea that we would replace gasoline with
electricity seemed far-fetched at best. And a lot of
environmental advocates were focused on fighting coal. There was
some discussion of alternative fuels, but when you looked at the
transportation sector, biofuels seemed like one of the best
options out there. And then there was this idea, there was a
debate about corn ethanol from the beginning, right?


David Roberts


Corn ethanol goes back. I mean, I kind of want to distinguish
between corn ethanol and kind of biofuels. The larger category,
like corn ethanol, goes back farther than the rest of this stuff.
Right?


Dan Lashof


Right, but back then we weren't making much of it, right? So in
2007, there was about 6 billion gallons of corn ethanol being
produced, which is about 4% of gasoline consumption back then.
And there was a debate about it. A lot of that debate was like
about net energy balance. Remember that one?


Does it take more energy and fertilizer and tractor fuel and
trucking than is in the fuel? I think that debate sort of missed
the point, and it was gradually shifting to, well, we don't
really care about BTUs, we care about carbon and what's its net
carbon impact.


David Roberts


And I feel like the limitations of corn ethanol were around even
then, which is why I remember so much buzz around cellulosic
biofuels.


Dan Lashof


Yeah, right. At that time, there was new research that seemed
very exciting. I was convinced that that was the future of
biofuels. Right. We were going to make ethanol not from grain,
not from the corn kernels, but from corn stalks, maybe from some
perennial grasses like ...


David Roberts


Switchgrass.


Dan Lashof


Yeah, right. And that was going to be awesome because you
wouldn't be competing with food as much, and it was supposed to
be cheaper because you weren't ... as waste material or the
yields were higher. So that was going to take over.


David Roberts


Yeah. Wow. We were so young then. And so then this is the sort of
political atmosphere in which came the Energy Independence and
Security Act of 2007, which, among its other sort of puzzling
features in retrospect, was a big bipartisan energy bill passed
in part to address emissions and I guess just wasn't the poison
that it is now, I guess. But so part of that bill was about
biofuels and setting those standards. So just tell us kind of
what we did about biofuels in that bill.


Dan Lashof


To set the stage. The big political driver really was concerned
about imported oil, which was peaking. It actually peaked in
2005, but it was about the same level through 2005, '06, '07.


David Roberts


Right. Because this was before the fracking revolution changed
all that.


Dan Lashof


Right. And fuel economy standards for automobiles had been
stagnant for a long time. So the bill had three main components.
One was reform of the fuel economy standards, actually setting
them on a size basis, which allowed the auto companies to kind of
accept it, and then setting a target to increase them to 35 miles
per gallon.


David Roberts


Is that when the light truck loophole made its way into ...


Dan Lashof


No, that was already there. This was actually designed to help
address that by saying it did leave trucks and cars separate, but
it said, we're going to base the fuel economy for a manufacturer
based on the mix of sizes of vehicles they make. So if they make
bigger cars, they don't have to hit the same level, but it
reduced the sort of clip effect between a truck and a car. So it
actually allowed more of these crossovers, but it also allowed
unlocking an increase in the standards which had been stuck. So
that was a big component. And one of the things that
environmentalists were most excited about in that bill, there was
also a set of energy efficiency provisions, appliance standards
and other things.


And then the third big piece was the Renewable Fuel Standard.


David Roberts


And did the Renewable Fuel Standard exist prior to this or was it
developed for this bill.


Dan Lashof


It did exist. I think it was first passed in 2005, but it was
relatively modest. And then in the 2007 bill, well, there was
this buzz about cellulosic ethanol. The thought was set a long
term trajectory of increasing uses of biofuels and make sure that
by 2022, most of that was supposed to be cellulosic ethanol.


David Roberts


Right.


Dan Lashof


So the standard ramped up to 36 billion gallons of total biofuels
by 2022. That was the target of that 21 billion gallons was
supposed to be advanced biofuels, either cellulosic ethanol or
other biofuels made from something other than corn.


David Roberts


Right. And this suffice to say did not happen. It did not play
out that way. So maybe sort of take us forward from 2007 to what
happened to actual production of actual biofuels. Like how has
the industry developed in the 15 years since then?


Dan Lashof


Well, so the corn ethanol industry grew as expected up to about
15 billion gallons which was sort of what it was supposed to be
capped at subtracting 36 - 21 is 15. So that was what corn
ethanol was supposed to provide. Right, they did that. Cellulosic
ethanol not so much. The actual gallons of cellulosic ethanol
produced in 2022 were zero. Literally zero.


David Roberts


Wait, say that, say again.


Dan Lashof


There was no cellulosic ethanol produced in 2022. There had been
a couple of demonstration plants, none of them were actually
operating in 2022. There was a little bit of what was considered
cellulosic biofuel, about less than a billion gallons of biofuel
equivalent. That mostly came from landfill gas, which was
considered cellulosic. Because ...


