Up in the Air: Can aviation save the Renewable Fuel Standard?

Declining gasoline demand, blend walls, lack of blender pumps, a fight over E15 ethanol, food vs fuel — it all looks pretty dire for the US Renewable Fuel Standard target of 36 billion gallons of renewable fuel by 2022.

Or does it? Does the key to making everyone happy lie 8 miles high, in the aviation sector? The Digest looks at the numbers.

In the world of fuel supply planning, what you will see below is known as a scenario — which is to say, a possible outcome by 2022 if certain real-world assumptions turn out to be true.

What is interesting about this scenario is:

1. It meets the 2022 Renewable Fuel Standard target of 36 billion gallons (of ethanol-equivalent) renewable transportation fuels in the United States, as envisioned by the 2007 Energy Independence and Security Act.
2. It fits the current US fuel infrastructure — no blender pumps, no E15 ethanol blending, no E85 expansion required.
3. It fits within the current (declining) gasoline forecast from the Energy Information Administration of around 125 billion gallons of gasoline demand by 2022.
4. It requires no new technology to be developed out of a lab, with the concurrent technology and policy risk.
5. The new fuels in question are cost-competitive, with help from the RIN credits that Congress established to support achievement of RFS targets.

What about this scenario, possible, plausible?

Is it magic? Hardly. In this scenario, current technology is employed to distribute high-blend fuels into the fuel supply. In particular, this scenario looks to the aviation sector. But how can we produce 36 billion gallons of renewable fuel with less infrastructure squawk than we hear while producing less than 20 billion gallons today?

1. Cellulosic ethanol. The scenario envisions the deployment of around 3 billion gallons of cellulosic ethanol by 2022. POET in 2010 announced a target of 3 billion gallons by 2022 for its own technology — and we have competing technologies available now from Beta Renewables (now developing a second commercial plant, in North Carolina); DuPont (building a first commercial plant in Nevada, IA; Abengoa (opening a first commercial plant in Hugoton, KS next month); and INEOS Bio (working towards steady-state operations at their first commercial plant in Vero Beach, FL).
2. Isobutanol. The scenario envisions converting essentially all of the remaining legacy US ethanol production to isobutanol — which blends into gasoline at a 16 percent rate compared to the standard 10 percent for ethanol. Butamax and Gevo are bringing isobutanol technology forward in the US — Gevo is working towards steady-state operations at its first commercial plant in Luverne, MN.
3. Renewable diesel. The scenario envisions expanding renewable diesel supply to 1.25 billion gallons. Today, about 850 million gallons is produced worldwide, the bulk of it by companies producing in the US (Diamond Green Diesel, REG) or targeting the US market (Neste Oil). Projects representing than 400 million gallons in new capacity by 2022 have already been mentioned by companies licensing the Honeywell UOP process.
4. Biodiesel. The scenario envisions expanding biodiesel supply to 2.4 billion gallons. Last year, biodiesel producers manufactured 1.8 billion gallons of biodiesel — and currently there is actually more than 2.4 billion gallons of (legacy) capacity in the US, though many of the legacy plants would not be competitive vs building greenfield capacity using newer technology and superior logistics.
5. Jet fuel. The scenario envisions expanding renewable jet fuel supply to 5.0 billion gallons. Currently US airlines consume around 15 billion gallons of jet fuel and renewable jet fuel blends in at 50 percent rate for the HEFA fuel spec — other renewable jet fuel developers are targeting 100% drop-in fuels.

Looking at the pathways

“And when you touch down you’ll find that it’s stranger than known…among those afraid of losing their ground.”

Let’s look at some items to consider in terms of these technologies.

Blend wall. 125 billion gallons of gasoline demand supports the blending to 15.2 billion gallons of isobutanol and 3 billion gallons of cellulosic (or legacy) ethanol, at blending rates of Bu16 and E10.

Ethanol, E15 blends and isobutanol. Not convinced that the entire ethanol industry will switch over to isobutanol? If not, think about E15 ethanol. Right now, 2001 and later models are EPA-approved for E15 (though automakers continue to resist E15 blends over warranty and legacy vehicle concerns).

By 2022, only 20 year old cars would be on the not-approved list. Similar to the situation today, where 1995+ models are approved from E10 ethanol — and there isn’t any meaningful debate about E10 blending.

But consider this. The same pathways that are opening up E15 ethanol would possibly open up Bu24 isobutanol. Making it a snap to distribute 36 billion gallons without changing out fuel pump or engine infrastructure.

Cellulosic ethanol. Not convinced that so much cellulosic ethanol capacity will be built? The capacity numbers get easier to reach, in fact, if cellulosic ethanol only reaches, say, 1.0 billion gallons by 2022 – because isobutanol blends at higher rates.

Jet fuel. Right now in the US, jet fuel is not incorporated into the Renewable Fuel Standard. To reach the RFS targets by any other means — given the declining gasoline pool — would require bigger growth in biodiesel, renewable diesel, ethanol or isobutanol greenfield capacity. The demand from these sectors is much weaker than the persistent demand signals from the aviation sector. What would have to happen is that the EPA would have to approve the pathway, and thereby allow jet fuel developers to produce RINs.

Biodiesel. To expand production to these levels, the biodiesel industry would need to continue efforts to get B10/B20/B99 approved by the OEMs.

How much capacity building?

The scenario envisions around 9 billion gallons in new capacity (3, cellulosic ethanol; 5, jet fuel; 1, biodiesel and renewable diesel). That’s roughly 1 billion gallons per year, or half the rate of construction during the 2000s ethanol boom.

The Bottom Line

Scenarios are scenarios and we’ll see in the real world how the numbers shake out. Yet it is true to say that the 36 billion gallon target can be achieved, even while bypassing a number of the known infrastructure bottlenecks where the petroleum and renewable fuel industries are at loggerheads.