Hello friends! Here’s my monthly take on five most interesting developments in fuels and vehicles trends. What I try to do each month is select stories, studies and other interesting items that you may not have seen elsewhere but that really represents an important issue or trend that I think you would want to know about. Or, I try to poke behind the hype to provide a deeper understanding of what’s happening. Items I selected this month include:
1. ICCT: Potential Biomass-Based Diesel Production in the United States by 2032 — One of the biggest issues I’ve been working on in my consulting practice over the last year is related to the scale up of renewable diesel (RD also known as hydrogenated vegetable oil or HVO). Who is investing? Where are the facilities going to be and what are their capacities? What low carbon intense (CI) feedstocks are available and what is their likely supply and demand situation over the next 10+ years? So I thought clients and blog readers alike would be interested in this new analysis from the International Council on Clean Transportation on the feedstock issue that it hopes U.S. EPA will consider in setting future biomass-based diesel (BBD) targets under the Renewable Fuels Standard (RFS).
ICCT found in this analysis that the total potential BBD production from the seven most common feedstocks for biomass-based diesel production in the U.S. is projected to increase by about 16 million gallons, or 1% a year from 2018 to 2032, according to the ICCT. The amount of BBD that could be produced from domestically available fats, oils, and greases will be 1.84 billion gallons in 2020, increasing to 1.97 billion gallons in 2032, a 13% increase compared with 2018. That’s far below planned capacity for RD right now, which I peg at about 5-6 billion gallons at least. I consider that a conservative estimate.
The projected volume in 2032 of 1.97 billion gallons of BBD that could be produced from domestically available feedstocks is even smaller than the 2020 and 2021 BBD obligation of 2.43 billion gallons specified by the EPA. The gap between BBD availability and the RFS-driven volumes might be even higher as additional BBD could be needed to meet the advanced biofuel obligation, reflecting pressure from the ethanol blend wall. Continued increases in BBD and advanced biofuel volume obligations are likely to add pressure to domestic BBD feedstock markets, leading to price increases and feedstock switching.
Potential BBD production from the estimated feedstock availability of FOGs
(million gallons biodiesel equivalent)
Source: ICCT, February 2020
The ICCT notes that overall impact of higher obligations could thus result in significant GHG emissions from the production of low-cost substitute feedstocks. Furthermore, obligated parties in the U.S. would need to increase imports of BBD feedstocks, or BBD, or both to meet higher obligations. Thus, setting BBD volumes low would enable RFS to meet its stated intention of reducing GHG emissions and improving national energy security.
Feedstock Inputs to Biodiesel Production in the U.S.
Source: ICCT, February 2020
Key findings for each feedstock follow:
2. Euractiv: EU Announces ‘Clean Hydrogen Alliance’ for Launch in the Summer — As part of its Industrial Strategy for Europe, the EU Commission plans to create a Clean Hydrogen Alliance which will kick off this summer, Euractiv notes in this article. Grounded in the already announced European New Green Deal, the industrial strategy seeks to:
The Clean Hydrogen Alliance will bring investors together with governmental, institutional and industrial partners. The Alliance will build on existing work to identify technology needs, investment opportunities and regulatory barriers and enablers. It will be modelled on the European Battery Alliance, which brought together more than 200 companies, national governments and research organizations around battery manufacturing. Euractiv notes the Commission’s principal adviser on energy, Tudor Constantinescu, said “hydrogen may be a missing link in the energy transition” because it can help decarbonize process industries and heavy-duty transport: aviation, maritime and long-haul trucking. Meantime, Germany is planning its own hydrogen strategy, and Portugal has announced it will develop a hydrogen target for transport.
3. U.S. News & World Report: Ethanol and Electric Vehicle Advocates Merging on Fuel Plan — Biofuels, EV, auto, agriculture, NGOs and other advocates have been meeting for the last couple of years on the potential for a Midwest Clean Fuels Standard (CFS). This article details those discussions and notes that CFS legislation could be introduced in Midwest states in 2021 legislative sessions. Minnesota has a governor-appointed biofuels council exploring how to expand biofuels use while increasing carbon efficiency. The article notes that the Great Plains Institute, which facilitated the discussions, released a paper recently on the CFS. Principles for the CFS include the following:
This could be a game-changer for the struggling biofuels industries, provide a boost for electrification and renewable energy and opportunities for oil companies that are looking for investments to decarbonize. The collaboration here among these industries is important and so is the inclusive vision. It’s what the federal government, through the Congress, should be doing but is not. If the federal government continues to fail to lead, then it is to the states and cities to figure it out. And that’s what they are doing.
Meantime, Oregon’s governor issued an executive order that would, among other things, double the state’s Clean Fuel Standard. Read more about that here.
4. Science Alert: Scientists Find a Way to Make Hydrogen Fuel Production 25x More Efficient — Japanese scientists have found a way to efficiently produce hydrogen fuel by using rust and a light source, this article notes. The set-up uses just a few basic ingredients: light from a mercury-xenon lamp, a solution of water and methanol, and a type of rust (or iron oxide) called α-FeOOH. In a new study, researchers have outlined how this method yields 25 times more hydrogen than existing techniques that use titanium dioxide catalysts. By swapping titanium with rust, the hydrogen gas generated seemed to be blocked from recoupling with oxygen, making the separation of the elements easier and reducing the risk of explosion at the same time.
5. Horizon: Why Raising the Alcohol Content of Europe’s Fuels Could Reduce Carbon Emissions — The European Committee for Standardization (CEN) commissioned research looking at the costs and benefits of introducing E20, according to this article. The project found that all vehicles coming into the market and those since 2011 can handle E20. Under the EU’s Renewable Energy Directive, 10% of the fuel used in transport will need to come from renewable sources such as biofuel by the end of 2020. The 2018 revision of this directive (REDII) set a target of 14% renewable energy use in all transport by 2030. Most member states allow E5 blends, but a few have moved to E10, most recently Denmark, Hungary, Lithuania and Slovakia.
The researchers also estimated that if all 28 EU countries (the UK was still part of the EU at the time of the study) adopted E20, it could reduce GHG emissions by the equivalent of 25.4Mt (megatons) of CO2 – about 8.2% of the current emissions from gasoline in the EU. They estimated that further savings could be made if the fuel’s petrol component had a higher-octane rating of 102 – most fuel on sale today has an octane rating of 95. Yes, you read that right – 102 octane. Kind of interesting considering the stall out of discussions on 95 RON in the U.S.
What I’m Also Reading:
Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.