David Roberts


Weird,


Dan Lashof


Most of what's in a landfill is woody stuff that's decaying and
making methane. So if you capture that and use it in a CNG
vehicle, that's considered part of this.


David Roberts


But the whole infrastructure of wild hopes about switchgrass and
waste products and all of this, it came to literally nothing.


Dan Lashof


It came to literally nothing so far. Now, there's still some true
believers, it's still right around the corner, kind of like. But
the thing that did happen and there's about 5.6 billion gallons
of the total biofuel produced in 2022 is something other than
corn ethanol.


David Roberts


What is that stuff?


Dan Lashof


Most of that is bio-based diesel and that's a couple of different
things. So some of that is from waste oils. So like used cooking
oil.


David Roberts


Yes. I remember so much talk about used cooking oil.


Dan Lashof


So there's a little bit of that, but a lot of it is biodiesel or
so called renewable diesel made from oil crops like soybeans or
palm oil, which is imported and a huge problem or other oil
crops.


David Roberts


Now, are those in the renewable fuel standard like or do those
have a category of their own in the, in the standards?


Dan Lashof


There is a category of bio-based diesel. It's required to produce
a billion gallons in 2022, and it exceeded that. But it also
counts as part of this larger advanced biofuel category.


David Roberts


Yeah. You mentioned before the call that in terms of land use,
that biodiesel is now rivaling corn ethanol.


Dan Lashof


Yeah, this actually shocked me when I looked into it. So we use
about 30 million acres of land to produce corn that goes into
making ethanol. We use another 30 million acres of prime US
farmland producing soybeans that goes into biodiesel wild. And we
hear much less about that, partly because it actually produces
much less fuel. It's overall much less efficient.


David Roberts


Oh, the diesel process.


Dan Lashof


Yeah, it takes a lot more land per gallon of diesel than you get
per gallon of ethanol because corn is not that great. No, corn is
not great, but the biodiesel is even worse. And when you think
about the global market for oil crops so palm oil, for example,
is a major driver of deforestation around the world.


David Roberts


Right.


Dan Lashof


And that's totally fungible with soybeans and canola and other
oil crops. So if we're diverting soybeans to make biodiesel in
the US. That means somebody else is probably producing palm oil
and may well be deforesting the rainforest to do it.


David Roberts


So the amount that was set for advanced biofuels in 2007 for 2022
just isn't being met. It's not as much biofuel as that
legislation anticipated.


Dan Lashof


Yeah, so the law allowed EPA to waive the requirement if it
determined that the supply just couldn't meet the number and set
a level that they concluded could be met by the industry. And so
that's what they've been doing consistently every year for the
advanced biofuels requirements.


David Roberts


I guess I knew on some level that things had not panned out the
way we hoped in 2007. But the notion that the whole hype about
advanced biofuel came to literally nothing and all we basically
did is just keep growing corn ethanol and biodiesel like we were
before, with all the flaws. I mean, we already knew about the
flaws, some of the flaws then. Speaking of the flaws, tell us
about what we — insofar as you can I'm sure there's a lot, and
it's difficult to summarize — but tell us what we've learned
about the environmental and carbon impacts of biofuels that we
didn't know when we passed this law in 2007.


Dan Lashof


Well, I'd say there's two main things. First, we know that
there's a much better way to eliminate emissions from passenger
vehicles. So, like I said, we didn't really believe, at least I
didn't really believe, electric cars were going to be a thing
back then. Now, that's clearly the way we get rid of emissions
from the road. And if you do the calculation, it takes 300 acres
devoted to corn ethanol powering an internal combustion engine
car to move it as far as one acre of land dedicated to solar
photovoltaics, to power an EV 300 to 1. And we can put solar
farms in the desert and not just on actual farms.


So it's just like a completely different landscape in terms of
what are the pathways.


David Roberts


Yes. And as I point out to people, solar has only gone in one
direction and cellulosic biofuel has also only gone in one
direction, which is nowhere. At a certain point, you got to learn
from trajectories.


Dan Lashof


So that's the first thing. There's a much better way. The second
thing is, I think the key conceptual shift is really, and it
hasn't been incorporated into policy yet, is that land is scarce.
We need to focus on the overall use of land and not just land use
change. So the way I think about this is if we want to achieve
net zero emissions globally by 2050 and feed 10 billion people
and protect biodiversity, how do we optimize the way we use land
to do all of that?


David Roberts


Right.


Dan Lashof


And if we dedicate an acre to producing biofuels, we can't use
that same acre to have an old growth forest that is storing
carbon in the trees and providing biodiversity.


David Roberts


Right. So for any given acre of land, if you use it for one
thing, part of the cost is the opportunity cost of not using it
for something else that would have absorbed more carbon.


Dan Lashof


Yeah, exactly. And of course, the opportunity cost is a pretty
familiar concept in other contexts. Right. We know that if we
spend $1,000 on a vacation this summer, we can't invest that
money to pay for travel when we retire.


David Roberts


Right.


