Biofuels and the Future of Transportation | Episode 22

  March 20, 2021

While there's no doubt that electric vehicles will have a progressively larger role in the future of transportation and in reaching the goal of decarbonizing transportation, is it the only solution? Conventional corn and conventional corn-based ethanol production has 46% smaller carbon footprint than conventional gasoline and is able to use today's infrastructure. What role will biofuels play going forward? We invited friends from the Renewable Fuels Association to provide an update on the biofuels market and to discuss the future role biofuels could play in the future of transportation.

Transcript

John Eichberger:
Hey everybody. Welcome to Carpool Chats. I'm John Eichberger with the Fuels Institute. Today, we're going to be talking about something that's so vitally important but sometimes gets lost in the noise of discussion with the future of transportation. That is the role of biofuels and how we're going to address our liquid fuels market going forward. I'm going to be joined today by Troy Bredenkamp and Cassie Mullen from the Renewable Fuels Association. Troy, Cassie, thank you guys very much for joining us on Carpool Chats. How you doing?

Cassie Mullen:
Good. How are you, John? Thanks for having us.

Troy Bredenkamp: We're good, John. Thanks for having us.

John Eichberger:
It's great to have you guys here. I'm sorry we weren't all able to get together at the National Ethanol Conference this year. That's always one of the highlights of my year, getting to see all my old friends from the ethanol industry. I'm really glad you guys were able to join us today. I want to start off with my overall thinking and then get you guys to weigh in. All the hype, all the noise, all the advocacy seems to be electrification. We have to decarbonize the transportation space. We got to go electric.

John Eichberger:
Now, I'm one of those who believes electric vehicles are going to have a huge role in the future of our transportation space, but I don't believe they are the be-all end-all and the only solution. I think we need to do something broader than that. We need to do a lot more. I really think that is the opportunity in the liquid fuel space for biofuels to kick in. Troy, I'll kick it over to you first. I say that, what's your initial reaction?

Troy Bredenkamp:
I'd say you're absolutely correct, on all accounts really. I mean, EVs have a huge future in the light duty vehicle market moving forward. I've spent the last two months in Washington, DC, and I can tell you, your assessment is correct. Everyone is thinking electric vehicles, but what they're not really taking into account is the timeframe that it's going to take to get you to wherever they think we need to be from an electric vehicle perspective.

Troy Bredenkamp:
I think Cassie and I and the Renewable Fuels Association would want to remind people we are a biofuel that is right here right now. We haven't coined it yet, right, Cassie?

Cassie Mullen:
Right.

Troy Bredenkamp:
But we are starting to say the term we are the right fuel right now, because we truly are. We just had a study from researcher from Harvard and Tufts University that said, right now, conventional corn and conventional corn-based ethanol production has 46% smaller carbon footprint than conventional gasoline. That means we're almost at 50% reduction today. Meaning that if we're using more and more ethanol in today's fuel market, using today's infrastructure, using today's cars, we could be doing a lot more for the environment.

Troy Bredenkamp:
If the issue truly is decarbonization, we think we're going to be part of that future for years to come and we could be part of that future right now. That's what we're going to be pushing in Washington, DC.

John Eichberger:
That's one of the things I've been saying, Cassie. I mean, even if the most aggressive forecast for electric vehicle adoption comes to fruition, which I think can't be done without government mandates, and that's a 60% sale of new light duty vehicles in 2040 would be plugin. That only equates to 27% fleet turnover by then. We're going to be selling combustion engines and burning liquid fuels for 50 to 60 years to come. What is the best way we can leverage ethanol in the fuel supply to address the carbon intensity that Troy just mentioned?

John Eichberger:
I mean, we do have some infrastructure limitations that we're starting to overcome them, but what is the right path to be able to leverage the carbon intensity benefits of ethanol as effectively as possible?

Cassie Mullen:
Well, and by the way, I want to say first, thank you for all the work you've done on these studies, because we've always been given a nice-

John Eichberger:
I hear support behind you on that too.

