Study sees 33 percent jump in biofuels use by 2030

2/11/2009

SIOUX FALLS, S.D. - The United States could produce enough ethanol to displace nearly a third of all gasoline use by 2030, but gas would have to cost more than it does today for the plan to work, according to a study released yesterday by Sandia National Laboratories and General Motors Corp.

The researchers found that annual ethanol production from plant waste and energy crops could reach 90 billion gallons by that date, with 75 billion gallons coming from cellulosic feedstocks such as switchgrass, corn stover, wheat straw, and woody crops.

Cole Gustafson, a biofuels economist at North Dakota State University in Fargo, N.D., said the 90 billion figure is the most aggressive he's heard to date, far surpassing a federal mandate calling for 36 billion gallons of renewable fuel to be blended into gasoline by 2022.

"I really question if we can even make that," he said. "This technology has been very slow to evolve."

The government would need to protect the industry from low-priced competitors.

"What we end up finding is that we're going to have some significant challenges with regard to competing with very low priced petroleum products," said Art Pontau, Sandia's deputy director of combustion and industrial technologies.

The "seed to station" floor cost of ethanol without taxes is $1.50 per gallon, and gasoline will undercut it if it's priced below $2.25 per gallon without taxes, or $2.65 at the pump, the study found.

The average national retail cost for a gallon of gasoline yesterday was about $1.93. One year ago at this time a gallon cost about $2.95. The cost of E85 ethanol was $1.655 per gallon.

Meanwhile, Agriculture Secretary Tom Vilsack said the U.S. Environmental Protection Agency should raise the amount of ethanol it requires to be blended with gasoline in order to help the U.S. ethanol industry.

The U.S. government currently sets the ethanol-to-gasoline blend rate at 10 percent. Ethanol groups have complained the cap is stifling development and growth of the alternative fuel industry. They have suggested rates of 15 percent, or even 20 percent.

Ultimately, the EPA must decide whether to change the blend rate.

The Energy Department cautioned more studies were needed to determine whether higher blends of ethanol could be used.