Dan Lashof


But for some reason, that it hasn't really been built into the
way people think about land. I think there's still this notion
that there's going to be a lot of spare land out there, we can
reclaim land, but when you do the math, it just doesn't add up.


David Roberts


Well, about the math, though, how confident are we that we know
and understand all the ins and outs? Do we have a ranking of land
uses by carbon absorption? Do we have a clear sense of that
ranking?


Dan Lashof


I mean, I think that's a good question. So if you've got a old
forest, the best thing to do from both a carbon point of view and
a biodiversity point of view is protect it.


David Roberts


Right.


Dan Lashof


Keep the carbon in the trees, keep the birds and bees flying
around. And anytime you use land for something other than feeding
people, it's going to put more pressure on those remaining old
forests. So that's one way to think about it.


David Roberts


Right. Because I'm thinking all these land use arguments, as you
well know, are frequently deployed against renewables as well.
There's an opportunity cost for food production. There's even
some people who say there's an opportunity cost, like whatever,
put a nuclear plant, get more power for less area. There are
opportunity cost for putting mirrors. So this question of the
highest, best use of land from a purely carbon perspective cuts a
lot of ways.


Dan Lashof


Yeah, that's true. And we have not really done a full kind of
optimization of land use for achieving decarbonization. That's
something I'm actually hoping to work on over the next couple of
years. I think it's badly needed. There's some work that's been
done that points in that direction, but not a fully integrated
analysis. But to give one example, yes, there are issues around
land use for renewables and certainly legitimate conflicts over
how people want to see their community or their landscape look.
But NREL did a study of what it would take in terms of land to
get to 100% clean electricity grid by 2035, which is the Biden
administration goal.


And they looked at the total amount of land that you had to
dedicate to wind/solar transmission lines. That amount is smaller
than the amount of land we're using for biofuels today. And those
biofuels are supplying less than 10% of our transportation
energy. So there's no comparison in scale.


David Roberts


Yes. Got it. So even if we don't have perfectly tuned,
fine-grained distinctions here, there are plenty of crude
distinctions we can make. Some of the cases are obvious, more
obvious than others. And so given this new way of seeing
biofuels, this sort of opportunity cost of lands carbon
opportunity cost, and I assume we probably learned more stuff
about biofuels in the interim in terms of the amount of energy in
versus out and all this. So how do biofuels look now relative to
how we thought about them then? I'm going to guess that based on
our new knowledge, they look worse.


But how much worse? Like corn ethanol, for instance.


Dan Lashof


Yeah so ...


David Roberts


Not good. Not good.


Dan Lashof


No, I mean in terms of energy in versus energy out, actually, the
ethanol industry has gotten more efficient. If you're ignoring
the land problem, it's starting to look, you know, it looks okay.
I mean, it doesn't get you to zero by anybody's calculation. But
if you ignore the land issue, 30-40% reduction relative to
gasoline is plausible. But once you take the carbon opportunity
cost of land into account, then anytime you're dedicating an acre
to grow fuel rather than either food or forests, you're going to
lose. And you're going to lose it's not close it's by factors
two, three or more.


David Roberts


That's true of any crop, any kind of fuel across the board.


Dan Lashof


Yeah, just because that opportunity cost is so large.


David Roberts


Interesting. So let's take this knowledge then and gallop here
into 2022, I guess we're in 2023 now.


So tell us first of all, why is EPA revisiting these standards? I
guess they decided in 2007 that they could see exactly 15 years
into the future of biofuel demand, but no further. Was it always
built into the law that 15 years, and then we'll start revisiting
it.


Dan Lashof


Exactly. So Congress specified exact volume targets for every
year through 2022. And again, it gave EPA the ability to adjust
those if it concluded it wasn't feasible, which is what they had
to do on the advanced biofuel side. But starting in 2023 ...


David Roberts


Wait, can I pause? Before we get into the change in the line, I
want to ask one question about the volume thing, because it also
strikes me as kind of crazy, like how gasoline performs with
ethanol in it. Depends on the level of ethanol in it, right. The
percentage of ethanol. And there's been a lot of arguing about
how much ethanol you can blend into gasoline. But if you're
specifying volumes of biofuel, you can't specify volumes of total
gasoline demand that's going to fluctuate out of your control. So
if demand goes way up, then the same volume looks like a smaller
percentage, and if gasoline demand goes down, then the same
volume looks like a larger percentage.


David Roberts


It just seems like specifying volumes is a bizarre way to
approach this question, especially 15 years in advance, when you
have no idea what total demand for gasoline is going to be. So
you really have no idea what percentage of the total these
volumes are going to be. Am I crazy, or is that just a weird way
to approach this issue?