Cassie Mullen:
My dogs are here and they want to weigh in as well.

John Eichberger:
Hey, we're all living at home.

Cassie Mullen:
Again, thank you for all you've done in this arena, because I feel like we've always gotten the fair shake that we deserve in that. That's not always the case with ethanol when it comes to these other topics. Thank you for that first and foremost. I think we're going in the right direction. I think that all the studies that have been done on infrastructure and all of the information that's come out over the last five years, that helps retailers to understand the compatibility of their equipment, I think that's a huge step forward.

Cassie Mullen:
Certainly, grant programs and financial support programs didn't hurt anything. I'm hoping that we have some more of those on the horizon, but I think mostly it's the willingness to adopt the equipment that's out there now. That just makes this argument that much easier for us. Most people don't realize that since 2008, the largest majority of dispensers out there are compatible for E25. That's a really big number, right? That's from Gilbarco and Wayne.

Cassie Mullen:
That's not us just happy they said it. That's their words. Tanks and pipe and all that, yeah, there's variance but over 30 years people have said this equipment is good to go. Now, I never rest on that. I tell retailers, the thing you need to do is individually assess your site and make all of the necessary changes, all of them. Right now we have a really, really strong infrastructure, and so I think just continue programs with funding and just getting the awareness out there that the compatibility is there right now in large part.

John Eichberger:
Well, this is the type of conversation we've always needed to have. I remember years and years ago when I was a lobbyist, and I'm a recovering lobbyist now, that I remember sitting down with your organization and being told, "John, you're so negative. You keep coming up with all these hurdles." My response was, "I'm not creating the hurdles. They're there and we need to know where they are to overcome them." What we've done in the last 15 years is we've overcome a lot of them.

John Eichberger:
Troy, I'd like to understand, what's the consumer reaction? Because we still have some pockets of the country, "Oh, ethanol is bad." Some mechanics out there going, "Well, you must use ethanol when something goes wrong with your car." I mean, they're such old lines that really aren't relevant anymore. What has been the consumer reaction that you've seen when you start seeing the growth of E15 in the market, opportunities for maybe mid-level ethanol in certain markets? I mean, how do we make sure the customer embraces this as well?

Troy Bredenkamp:
I think we have very good data that shows over time people really come around to liking ethanol and higher blends. RFA has been doing benchmark polling for years. We have done focus group testing for years. What is interesting, John, is that when you get a moment and you get some time and you can explain to them what you mean by biofuels or what you mean by ethanol and the two or three key points of better for the environment, renewable, American-made, you can start to get through to them.

Troy Bredenkamp:
It is easily two-thirds of the consumer out there becomes very supportive and embraces these higher blends of ethanol. That is I think, an area to start. Then you add to that, we've now started to do some benchmark testing on low-carbon fuel standard. Again, once they get a basic understanding as to what that would entail, again, two-thirds of America becomes pretty supportive of some kind of a lowering carbon or decarbonization concept moving forward. Here's the most interesting question we've asked lately.

Troy Bredenkamp:
We asked the question of fueling options, and this is a question we just added in, in the last month and a half to our benchmark polling. Should America have fueling options when it comes to a choice of fuel at the pump, or how they operate their vehicle? We gave them the options of electricity, diesel, gasoline, higher blends of ethanol. 86% of those consumers said that they want fueling options far into the future. I think that's a message that needs to start to make sense and be shared with not only policymakers, but also auto manufacturers.

Troy Bredenkamp:
There seems to be this ... You're right. There's this end run right down to EVs and we're going to make all EVs by a time certain. I'm not sure they're asking the consumer what they want because our polling data says that the consumer actually wants an option for fueling. Now, maybe that's even in an EV platform, a fueling option, because I think we have a future there when it comes to fuel cell technology, all kinds of things that biofuels could do to play a role down the road, even in an EV platform. But the consumer wants options and I think that everyone should be paying attention to that.

