US EPA sets renewable fuel standard for 2019

U.S. environmental regulators have established renewable fuel standards for 2019, calling for a 3% increase in renewable fuel volumes over 2018, but have continued to waive statutory requirements targeting even larger volumes of renewable fuel.

Congress created the Renewable Fuel Standard or RFS program through the Energy Policy Act of 2005, and expanded the program through the Energy Independence and Security Act of 2007. Administered by the U.S. Environmental Protection Agency, the RFS requires a certain volume of renewable fuel to be used in transportation (motor vehicles and jets) and heating. Refiners and importers of gasoline or diesel, along with other market participants like fuel producers and exporters, track and trade renewable fuel credits called Renewable Identification Numbers or RINs.

The RFS includes four categories of renewable fuel: cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. By statute, Congress prescribed specific volumes of these four categories of renewable fuel for each year through 2022, and required the EPA to set RFS volume requirements annually based on these statutory targets. The statute also allows the EPA Administrator to waive these volumetric requirements, based on a determination that implementation of the program is causing severe economic or environmental harm, or based on inadequate domestic supply.

On November 30, 2018, the EPA issued its final rule for the 2019 RFS program. The 2019 final rule sets the total U.S. renewable fuel volume requirements for 2019 at 19.92 billion gallons, including 4.92 billion gallons of advanced biofuel, 2.1 billion gallons of biomass-based diesel, and just 418 million gallons of cellulosic biofuel. The rule also sets a 2020 volume requirement for biomass-based diesel of 2.43 billion gallons.

The EPA noted that "the market has fallen well short of the statutory volumes for cellulosic biofuel, resulting in shortfalls in the advanced biofuel and total renewable fuel volumes." Based on this observation, EPA exercised its waiver authority to finalize the cellulosic biofuel volume requirement at the level EPA projects to be available for 2019. This is consistent with EPA's past practice, through which it has set the cellulosic biofuel requirement lower than the statutory volume for each year since 2010.

Hatteras Island power outage and response

North Carolina's Hatteras Island experienced a power outage last week when construction activity damaged two underground transmission cables serving the island.  While the damage is repaired, residents face mandatory power conservation rules and visitors have been evacuated.

Hatteras Island is a barrier island located in North Carolina's Outer Banks.  While the island is relatively far offshore, it is connected to the northern Outer Banks islands by the Bonner Bridge.  Hatteras Island's roughly 4,000 residents and tens of thousands more seasonal visitors are supplied electricity by Cape Hatteras Electric Cooperative, a member-owned, not-for-profit electric distribution cooperative.

According to the cooperative, on July 27 a contractor building a replacement for the Bonner Bridge "accidentally drove a steel casing through the cooperative’s transmission cables" at the south side of the bridge.  The cooperative says it is taking steps toward both temporary and permanent solutions. For now, it is using a permanent diesel generator in the village of Buxton as well as temporary backup diesels to provide power to the island and is "working to expand the temporary generation service on Hatteras Island in order to accommodate a staged reentry of visitors." Meanwhile, the cooperative is working to splice the damaged underground cable and to build a new overhead transmission line, so permanent transmission service can be restored.

Calling the incident an "unprecedented complete loss of power delivery to Hatteras Island," Dare County issued a mandatory evacuation order for all visitors to Hatteras Island effective July 29, citing "life safety issues from the loss of reliable electrical power on Hatteras Island and growing uncertainty as to when repairs to the main transmission line will be completed to enable restoration of full power to the island."  Estimates suggested over 10,000 visitors have been kept off Hatteras Island as a result of the evacuation order, with proper credentials required for reentry.

According to the county's website, a complete repair might take from one to two weeks.  The county notes that the on-island diesel generators "will only be able to run if load is at minimal levels and everyone is conserving." The county cites mandatory power and water conservation measures in effect, including a requirement to disconnect system circuit breakers for air conditioning systems and hot tub heaters.