Dan Lashof


That's correct. What EPA actually does under the law when they
set the targets, is they look at the volume target. They project
how much gasoline will be consumed, and then the actual
requirement on refineries is a percentage. So they convert the
volumes into percentage when they implement it. But they've only
been doing that sort of one or two years in advance. Or actually,
sometimes they get to the end of the year, and then they do it
looking backwards, which is a little weird, too. So then in a
year like 2021, when the Pandemic shrunk demand for gasoline, it
was actually the percentage requirement that was binding, and the
volume was much less than what EPA had originally projected.


So that's how they implemented. But it's still a strange way to
write the law. I totally agree with that.


David Roberts


The reason I ask is, it seems to me, sitting here in 2023, that
the next 15 years of gasoline demand are even more difficult to
forecast than they were in 2007. There's more going on. There's
more forces converging from different directions. There's a lot
of it's a really open question. So if you're specifying a volume,
that just seems crazy. Are they doing that again? Are they going
the volume direction again?


Dan Lashof


They are, but again, they convert it to percentage, and they're
only looking three years. Their current proposal looks three
years in advance, not 15 years in advance.


David Roberts


Got it. Okay, well, let's back up. Just tell us what's going to
happen. What is EPA doing in 2023 about this? Now that these
original volume standards are over, the time period is over,
what's EPA going to do?


Dan Lashof


Right. So EPA has this broad discretion now, and so they proposed
a rule to set the volume targets for three years, 2023 through
2025. But they basically ignored all these changes that we've
just been talking about and sort of blithely went forward as if
nothing has changed. And they've proposed to increase the amount
of biofuel required each year, not by a huge amount, but by some.
And they've said, okay, the amount of conventional corn ethanol
that would be implied by these requirements is going to stay
constant at about 15 billion gallons. But because of what you
said, that's a huge problem.


Right. So if we're actually on a trajectory to meet our climate
goals, we've got to electrify the fleet. And that means gasoline
consumption over the next 20 years should go down by about 80%,
according to at least some scenarios. So the current standard
gasoline is blended 10% ethanol, and 15 billion gallons is
already more than you can absorb at 10% of current gasoline
demand.


David Roberts


Is that true? What happens if there's too much if there's too
much corn ethanol and you can't blend it all in? What do they do
with it?


Dan Lashof


So some states allow up to 15% ethanol.


David Roberts


Right.


Dan Lashof


And the original theory was we were going to have flex fueled
vehicles that would use 85% ethanol.


David Roberts


You still see those around sometimes.


Dan Lashof


Yeah. The auto companies got credit towards meeting their CAFE
standards.


David Roberts


Right.


Dan Lashof


Producing those even if they never saw a drop of E85, right. So
there are a few of those vehicles around, but they're just using
10% ethanol or maybe 15% ethanol, depending on where they're
fueling up. So you can maybe absorb a little bit more than 10%.
But basically, by setting the requirement at a level that is more
than 10% of gasoline demand, what EPA effectively has done is
forced more biodiesel, because that you can substitute for diesel
in the freight sector. And as we discussed, that's even worse
than corn ethanol.


David Roberts


Well, you mean because they're holding corn ethanol steady and
increasing the overall amount of biofuels, and we now know that
cellulosic is going to be 0% of that, then all the remainder has
to be biodiesel, doesn't it?


Dan Lashof


Most of it will be. I mean, again, there's some what's called
renewable natural gas. So if you harvest landfill gas or dairy
digesters, you can produce some fuel that way.


David Roberts


But most of the increase will come from biodiesel.


Dan Lashof


Most of the increase is biodiesel. And again, the way the law is
written, it doesn't actually specify corn ethanol. It specifies
conventional biofuels. So you could use biodiesel to satisfy part
of that. Right. Now, this is the so called 10% "blend wall",
ethanol "blend wall". That's about 14 billion gallons.


David Roberts


Got it.


Dan Lashof


And it's going down every year.


David Roberts


Wait. why?


Dan Lashof


Well, because gasoline consumption is going down.


David Roberts


Right?


Dan Lashof


And it's already going down because cars are getting more
efficient under the fuel economy standards, particularly the ones
that the Obama administration promulgated. And as we get more and
more electric vehicles on the road, it's going to go down faster.


David Roberts


Given what we've learned about biofuels and given how they
performed since 2007, what on earth is EPA doing? I guess I'm
just wondering, what are the political forces, as you see them,
that are pushing to keep this Frankenstein alive when it
basically looks like we should just we'll talk about future uses
for biofuels later and there might be something to that. But in
terms of shoving corn ethanol into gas tanks, it just seems like
the whole enterprise is kind of silly. So what's keeping it
alive? What's propping it up? Because EPA looks like they're
just, like, going forward, like you said, as if they've learned
nothing.


And yet we know they have learned stuff. So what is going on? I
guess I'm asking.


Dan Lashof


Well, I think there are a couple of things. Obviously,
politically, you have this now incumbent ethanol industry.
Companies like ADM that make a lot of money making ethanol, and
they're in Midwest states that don't necessarily have a lot of
people, but have two senators each.


David Roberts


But are no longer going first in the Democratic primary lineup. I
wonder if that's going to change anything.