John Eichberger:
Now, I'm a big opponent of putting all your eggs in one basket. I mean, if we're saying EV is the only solution, then that negates so many other opportunities. I mean, imagine a situation where you can have a high octane, mid-level ethanol blend in a compatible engine, paired up with a highly efficient hybrid technology. I mean, maybe that's the direction to go. Then you don't have as much infrastructure requirements.

John Eichberger:
I mean, there are just so many mixtures of options available to us that if we get ourselves locked into one mindset, I really think we're going to miss the boat on things that we can do that not only protect the environment, reduce our carbon intensity, but also benefit the consumer. That's the crux. Cassie, I want to turn over to you because Troy brought up the idea of policy and LCFS. When RFS2 was enacted in 2007, it was really a let's protect American energy security, let's support our farmers.

John Eichberger:
It wasn't so much about carbon at the time. The conversation has changed dramatically today. As we close towards the end of the statutory volume requirements of the RFS program, and it gets prepared to go over to EPA for management, I know Congress is thinking about it. I keep hearing LCFS pop up as a possible national model. What is RFA's thoughts in terms of what is the future of federal biofuels' policy going to look like and what it should look like going forward?

Cassie Mullen:
Well, you spoke to the LCFS and this is a real hot topic right now because we've seen just such success in California with it, right? If you look at the amount of stations that increased last year from E85 standpoint, California once again is the opposite of everybody else where they're growing by leaps and bounds. The LCFS certainly helps that, right? This is a very important topic that we're having. Our industry is really diving into what does a national LCFS program look like or a broader LCFS program rather.

Cassie Mullen:
They're looking at other things like naphtha and just different ways that we can just get to a higher level than we are right now. Those success stories like we're seeing in California, I mean, they have to be a part of the conversation. I think they will be moving forward. I think that everybody is trying to figure out a way that we can go on a broader level and having that data is just so impactful for our cause moving forward.

Cassie Mullen:
I'm sure Troy has something else to add to this because he's the guy on the Hill all the time, but...

Troy Bredenkamp:
No, no. Yeah. It's-

John Eichberger:
Troy, what do you think?

Troy Bredenkamp:
Well, it's true. I mean, Cassie is right. We've spent an inordinate amount of time on low carbon and I think we need to, because I think that's where the rubber is going to hit the road moving forward. The renewable fuel standard has been a very good policy for the ethanol industry for 15 years now, since RFS1 and it's going to continue to play a pivotal role. But I think we now need to look at the situation in Congress, the leadership makeup. We have a new administration.

Troy Bredenkamp:
We need to realize that there's an opportunity here I think for biofuels and in particular, lower carbonating ethanol, to play a huge role in whatever comes forward from a public policy perspective. California, as Cassie said, they're adding tanks. They're adding E85 infrastructure. They're adding ... Well, not E15 yet, but we hope to get there soon. They are using more ethanol than any other state in the country.

Troy Bredenkamp:
I think there's a lot of takeaways from California that could be implemented, maybe not everything, but certainly there are some pluses to their program that could be implemented from a national low-carbon fuel standard perspective. We're definitely going to see a bill. We're expecting a bill probably from House Energy and Commerce Committee later this spring that is going to be some sort of a pretty macro climate change policy that will include, we hope, some kind of a national low-carbon fuel standard.

Troy Bredenkamp:
When it does, we want to make sure that ethanol plays a huge role in that, because again, we think we are a fuel that could be used right now to have a huge impact. Here's something else, John. We are actually looking at ethanol in the future that could not just be net zero, but could actually go negative. People don't understand that term, but we're looking at improvements in corn planting and corn production. We're looking at plant enhancements where we are becoming more and more efficient.

Troy Bredenkamp:
We're looking at carbon sequestration at the ethanol plant itself. If that was to really take hold, now we're talking about knocking another 25 to 30 points off of that carbon intensity score really quick. Then with corn practices being improved, we're actually not just net zero. We're sequestering carbon for every gallon that is used. I don't know of another fuel source out there, electric or otherwise that can make that kind of a claim. That's why we're pretty excited about where our future might be.

