Bill proposes fossil fuel-derived ethanol should qualify for RFS

By Kris Bevill | January 18, 2012

Rep. Pete Olson, R-Texas, introduced legislation on Jan. 17 that would amend the Clean Air Act to allow ethanol produced from domestic fossil fuel sources other than petroleum to qualify as a conventional biofuel under the renewable fuel standard (RFS) beginning this year. Currently, the RFS defines “conventional biofuel” as being ethanol derived from corn starch. There is no category of the regulation that allows for the use of hydrocarbon-based fuels, referred to in Olson’s legislation as domestic alternative fuels, as a compliance mechanism.

Olson introduced H.B. 3773, named the Domestic Alternative Fuels Act of 2012, to increase competition in the marketplace, stabilize food prices and enhance American energy security and global competitiveness, according to a statement released on Jan. 18. “It’s long past time for Congress to address the failed RFS,” he said in the statement. “The RFS focus on corn ethanol has translated into higher feed costs for livestock producers and higher food costs for working families. While Congress considers eliminating the RFS altogether, we should in the meantime allow greater participation and competition under the program. That will benefit farmers, businesses and consumers.”

The Renewable Fuels Association said it strongly opposes Olson’s bill and any efforts that promote the inclusion of more fossil fuels into the fuel supply. “There is nothing renewable about fossil fuels and they have no place in national renewable energy policy,” RFA President and CEO Bob Dinneen said. “The RFS has been a very successful initiative and is vital to the commercial development of truly renewable fuel technologies, like advanced and cellulosic ethanol. We shouldn’t be changing the rules of the RFS in the middle of the program because it is working. It is reducing our reliance on imported oil. Scores of companies have made investments based on the program and new investments in next-generation renewable fuels will be chilled if the RFS is fundamentally changed before 2022.”

Growth Energy spokeswoman Stephanie Dreyer also stressed the fact that the RFS was designed specifically to promote fuels not derived from fossil fuels and said Olson’s amendment, if passed, would undermine the goals of the legislation. “Putting an opening in for all these fossil fuel products will do nothing but perpetuate our addiction to oil - but I guess this is to be expected from an oil state representative,” she said.

Olson is not without his supporters, however. Dallas-based Celanese Corp., a global technology and specialty materials company that has developed a process to convert hydrocarbons to ethanol for both fuel and chemical applications, applauded Olson’s proposal and said it would still reduce the amount of petroleum used in the transportation fuel while at the same time promote free market economics and technical innovation. “U.S. energy policy should encourage new ideas, technologies and innovation to promote a diverse set of energy and fuel choices,” said Steven Sterin, chief financial officer and president of Celanese’s advanced fuel technologies business. “Our nation’s plentiful natural energy resources, such as natural gas, are a tremendous asset and can drive the economic growth of the United States for years to come. Rep. Olson’s bill creates conditions under which American innovation can achieve these goals without using valuable food resources for the production of liquid fuel.”

Celanese’s technology, called Celanese TCX, is a thermochemical process that can be used to produce industrial or fuel ethanol from hydrocarbons such as natural gas or coal. Celanese expects to further develop its TCX ethanol process technology at a facility in Clear Lake, Texas, which is expected to begin operating later this year. Celanese is also active in China and plans to begin producing hydrocarbon-based ethanol there in 2013. The company’s initial focus is on the production of industrial ethanol, which can be used in paints, coatings, inks and pharmaceuticals, but company officials have stated they are also exploring the potential to enter into the fuel ethanol space. However, because its ethanol would not be derived from biomass, at least not initially, it would not be possible for the company to generate renewable identification numbers (RINs) through the production of the fuel. Because RINs are used by obligated parties to prove their compliance with the RFS, it is questionable whether Celanese’s fuel would be marketable unless an amendment such as Olson’s is passed, making hydrocarbon-based ethanol RFS-compatible.

Co-sponsors of Olson’s proposed amendment include Reps. Gene Green, D-Texas; Joe Pitts, R-Penn.; Jim Costa, D-Calif.; David McKinley, R-W.V.; and Charlie Gonzales, D-Texas. The proposal has also drawn the support of a number of historical corn ethanol opponents, including the National Cattlemen’s Beef Association, the National Chicken Council, the National Pork Producers Council, the National Turkey Federation and the Grocery Manufacturers Association, as well as America’s Natural Gas Alliance. Bill Donald, president of the cattlemen’s association, said his group supports Olson’s proposal because it would allow more competition in the RFS. “Unfortunately, the RFS has allowed the federal government to mandate corn-based ethanol production volumes, which has put cattlemen and other end-users of corn at a competitive disadvantage,” he said in a statement. “Congressman Olson’s bill is a step in the right direction.”