Dan Lashof


It may make a little bit of difference, but Iowa is not the only
state. It's not the only state where ethanol is produced, so they
still have a lot of sway. Also, I think that this idea of the
carbon opportunity cost of land really has not been absorbed by
policymakers at this point. So there's still, in their minds, an
active debate about, oh, maybe it's 20% better than gasoline,
maybe it's 40% better than gasoline. There's some studies which
say that it's a little worse than gasoline, but there hasn't been
an acceptance yet of this view of land as fundamentally scarce
and something that you really have to be much more intentional
about how you use it.


David Roberts


Well, the ethanol lobby is obviously one thing, and of course,
corn state senators are, of course, one thing. I think you and I
will recall when John McCain was running, what was it like the
first time he ran? He was very bravely standing up against
ethanol and then just got pilloried and caved on it later, as I
recall. Am I making all that up? It's had such a grip on
politics.


Dan Lashof


Yeah, that sounds right. And certainly I think both Obama and
Clinton who were running in the primaries during the time the
2007 bill was written, were staunch supporters of ethanol. So,
yeah, there's been this bipartisan support for it across the
board. One notable exception has been Senator Diane Feinstein of
California has always rallied against ethanol.


David Roberts


Interesting.


Dan Lashof


But to no effect.


David Roberts


And what about fossil fuel companies? Like, where are they on
this whole thing? Where are they throwing their influence?


Dan Lashof


Historically, they opposed ethanol mandate. They were kind of
outmaneuvered when the RFS was first done because you had both
environmentalists who supported the overall law, whether they
focus on the RFS or not because of the fuel economy standards and
kind of the farm state senators and representatives supporting it
because of the ethanol piece. So that's actually a fight they
lost. Now it's a little challenging because both the fossil fuel
lobby and the ethanol industry feel threatened by electric
vehicles. And so there are cases where they're actually teaming
up to fight electrification, which is definitely a toxic mix.


David Roberts


And isn't there some overlap of plastics and biofuels now that
the fossil fuel industry might be? Because I know fossil fuel
industry has big hopes for plastic to help them survive in a post
fuel world. Isn't there some sort of like biofuels made out of
plastics? Or am I groping here? What am I talking about?


Dan Lashof


Well, there are ways to make plastic substitutes from biomass. So
you see some compostable forks that are made from cornstarch, for
example. I don't think a big market compared to the ethanol
market. So I don't know that that's a big player. I think from
the fossil fuel industry point of view, they definitely are
looking at plastics as their get out of jail free card. As oil
demand for automobiles goes down, they're looking to divert both
natural gas and petroleum into a huge number of new petrochemical
plants to produce plastics and other things. So yeah, that's a
real issue.


David Roberts


But returning to here to Biden so there was never, I guess,
really a road through biofuels to zero carbon. I mean, maybe
people waved their hands at it like super-future cellulosic,
whatever, but in the 15 years since, we have not progressed down
that road, hardly even a single step. And yet here the EPA is
sort of acting like, yeah, that's still our thing on
transportation. We're still going to labor away at biofuels and
try to sort of marginally reduce the impact of gas. Meanwhile,
you have over on the other side of the Biden administration,
Biden himself the bills he's passed, his own transportation
secretary on and on, being very explicit that their
transportation strategy is electrification. So why isn't the
right hand talking to the left hand here? What is this
Janus-faced transportation strategy?


Dan Lashof


Yeah, it's a huge disconnect. I mean, right as EPA was proposing
this renewable fuel standard continuation, the administration
published a transportation decarbonization strategy which, as you
said, absolutely focused on electrifying certainly all the
passenger cars for freight. It's some combination of battery
trucks and hydrogen fuel cell trucks. The one place they point to
biofuels and we can talk about this more is with respect to
aviation fuel.


David Roberts


Yeah, I want to get to that. In a second because that seems like
a big piece of this. But just in terms of, well, a. why? I guess
no one really knows why. I mean, maybe it's just path dependence,
maybe it's just lobbying, maybe like EPA is not meeting with Pete
Buttigieg enough. But what would you recommend, what would WRI
recommend that EPA do in this situation if it had read its own
administration's transportation plan? What would renewable fuel
standard setting look like in light of sort of sane response to
Biden's electrification push?


Dan Lashof


Right. So it's important to point out that right now we have a
proposal from EPA. It's not a final rule. And so part of what
we're trying to do is point out this disconnect between this
proposed rule and the rest of the administration's climate
strategy and transportation strategy. So hopefully it'll have an
impact. We'll see. So what we recommended is setting much lower
volume targets for renewable fuels going forward that are based
on the amount of fuel that you can produce from biomass waste. So
this is the key distinction that we're trying to make. It's one
thing, the carbon opportunity cost, if you're dedicating an acre
of land to produce biofuels, is high.