John Eichberger:
Well, I love hearing you say that, but there's also evidence that things move slowly. When I was up on Capitol Hill as a legislative aid to an Iowa congressman, being the advocate for ethanol at the time, carbon sequestration was like this Holy Grail of environmental achievements. To hear that 22 years later, we're there and we're starting to see that manifest itself in real-world marketability is fascinating.

Troy Bredenkamp:
Yeah. Well, and I think that's where we're headed. I think when you're looking at policy that seems to be coming to the forefront in Washington, DC, there does tend to be this thought of something being centered around carbon, being centered around a market-based carbon solution. I think when that happens, we're going to see that sequestration opportunities really present itself.

Troy Bredenkamp:
As low-carbon fuel standards get adopted state by state, like California, or even nationally, that's going to really set that market that will drive that technology, including in our sector. It's going to be nothing but good for ethanol producers nationwide.

John Eichberger:
Yeah. Cassie, I want to go back to something you mentioned. You discuss the success of E85 in California and it has me scratching my head a little bit because the CAFE credit for flex-fuel vehicles expired two years ago and I saw something come up a month or two ago. I pulled the data on sales last year. We only sold about 700,000 flex-fuel vehicles last year in the United States.

John Eichberger:
Is there anything happening to encourage the development and marketing of flex-fuel vehicles, or is that market starting to shrink and we got to think about a different way of going about mid-level or anything above E15 blends in the market? What's the market strength of those blends, if we're not producing vehicles in the volumes that we thought we would be at this time?

Cassie Mullen:
Yeah. That's a great point. When we recently had a panelist from California, the largest E85 distributor out there, speak about this, this is a big concern of theirs because we are seeing a dwindling auto alliance there. I think that on our side, what we're doing is we are pushing very hard for studies and data about higher blends in vehicles, right? We're certainly working with manufacturers of the vehicles to get the warranty information out there about higher ones, but this is an E85 situation.

Cassie Mullen:
It's going to be tough. We're going to have to have the support of the automakers. We're going to have to have some kind of an extension. I think there we're kicking around all kinds of ideas and just happy to be having the conversations, but they're critical. We have to have an auto base that continues to rise in order for this to be successful, it's if not one of the most important parts of the conversation. It's troubling to a degree, but I know the conversations are ongoing.

Cassie Mullen:
I know that when we do see things like electrification and the words mandate out there, the automakers' ears perk up. Recently Toyota had a big article saying that this wasn't the way to go, right? They're saying this isn't what you want to do. You do not want to go all electric. Okay? This is an automaker who could go either way and they don't believe that those are the solutions. I think that we have auto on our side.

Cassie Mullen:
I think that the conversations are only going to continue to bulk up and we're going to just have to keep our thumb on this big time. I mean, of course we're in supportive seeing it go back to the way it was and like I said, it takes a village here, right? We have to have auto in line. We have to have infrastructure in line, and then we have to have the product out there. Auto is as big of a part of the conversation as any other part.

John Eichberger:
Yeah. Troy, you think about the policy side. I mean, you mentioned a climate bill being developed by the spring for consideration. I look at what's going on all around us. You have, towards the end of last year, this influx of politicians announcing the ban on combustion engines in 2035 in California. Then you've got several other states saying, "We're going to follow suit." You got Quebec, you got the UK. I did an analysis, about 50% of the global auto market has suggested they want to ban combustion engine sales at some point.

John Eichberger:
Now, I look at the federal side and I don't see the votes lining up for any bill like that, because quite frankly, you do that, the entire farming community should go nuts. I don't see that happening in this Congress, but that seems to be the mindset here. From a liquid fuels side ... And I remember a couple of years ago, I stood up on the stage at NEC and I said, "Look, refiners and biofuel guys, you're not each other's enemies. You guys have to join together, work together, because if you don't, then the only other option to have is electrification."