Commercial fishing and solar energy

Commercial fishing businesses tend to consume significant amounts of energy, but may be able to offset their energy expenses by turning to solar panels and other distributed electric generation.

The winter fishing fleet of Northeast Harbor, Maine.

According to the National Marine Fisheries Service, the U.S. commercial fishing sector landed $5.3 billion in seafood last year.  Alaska led the nation in total catch value in 2011, landing $1.9 billion in fish and shellfish.  Massachusetts came in second at $570 million, with Maine coming in third at $426 million.

Catching this seafood comes at a price.  Diesel and other marine fuels account for a significant fraction of commercial fishermen's expenses.  Onshore, electricity powers stationary facilities like freezers, refrigerators and pumps for holding tanks, with seafood processing operations consuming even more power.

The location of many commercial fishing businesses -- typically located on the coast, often on a pier or wharf exposed to the sun and wind -- may create an opportunity for fishermen to offset their energy costs by producing their own electricity.  One Maine lobsterman recently added a 10-kilowatt solar array to his wharf in Harpswell. Funded in part by an $11,750 grant through the U.S. Department of Agriculture's Rural Energy for America Program, last month Potts Harbor Lobster added 44 solar panels to two roofs on the Reversing Falls Lobster wharf in South Harpswell.

In addition to USDA REAP grants, additional incentives are available that may shorten the payback period for distributed generation projects at commercial fishing facilities.  For example, Maine's net energy billing law allows consumers to use solar or other distributed generation to effectively spin their electricity meters backwards.  Consumers in almost every state can use similar net metering programs to sell excess power back to the grid, offsetting their electricity bill.  Other states, like Massachusetts and New Jersey, allow consumers to produce and sell solar renewable energy credits (sometimes called SRECs) from grid-connected solar photovoltaic panels.  These SREC sales can create a significant revenue stream for people and businesses who develop qualified renewable power projects.

Not every site may be well-suited for distributed generation projects.  Given relatively high capital costs for many small renewable power projects, payback periods may be too long for some businesses to make the investment.  However, as the cost of electric transmission increases across the country, the traditionally self-reliant fishing industry may increasingly turn to solar energy and other distributed generation technologies.

Does blending ethanol in transportation fuels lower costs?

While widespread drought has driven corn prices up in the U.S., pinching ethanol producers, debate has emerged about the economic impacts of blending corn-based ethanol into gasoline and diesel used as transportation fuel.

As local gas pumps may tell you, U.S. transportation fuels may contain ethanol.

Under the EPA's U.S. Renewable Fuel Standard program, transportation fuel sold in the United States must contain a certain amount of renewable fuel.  Corn is the feedstock for the vast bulk of the ethanol biofuel used to meet the renewable fuel standard.  Despite near-record levels of corn planting, drought across much of the country has led to crop reductions and high prices for corn.  At the same time, the demand for gasoline and diesel has not grown as it had been projected to do.  This slackening of demand comes from both increases in vehicle energy efficiency and decreases in fuel demand due to the economic slowdown.  Between higher feedstock costs and reduced product demand, many biofuel ethanol producers are struggling or failing to turn a profit.

Some policy questions surrounding the blending of corn ethanol into transportation fuel remain controversial.  One argument used to support the practice points to evidence that blending ethanol into gasoline and diesel reduces the cost of fuel.  A widely-cited study by Xiaodong Du and Dermot Hayes titled "The Impact of Ethanol Production on U.S. and Regional Gasoline Markets" found that over the period of January 2000 to December 2011, growth in ethanol production for fuel reduced wholesale gasoline prices by an average of $0.29 per gallon.  Looking at 2009 alone, they reported that the average effect across all regions increased to $1.09/gallon, with regional price suppression  impacts ranging from $0.73/gallon in the Gulf Coast to $1.69/gallon in the Midwest. 