But there are some genuine waste resources and a lot more work
needs to be done to figure out how substantial they really are.
But they're not 36 billion gallons. But there are certainly
significant amounts of things like corn stover, which is what's
left over after you harvest the corn. You've got wheat hulls, in
orchards you trim them every year, so there's woody biomass
there, there's waste in the pulp and paper industry that they
currently burn to make electricity, which there's much better
ways to make zero carbon electricity. So there's those resources
and then there's this huge amount of biomass which is starting to
be pulled out of the Western Forest to reduce the risk of
catastrophic wildfires.


And what happens to that now is mostly it's either left to decay
at the edge of the forest or it's actually burned in a pile.


David Roberts


Either of those produce greenhouse gases, don't they?


Dan Lashof


Right, exactly. Well, you're taking carbon that was in the
forest, but that had the risk of going up in flames at any point
and turning into CO2. You're kind of speeding up the conversion
to CO2, but hopefully reducing the risk of catastrophic fires.
You look at what would happen to the biomass if you didn't use it
for biofuels. And if the answer is that carbon was going to go
back into the atmosphere quickly, that's a biomass resource that
it makes sense to use.


David Roberts


So WRI's recommendation is that basically standards be required
or volumes be required only for waste biofuels?


Only for volumes that could be produced with waste biofuels. And
that essentially the conventional corn ethanol should not be
viewed as achieving any greenhouse gas reductions. Now, it's
important to say that doesn't mean that the ethanol market is
going to disappear overnight.


Yeah. I was going to ask, are you here proposing that we
basically abandon both the corn ethanol and the soybean-biodiesel
markets? Because I would be all for that, but those are big,
powerful players. It's not a small thing to propose abandoning
them.


Dan Lashof


Yeah, well, this is definitely not going to be an easy push
right. To the administration, for sure. But I think it's really
important to lift up farmers in this transition. So if we
eliminated the Renewable Fuel Standard overnight, the gasoline
suppliers would still probably and according to EPA's analysis,
they would still blend 10% ethanol into gasoline because ...


David Roberts


Really? Why?


Dan Lashof


Well, they need it to provide oxygen and octane. So one of the
other factors that we haven't talked about that was going on
during the early 2000s is gasoline used to contain this thing
called MTBE.


David Roberts


Right, I remember.


Dan Lashof


Which was the way in which they got octane, and that created a
lot of groundwater contamination. California banned it in 2002,
new York banned it in 2004, and other states were moving to ban
it. And so the sort of chemical function that MTBE was playing in
gasoline got replaced by ethanol.


David Roberts


Got it. So they do need some kind of additive?


Dan Lashof


Yeah, there may be other things out there, but I think for now
the expectation is they would still blend 10%, which would mean
as we phase down gasoline consumption, as we electrify vehicles,
a gradual phase down of ethanol demand.


David Roberts


Of course.


Dan Lashof


But not an overnight elimination. So I think that's the first
thing to note. The second thing to note is US farmers in
particular are really good at growing food. And we need that
food. The world needs it more than ever.


David Roberts


Right. Isn't global food demand supposed to double? That's the
statistic I always see by 2040 or 50 or whatever.


Dan Lashof


Yeah, I mean, you got a population that's going to go from about
8 billion to about 10 billion. But then also as people get
richer, they eat more meat, for better or for worse. Often for
worse. But in low-income countries, actually increasing protein
consumption is important from a health perspective. And that
means you need more animal feed. So the total amount of grain
that's needed goes up by much more than the population.


David Roberts


So the contention here is that farmers would be okay if we
abandoned or started ramping down our current biofuel production.
Farmers would not simply be cast out onto the street.


Dan Lashof


I mean, I think this needs more work to look at what that
transition is like. But like I said, corn prices right now are
very high. The renewable fuels mandate probably contributed some
to that, but corn prices have also been very volatile and that
volatility didn't go away with the Renewable Fuel Standard. So
being a farmer is still really tough and we need to recognize
that. I think we have to look at a whole range of alternative or
complementary income sources that we need to boost the rural
economy. And that can include wind and solar revenue, right.


And it can include using biomass waste like corn stover to
produce hydrogen or other carbon benefits, which we can talk
about more. And then there's an opportunity to increase
fertilizer production more locally using clean hydrogen. Right
now, all the fertilizer that's being used, almost all of it in
the US. Is being produced from natural gas, and then this CO2
just goes into the atmosphere. So if you've got sources of clean
hydrogen, whether it's from electrolysis using renewable
electricity, or if it's from biomass waste with carbon capture,
one thing you can do with that hydrogen is make fertilizer that
could be more distributed than the big fossil fuel based
fertilizer plants that we currently have.


David Roberts


Interesting. And so when you say EPA should set volumes based on
what can be met with waste, what does that mean numerically?
Like, right now? It was 36 billion in 2022. Is that right?


Dan Lashof


That was the original law.


David Roberts


Right. And they're proposing for 2025.


