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Ethanol industry pins hope on panel of experts

The nation's corn ethanol industry took a hit on Thursday when the California Air Resources Board (CARB) approved a system of regulating greenhouse gases in fuels that makes gasoline look slightly greener than ethanol.

Even though only one board member voted against it, nearly half of the 10 board members said they had doubts about the accuracy of computer modeling that makes ethanol look worse because of its indirect effects. CARB assumes that growing corn in the Midwest to make ethanol leads to plowing up and burning grasslands and jungles elsewhere to grow more food. When the carbon dioxide released by thoe land use changes is added in to ethanol's "carbon intensity value," gasoline looks slightly better.

So the board moved up a review of indirect fuel effects, from January 2012 to January 2011, the same year the rules for California’s low carbon fuel standard kick in.

Geoff Cooper, vice president for research with the Renewable Fuels Association, told Agriculture Online Friday that the ethanol industry will do all it can to make sure that process treats it fairly.

"We will most certainly be participating in that working group and recommending other experts to participate in that working group with the intent that they will have a more fair and balanced assessment of all fuels," Cooper said.

Cooper and most other industry representatives who testified before CARB Thursday said their industry was unfairly singled out for indirect effects. CARB's rating of fuels doesn't include any indirect effects for gasoline, electricity, hydrogen and other vehicle fuels. The result is that Midwest ethanol’s average "carbon intensity value" is 99.4 grams of carbon dioxide equivalent in every megajoule. (That's a measure of energy that's about the same as the BTUs in a little more than a tenth of a gallons of ethanol).

CARB gives gasoline a carbon intensity value of 95.86, slightly lower. Partly because the engines that use them are more efficient, it rates average electricity for vehicles at only 41. Hydrogen made from renewable feedstocks gets an even lower 33. Natural gas has a value of about 75, and only 12.5 if it comes from a landfill.

Those fuels are the real winners in yesterday's vote, Cooper said. "It's clear that the board, by adopting this regulation with its inherent bias against biofuels has chosen electricity, natural gas and hydrogen, even though these fuels aren't available and aren't likely to be in the next several years."

Cooper wouldn't give an answer when asked if the ethanol industry is likely to bring a lawsuit against CARB for what it views as unfair treatment.

"We are currently evaluating several potential options to improve the regulation and insure that corn ethanol and all biofuels are fairly treated," he said.

Mark Stowers, vice president for research and development for the Sioux Falls, South Dakota-based ethanol company, POET, also tried to look on the bright side.

"We're pleased to see that the board has included a provision that allows for the examination of indirect effects of all pathways (for making different types of fuel)," he said.

Even though CARB is counting on cellulosic ethanol to play a role in meeting California's ethanol needs, Stowers worries that the new rules could hurt his own company's move into that type of ethanol. The low carbon fuel standard rules begin to take effect in 2011, the same year when POET plans to ramp up to commercial production of cellulosic ethanol made from corn cobs at its plant in Emmetsburg, Iowa.

"We're hoping what they did will not dampen investment in cellulosic ethanol," he said.

Another threat to Midwest ethanol is that CARB gives a slightly better rating for sugar cane ethanol made in Brazil, putting its carbon intensity at 73.4.

Apart from Thursday's adoption of a low carbon fuel standard, the state of California has already revised its rules for the amount of ethanol to be blended into gasoline to meet clean air requirements. That could take ethanol blends from about 6% today to 10% ethanol next year (before the Low Carbon Fuel Standard takes effect). After Thursday's vote by CARB, Cooper of the RFA said, "I don't know where that other ethanol will come from. I have my suspicions it will come from Brazil."

The nation's corn ethanol industry took a hit on Thursday when the California Air Resources Board (CARB) approved a system of regulating greenhouse gases in fuels that makes gasoline look slightly greener than ethanol.

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