Not so, according to a study released earlier this month by Christopher Knittel and Aaron Smith.  Their July 12, 2012 paper, Ethanol Production and Gasoline Prices: A Spurious Correlation, disputes many of the findings of Du and Hayes's research.  In Knittel and Smith's view, the previous researchers' results were "driven by implausible economic assumptions and spurious statistical correlations".  Like Du and Hayes, Knittel and Smith provide a detailed analysis of the "crack spread" and "crack ratio", measures of the margin associated with refining.  They challenge the accuracy of the previous study's results, arguing that "the empirical results are extremely sensitive to the empirical specification; however, empirical models that are most consistent with economic theory suggest effects that are near zero and statistically insignificant."

Which view is more accurate is a question that remains to be seen.  The answer may have implications for the future course of U.S. policy on blending corn-based ethanol into gasoline and diesel fuels used for transportation.

Oil, from crude to fuels and chemicals

Petroleum - what we often think of as oil - powers a large sector of the world economy.  Crude oil, a naturally-occurring mix of substances produced by ancient life and transformed by time and geological forces, lies trapped beneath soil, rock, and the sea floor.  When captured and refined, the crude oil can be transformed into gasoline and diesel, but also into a wide variety of other fuels and chemicals.

In the U.S., crude oil is typically quantified in a 42-gallon unit known as the barrel.  While this bears some historic tie to actual barrels of oil, crude oil today is seldom packed in actual 42-gallon barrels, more typically being shipped in large seagoing oil tankers or pipelines.

At a refinery, each of the components of the crude oil mix is separated.  Some are converted from heavy, low-valued chemicals into lighter, higher-valued products like gasoline.  Processes like cracking, coking, and alkylation allow the production of more exotic petroleum derivatives.

From 42 gallons of crude oils, refineries can produce about 45 gallons of refined petroleum products. Typically, these might include:

• 19 gallons of gasoline
• 10 gallons of diesel
• 4 gallons of jet fuel
• 2 gallons of liquefied petroleum gases (propane, butane, etc.)
• 1 gallon of other distillates (heating oil)
• 2 gallons of residual fuel oil
• 7 gallons of other products

Most of this increase in total product volume comes as different fractions of the petroleum mix are distilled and transformed; the U.S. Energy Information Administration has described the increased volume after refining as "similar to what happens to popcorn, which gets bigger after it's popped".

Because each source of crude oil contains a different mix of hydrocarbons and other chemicals, the refining process yields different mixes of products for each type of crude. The demand for these products drives oil producers' decisions about where to drill and produce oil.

Matinicus Island energy options

Residents of remote islands often face energy costs that are higher than those on the mainland.  This can be for many reasons, most of which stem from islands' relatively small populations and remote locations.

Islands far enough offshore are often not connected to the mainland electric grid via submarine cables.  If the island is to have its own electric grid, it must develop both generation and distribution wires.  Some island communities are considering renewable energy resources like wind and solar, but for the most part diesel has fueled the bulk of electric generation on remote islands.  Diesel can be expensive on the mainland, and is even more expensive when it needs to be shipped out to the island for consumption.

The Maine island of Matinicus fits this model.  Located over 20 miles offshore, the 740-acre island is home to about 20 year-round residents and about 200 summer residents.  Since 1965, the Matinicus Plantation Electric Company has provided electric utility service to islanders.  The Matinicus utility is consumer-owned, meaning it is owned wholly by its consumers (as opposed to outside investors).  Electric generation is provided by a set of diesel units: two rated at 45 kW and a third rated at 65 kW.  The utility also maintains a 150 kW backup generator for emergencies.  The company does not serve the nearby island of Criehaven, which lacks a centralized electric utility system.

How do the circumstances of Matinicus Island affect energy costs?  In 2010, the Matinicus utility sold 225,000 kWh of electricity at an average rate of 65.2 cents per kWh, or about 4 times the average price residential customers pay on the mainland.  Producing this power required burning a fair amount of diesel - about 40,000 gallons per year.  Many islanders pay about $200 per month for electricity.