Dan Lashof


Less than that, let's see, because, yeah, we never got to 36, we
got to 21. And they're proposing a modest increase from that. And
we're talking about the waste being more on the order of less
than 10 billion gallons.


David Roberts


So, ballpark, you're recommending that they cut the volume
requirements for biofuels roughly in half, or a little bit more
than in half, down to what could be met through waste?


Dan Lashof


Right.


David Roberts


And aren't you also encouraging them to use a shorter time
period, shorter than three years?


Dan Lashof


Right. Well, in general, I think having a little bit of a runway
setting a standard for several years out makes sense. But in this
case, what we said was, look, things have changed since 2007. You
really need to rethink this policy and how it fits into the
administration strategy. So to give yourself some time to do that
rather than setting a target.


David Roberts


They had 15 years. This is what's bizarre about this. It's like
they woke up yesterday morning, they're like, oh, we have to do
this thing again. None of this stuff is a secret. What we're
talking about, the biofuels performance, is not a secret. It's
weird to me that they seem to be kind of sleepwalking into this.


Dan Lashof


That's a fair point. I don't have an explanation for that. But
given where we are, we thought one of the things that we could
suggest to give the administration a little more time to rethink
this would be to start with only one year standard, and then
hopefully the next phase, they would more fully account for the
changes, particularly in electric vehicles going forward.


David Roberts


Is it in law that they have to set standards every so often, or
is this going to be like setting new standards every year or two
years or three years forever? Or how does it work going forward?


Dan Lashof


They have to set standards for each year, but they can choose to
set it for one year at a time, or three years at a time, or five
years at a time? That's up to the EPA at this point.


David Roberts


A slight side question, but I would like a little bit of
international context here. Like, are other countries that have
been sort of doggedly pursuing biofuels all this time, despite
all the trends heading in the other direction, are they a big
dominant industry? And question in other countries, what's the
international take on biofuels right now?


Dan Lashof


Well, the one country that has probably the most significant
ethanol industry other than the US is Brazil.


David Roberts


Right.


Dan Lashof


And they make ethanol from sugar cane, which is more efficient
than corn. But I think it's still subject to similar carbon
opportunity cost problems.


David Roberts


Do you think it still fails the land test?


Dan Lashof


I think so. I haven't actually done that calculation, but I think
it's a similar issue. And then the other issue where biofuels are
used not for transportation, but there actually have been a
significant part of the European renewable mandate.


David Roberts


Yeah, biomass for electricity, right?


Dan Lashof


Well, yeah, electricity and co generation plants. So they're
using wood pellets, some of which come from the US southeastern
forest. A bunch of them come from Romania. Scientists have been
raising concerns about this for a long time.


David Roberts


That's very controversial, too, right? Biomass in Europe's
standard.


Dan Lashof


Right. And they've been supposedly tightening their requirements
so that it's supposed to be like waste. So if you talk to the
wood pellet industry, they'll say, oh, no, we're not harvesting
trees, we're using these biomass waste. But there was an
investigative report a few months ago that looked at Romania
where it's very clear that biomass pellets that were labeled as
coming from waste were actually big trees that had been harvested
and chopped up. So there's a huge problem there.


David Roberts


Interesting.


Dan Lashof


This all comes back to this unfortunate notion that biomass is
inherently carbon neutral, because after all the carbon in the
biomass that came from the air through photosynthesis so putting
it back to the air, that shouldn't be a problem.


Right. But the problem is, of course, that's true of fossil fuels
also, right?


David Roberts


True.


Dan Lashof


There's a time issue that you have to take into account. And so
this notion of the carbon-debt, if you harvest forest to produce
energy, has not been factored into a lot of these standards.


David Roberts


It sounds like over there, it's probably more of a
forestry-industry shenanigans thing than a farming industry
shenanigans thing.


Dan Lashof


Yeah, it is. But then I think around the world, there's also
various places where biodiesel is being used and promoted through
policy, where you've got a palm oil industry in Indonesia, for
example, and other places where that's been promoted. So there is
a global aspect to this that also needs a lot of attention. And I
think what the US does sets a precedent that other countries look
to. So it's another reason why we really have to get this right,
but nobody.


David Roberts


Else is dumping corn into gas tanks specifically.


Dan Lashof


Not at these volumes, no.


David Roberts


And really, why would you? Okay, I wanted to leave a little bit
more time for this, but just sort of by way of wrapping up. I
think we can agree, for reasons we've discussed, that biofuels in
personal transportation are silly. We're electrifying, we're on
the way, there's just no point anymore in — I guess you could
make an argument for gas. Cars are going to be around a while
longer and at least you can marginally reduce the impact of gas.
But given what we know about the carbon opportunity costs and all
that, it's not even clear that's helpful.


So in personal transportation, biofuels are silly, I think, but
there are, as people are constantly saying, areas we don't know
how to decarbonize yet. And so I wonder if you were sort of
canvassing, what are the plausible positive uses of biofuels in
the world? We're heading toward a decarbonized world. What are
they still good for?


