Biofuels Moving Indiana Forward

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Ethanol Update

• Biofuels Moving Indiana Forward
• April 28, 2008

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Ethanol Promotion and Information Council (EPIC)

• EPICs Mission
• The Ethanol Promotion and Information Council
  (EPIC) is a non-profit alliance of industry
  leaders that have come together to grow consumer
  demand for ethanol energy through targeted
  marketing.
• EPICs Vision
• Establish and grow ethanols place in the global
  renewable energy market.

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U.S. Ethanol Production

• 147 Ethanol Plants in Operation (8.55BGPY)
• 61 Under Construction/10 Under Expansion (an
  additional 5.08BGPY)
• Total of 13.61BGPY
• A minimum of 6 cellulosic ethanol plants on the
  way

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E85

• Been in use since the early 1990s.
• Classified as an Alternative Fuel.
• Same storage handling characteristics as
  gasoline.
• Seasonally adjusted for cold-start issues.
• Requires special dispensing equipment.
• Requires special vehicle Flex-Fuel Vehicle
  (FFV).
• Reduction in energy content.
• Reduction in emissions and carbon footprint.

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Current Federal Legislation

• Energy Independence and Security Act of 2007
• VEETC.
• FFV labeling.
• Tax credit of 30 of the total cost of an
  alternative fuel system, up to a maximum credit
  of 30,000. 
• CAFE credit extension - incentives necessary to
  absorb the increased cost of production of a
  FFV. 
• A requirement that federal fleets purchase
  alternative fuel for use in their alternative
  fuel vehicles. 
• Grants to encourage the advancement of
  hybrid-flexible fuel vehicles. 

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Energy Independence and Security Act of 2007

• Increased Renewable Fuels Standard (RFS)
• 9BGPY in 2008
• 36BGPY in 2022
• Reaches maximum of 15BGPY in Conventional
  Biofuels in 2015
• Remainder is Advanced Cellulosic Biofuels.

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Energy Independence and Security Act of 2007

• Grants
• Authorizes 500M annually for FY08-15 for the
  production of advanced biofuels that have at
  least an 80 reduction in lifecycle GHG emissions
  relative to current fuels.
• Authorizes 25M annually for FY08-10 for RD and
  commercial application of biofuels production in
  states with low rates of ethanol and cellulosic
  ethanol production.
• Authorizes a 200M grant program for FY08-14 for
  the installation of refueling infrastructure for
  E85.

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Energy Independence and Security Act of 2007

• Biofuels Infrastructure
• Amends the Petroleum Marketing Practices Act to
  make it unlawful for a franchiser to prohibit a
  franchise from installing E85 or B20 tanks and
  pumps within the franchise agreement.
• Requires the Secretary of Energy to report to
  Congress on the market penetration of flex-fuel
  vehicles and on the feasibility of requiring fuel
  retailers to install E85 infrastructure.
• Requires the head of each federal agency to
  install at least one renewable fuel pump at each
  federal fleet refueling center by January 1,
  2010.

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Energy Independence and Security Act of 2007

• Enactment
• January 1, 2009
• Except for RFS Standard 9BGPY in 2008

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VEETC

• Volumetric Ethanol Excise Tax Credit
• .51/gallon for every pure gallon of ethanol
  blended.
• Credit expires in 2010.
• Eliminated highway trust fund issues.
• Payment within 20 days.
• Good for taxable/nontaxable.
• Eliminates AMT.

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Alternative Fuels Tax Credit

• Federal income tax credit.
• Covers up to 30, maximum of 30,000.
• Availability for non-taxable entities.

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Other Key Items

• CAFE Credits Incentives to automakers to
  produce flex-fuel vehicles.
• Federal Fleets Required to purchase alternative
  fuels for alternative fuel vehicles.
• Grants Encourage advancement of hybrid
  flex-fuel vehicles. Encourage more fuel
  efficient flex-fuel vehicles.

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Potential Federal Legislation

• CAFE Fine Monies.
• Increased Tax Credit or Grants
• Tax Credit for Ethanol Plants for Blending
  Equipment.
• Mandated FFV Production.

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Potential State Legislation

• BTU Equivalency.
• FFV Tax Credits.
• Infrastructure Tax Credits.
• Ethanol Standards.

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BTU Equivalency

• Due to lower fuel economy, vehicles that travel
  200 miles on E85 will use more fuel than on RUL,
  but both fuels are taxed the same.
• Legislation lowers the state motor fuel tax based
  on BTU equivalency of E85 to RUL.
• No loss of revenue to the state.

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FFV Tax Credits

• State tax credit for the purchase of a flex-fuel
  vehicle.
• Tied to E85 purchases.
• Proof of purchase for vehicle and fuel are
  submitted with tax filing.

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Infrastructure Tax Credits/Grants

• State tax credit (or grant) for the installation
  of E85.
• In most cases, this is in addition to the federal
  tax credit.

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Ethanol Standards

• A handful of states have passed ethanol
  standards, setting the minimum amount of ethanol
  to be blended in their state.
• This increases the distribution and location of
  ethanol storage, which allows for lower
  transportation costs for E85.

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Retails Sales Incentive

• Quarterly incentives based on gallons of E85 or
  biodiesel sales.
• Must be 10 of overall sales for E85, 2 of
  overall sales for biodiesel.

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Other Possible Sources

• Some ethanol producers have started funding
  infrastructure to get E85 stations open.
• Loans that are paid back as fuel is purchased.
• Grants
• Both require long-term contract.

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Additional Information

• Alternative Fuels and Advanced Vehicles Data
  Centers
• State Federal Incentives Laws
• www.eere.energy.gov/afdc/incentives_laws.html

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Public Relations

• Key Messages
• Ethanol is an American resource.
• Ethanol is an important part of the solution to
  our energy problems.
• Ethanol has clear environmental benefits.
• Ethanol is ready and available today.

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Public Relations

• The Big Three
• Food vs. Fuel
• Subsidies
• Water Consumption

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Food vs. Fuel

• Energy Prices number one! Many other factors
  also involved.
• Not using food grade corn, demand is stagnate.
• Increasing yields, both in ethanol plants/corn
  fields.
• Just use the starch, vitamins minerals remain.
• Cap of 15BGPY from corn.

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Subsidies

• VEETC cost of 4B.
• Ethanol Plants do not receive!
• Will likely be reduced.
• Almost all industries are subsidized somehow,
  petroleum industry has been for 100 years

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Water Consumption

• 50MGPY Plant
• Less water than an average 18-hole golf course.
• Less water than 200 average households.
• Same/Less than refining gasoline.
• Water usage is down 27 since 2001.
• Example Average Sunday newspaper takes 150
  gallons of water.

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Reality Check

• Ethanol saves consumers between .50 - 1/gallon,
  whether they use it or not.
• Consumers would pay an additional 200M/day for
  gasoline.
• This has no inclusion for all other factors and
  the increased price of oil.

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Questions?