The desire to cut costs and enhance the local environment have led to several proposals to switch Matinicus to renewable resources in recent decades.  Some commenters have suggested Matinicus could pursue an island-based wind project as Vinalhaven did, while others view the site as inappropriate.  Others have suggested floating offshore wind could be a match for Matinicus; next summer's test installation of a floating offshore wind turbine off Monhegan could help us understand the impacts of such a project near Matinicus.  Other renewable ocean resources, like tidal energy, could one day play a role in the island's energy portfolio.  For any such project to succeed, it will have to be both cost-effective and palatable to island residents.  Until then, residents and visitors alike can look to the island's diesel generators as the primary source of electricity.

National park energy use and strategies

Small-scale alternative energy resources play an increasing role in how the U.S. National Park Service manages its lands, budget, and energy usage.

Solar panels line the roof of the comfort station at Devil's Garden Campground in Arches National Park, Utah.

The United States National Park Service manages about 84.4 million acres of land in the form of national parks, national monuments, and other historic and conservation properties.  While much of the Park Service's holdings are preserved as undeveloped backcountry properties, the NPS provides visitor amenities like lodging, food and other concession services.

The remote locations of many Park Service sites make traditional energy resources expensive and challenging.  Ranger stations and campground bathrooms may be located far from the traditional utility electric grid.  Diesel generators can be used if road access to the site is possible, but have drawbacks: fuel is expensive, and generators can be loud, produce emissions, and may be out of character for a particular national park site.

In some cases, the Park Service is turning away from traditional energy resources to alternative and distributed energy resources like solar power.  In fact, the Park Service has deployed distributed solar photovoltaic generation for over a decade.

Consider the example of Devil's Garden Campground in Arches National Park in Utah.  While the campground is relatively remote (located at the end of a 30-mile dead-end road inside the park), Park Service facilities in the campground need electricity.  These facilities include two campground hosts, three bathrooms, an amphitheater and a ranger station.

Historically, electricity for the campground facilities came from on-site diesel generators.  These units ran 24 hours a day, consuming over 6,400 gallons of fuel per year.  Producing electricity from diesel is seldom cost-competitive today; generating electricity from diesel at Devil's Garden Campground cost the National Park Service over $22,400 per year.  This meant that the Park Service was generating electricity for a price of 28 cents per kilowatt-hour (kWh), about four times higher than the current average Utah price.

(As expensive as this is, it's still about a third of the cost of diesel-generated electricity on the remote Maine island of Monhegan.  In 2010, electricity on Monhegan cost an average of 74.51 cents per kWh.)

As early as 1995, the Park Service joined with the state of Utah to develop four photovoltaic/diesel hybrid systems at Devil's Garden Campground.  Each system is composed of a 1.4 kilowatt (kW) tracking array, a 4 kW inverter and a 40 kWh battery bank.  Diesel units remain on-site and ready, but now run less than 4 hours per day.  This cut the Park Service's annual operation and maintenance costs for the diesel generators from $22,400 to $10,000.  The project dramatically reduced the noise level in the campground, and significantly cut the diesels' emissions of carbon dioxide, carbon monoxide, nitrogen oxides, and sulfur oxides.

As this example shows, sites that are already off the grid can be good candidates for small-scale distributed generation projects relying on alternative technologies like solar.  Depending on project economics and other objectives (like the Park Service's sustainability initiative, improving noise levels and air quality, or education), replacing diesel with renewable energy -- and making energy efficiency improvements -- can make sense.

Other units in the National Park Service system are following the Arches example by turning to distributed renewable energy and energy efficiency.  In 2011, Yosemite National Park installed a 672 kilowatt grid-tied solar array.  The $5.8 million Yosemite project is bigger in scale (the Park Service's largest solar energy project) and is tied to the utility electric grid, but represents a similar strategy to that used in Arches and throughout the Park Service.