Dan Lashof


Right, so I think there's a couple of use cases that could make
sense, but again, really depending on taking the carbon
opportunity cost into account and really focusing on waste
feedstock. So one is aviation. Of all the sectors that people
have said are hard to abate, aviation really is hard to abate.
And I don't think we know what the long term answer is there, but
certainly whatever biomass resources we have that are truly
beneficial to use for fuel, replacing jet fuel with so called
sustainable aviation fuel, that's one possibility that could make
a lot of sense.


David Roberts


Pausing on that, I mean, I saw a calculation on Twitter, so take
this for what it's worth, but if you're comparing the volumes
necessary to, say, replace 10% to 15% of gasoline volume and the
volumes necessary to replace total aviation fuel volume, they're
not way off from one another. So in other words, if biofuels
really, if we're really setting out to replace all bunker fuel,
not just jets use, but has other uses too, with biofuels, that's
going to be a lot of biofuels still.


Dan Lashof


That's right. And I don't think there's enough waste to supply
the whole aviation sector, but it can supply a meaningful part of
it. So that's one use. What we do with the rest of the aviation
...


David Roberts


Fly less, Dan.


Dan Lashof


Fly less. That could be a thing. I don't know that that's very
likely, but it would be good. They're short haul aviation.
There's electric planes, which ...


David Roberts


Trains!


Dan Lashof


... really cool. Trains would be a lot easier for short haul. And
people are talking about hydrogen. I don't know if that's going
to be a thing for aviation. The solution there, quite frankly,
might be that's the one place left where you would actually burn
petroleum and then compensate for those emissions with direct air
capture.


David Roberts


Right.


Dan Lashof


I don't love that solution, but right now I don't have a better
answer for aviation. So that's a tough one. The other thing for
biofuels, and this figures prominently in a lot of
decarbonization scenarios, such as the Princeton Net-Zero study
is making hydrogen by gasifying biomass and then capturing the
CO2. And if you put the CO2 underground, the net effect could
actually being a negative emission fuel.


David Roberts


Right. It's similar to BECCs. Right. Similar to burning biomass.


Dan Lashof


Right. It's a form of BECCs. But instead of making electricity,
where we have lots of options of better ways to make electricity,
if you make hydrogen, you're competing with electrolytic
hydrogen, which in the long run is probably cheaper. But if you
account for the benefit of actually removing carbon from the
atmosphere this way so if you're using, for example, corn stover,
there's several hundred million tons of corn stover produced
every year in the US. Given how much corn we're producing now,
now a third of that corn is currently being produced for ethanol.
So maybe that declines somewhat, but there's still going to be a
lot of corn stover.


David Roberts


So you take the corn stover, you gasify it and you get CO2 and
hydrogen, you bury the CO2, you use the hydrogen to make fuels.
Is that the idea?


Dan Lashof


Right. Use hydrogen to make fuels, or use it to make fertilizer
or use it to make steel, whatever you're going to use hydrogen
for. That makes sense.


David Roberts


That is such a long chain of conversions. It's just like you're
losing so much along the way there. It's hard for me to believe
that that's going to end up being the best we can do. But I don't
have any other ideas either.


Dan Lashof


Yeah, I mean, there are a few companies that are trying to
commercialize it. Like I say, it's not a large source of the
total hydrogen. So if you look at Net-Zero study or others and
say, what does the energy system look like in 2050? We're using a
bunch of hydrogen. Most of that comes from electrolysis, some of
it in these studies comes from this biomass pathway. But it's
actually a significant share of the net carbon removal because
every ton of corn stover that you convert to hydrogen plus CO2 is
actually producing 1.8 tons of CO2. And so a couple hundred
million tons of carbon removal potentially from doing this.


And if you value both the hydrogen and the carbon removal, it
starts to look like a sensible thing to do.


David Roberts


Right. But aviation and maybe hydrogen, those are sort of like
the biofuels of the future. That's more or less what we can think
of to do with them.


Dan Lashof


And then I think the other thing is to substitute for plastics
made from petroleum. That could be another ...


David Roberts


Is that ever going to I mean, I feel like that's been right
around the corner almost as long as cellulosic biofuels. Is that
a thing that's really going to happen?


Dan Lashof


Not as long as natural gas is super cheap and they keep producing
more of it. Right. So, I mean, it's hard to compete, but if
you're trying to squeeze the last ton of fossil carbon emissions
out of the system, then it starts to look like a plausible thing
to do.


David Roberts


Interesting. Okay, well, this is substantially more than I've
thought about biofuels in many, many years. Thank you for coming
on it and catching us up. And I guess if we're just sort of
taking away the main takeaway here, it's just that EPA should,
like, read Biden's Transportation Decarbonization Strategy.


Dan Lashof


That would be a good start.


David Roberts


All right. Dan Lashof, World Resources Institute. Thank you for
coming on and catching us all up.


Dan Lashof


Alright. Thanks.


David Roberts


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