June 30, 2011 - court lets Monhegan offshore wind site move forward

A court has cleared the waters off the Maine island of Monhegan for the development of an offshore wind pilot project.  Back in December 2009, the Maine Ocean Energy Task Force selected Monhegan and two other sites -- Boon Island and Damariscove Island -- as test sites for offshore wind development.  At the Monhegan site, the DeepCWind Consortium, a group led by the University of Maine, plans to develop a scale-model floating platform and test turbine about 2 miles south of the island.

Connecting islanders to the mainland, the Sea Queen provides mailboat and passenger service to the Cranberry Isles.

Monhegan is a gem of an island.  Situated about 12 nautical miles offshore, the island supports a year-round population of about 75, with summers bringing about 6,000 visitors and summer residents ashore.  Monhegan is not connected to the mainland by electric transmission lines, with most of the electricity on the island coming from a 300 kW diesel generator.  To many,  the combination of community and ocean energy resources makes Monhegan an attractive test site for offshore wind.

The project is not without its opponents, though a court ruling last week has cleared at least one obstacle to project development.  In January 2010, shortly after the Monhegan site was selected, an environmental activist filed a lawsuit against the Maine Department of Conservation, arguing that the Department had illegally approved the Monhegan site without considering the impact of the project on birds, the environment, and the aesthetics of the project as viewed from the island.  The activist claimed to have legal standing to challenge the approval on grounds including a constitutional right to practice religion through conservation stewardship.  Last week, after reviewing the evidence upon which the Department made its decision -- 359 pages of documents assessing the impacts of the project -- Superior Court Justice Jeffrey Hjelm issued an order finding that although the activist did have standing to challenge the Department's action, the Department's decision complied with the law and is valid.

This ruling helps clear the way for the Monhegan project to move forward, but there are still more steps to be taken, including both engineering and regulatory hurdles to pass.  DeepCWind anticipates installing the first one-third scale test platform in 2012.

2/17/10

More information on the DOE nuclear loan guarantees: the US will guarantee $8.3 billion of the $14 billion Plant Vogtle development spearheaded by the Southern Company -- and the developers are still saying they are exposed to risks from private financing for the rest. DOE is reportedly looking at three more sites: Unistar's third reactor at Calvert Cliffs in Maryland; a troubled San Antonio, Texas project, facing rising cost estimates and a lawsuit filed by San Antonio's municipal utility against its partner in the project, NRG; and the joint Scana Corporation and Santee Cooper proposal near Jenkinsville, S.C.

An interesting take by Michael Northrup: there is a clean energy gold rush, but the US is being left behind. We have only one out of the top 10 wind manufacturers (General Electric) and only two of the top 10 solar manufacturers (First Solar and Sun Power, both of whom actually make stuff overseas). An interesting tie to Habib Dagher's vision that the opportunities for renewables lie not only in having installed capacity, but in manufacturing the equipment needed for development. Under this model, your production is not limited by your local demand, but rather the global market -- meaning we can import dollars into the country (or our states) from abroad, resulting in a net increase of the pie.

Solar news: NV Energy and NextLight Renewable Power, LLC announced a 25-year power purchase agreement for power from NextLight's Silver State Solar Power photovoltaic plant. This 50 MW project located near Primm, NV should see groundbreak by the end of 2010, employing 230 construction workers and coming online in May 2011. The specific terms of the power purchase agreement were not disclosed, but we do know that the long-term agreement stems from NV Energy's 2009 Request for Proposals for renewable energy and requires approval by Nevada's Public Utilities Commission.

In Maryland, some are pushing for property-assessed energy efficiency loans, and increased incentives for solar. Maine faces a similar proposal in the form of LD 1717.

In Connecticut, U.S. Sen. Chris Dodd calls for rebuilding the Kleen Energy plant that recently exploded while under construction.

$14 million in stimulus grants to Maine ports (Searsport, Eastport, Portland), stated as supporting "green cargo" like wind turbine parts.

Diesel from algae? DARPA says yes, and that it will be cost-competitive with true fossil fuel.

$9 million loan program to retool the old Ethan Allen furniture factory in Island Pond, Vermont, into a pellet factory.