John Eichberger:
In the context of what we're hearing and seeing, I mean, what is the play? What is the opportunity, realistically, from a legislative perspective to really secure the role of biofuels in reducing carbon intensity?

Troy Bredenkamp:
Well, I think to Cassie's point number one on flex-fuel vehicles, we need an even playing field. I think when you talk about all those issues from a carbon perspective, we just need an even playing field. I think ethanol can compete quite nicely if we were comparing apples to apples. We just don't seem to be doing that from a policy perspective quite yet. That's where we got work to do in Washington, DC. What if there was a tax credit, not as robust as there is for electric vehicles, but some kind of tax credit for flex-fuel vehicles again?

Troy Bredenkamp:
That's going to be a push of ours, that if we're going to give some tax credits for electric vehicles, let's at least give a tax credit to flex-fuel vehicles so that we have the vehicles out there that can utilize the product that we can make that's going to do lowering of that carbon from an atmospheric perspective. We're also looking at ways to make sure that we're comparing our carbon intensity to the carbon intensity it takes to create the electricity that is used in an electric vehicle, so that you are comparing apples to apples.

Troy Bredenkamp:
A life cycle analysis needs to be included in this policy discussion, because, again, we feel very comfortable that if that is done properly biofuels, and in particular ethanol, it could play a huge role down the road. With regard to these statements and with regard to car companies coming out and saying, "We're going to make all electric vehicles by a time certain." We saw a lot of people get excited about the Super Bowl ad and the General Motors ad in particular.

Troy Bredenkamp:
I think it's important for us to remind people, we remember a Super Bowl ad in 2006, and I believe General Motors made a commitment that they would make all vehicles flex-fuel vehicles in the future. I'm almost certain we never saw that. I mean, there is platitudes, there is statements to be made. There are some advertising dollars being used, but at the end of the day, it all has to be based in some form of reality. I think the reality is the case, there needs to be an option past 2035.

Troy Bredenkamp:
I think that the consumer will be demanding that there be an option. I think that option is going to be very low in carbon because I think, again, if we're talking about more and more biofuels being used, there's a huge opportunity and I think that's going to play a huge role in making that option available to a all-electric vehicle platform.

Cassie Mullen:
To that point-

John Eichberger:
Well, I think I agree. Go ahead, Cassie.

Cassie Mullen:
To that point, I was just going to say, John, two things. Number one, it's way too soon to talk about the Super Bowl, okay? I am a Chiefs fan and it's just it's all raw still. I think it's even too soon for John, so let's not talk about Super Bowls anymore. His was last year. John, I remembered something that you mentioned at NEC and it has always stuck with me when I have these discussions with people because infrastructure isn't just pipes and tanks and dispensers. Obviously, it's automotive as well.

Cassie Mullen:
When we go down these drastic routes and we say these things like, "We're going to mandate electric." Or anything, it puts all liquid fuels at risk. They're not our opponents. The folks out there are not our opponents. We have to figure out, how do we get in line with those so-called opponents? Right? In order to not phase ourselves out some way, you know?

Cassie Mullen:
It's very important that we dispel any myths out there, and like Troy said, make sure that however we're grading the paper, that it's fair and that we're getting our message out there, like we're able to do today, and telling people what the reality is, rather than these nice package talking points that really seem to get a lot of play.

John Eichberger:
Well, one of the things we're trying to do to at the Fuels Institute is provide a little more insight into those talking points, dive a little deeper. We have 150,000 liquid fuel retailing facility in the United States. How do we leverage those? How do we take advantage of those to reduce the carbon intensity in transportation while we're building any electric vehicle market? Because they can co-exist and they're going to co-exist for decades, no matter what the policy say.

John Eichberger:
I'm really glad that you guys continue pounding away. I love hearing the fact that the carbon intensity of ethanol is getting better all the time. That is a fantastic story to be telling. I wish you guys the best of luck in making sure that your sector stays relevant to the discussion because it is relevant. We need to have all solutions on the table in order to make sure that we're doing the best for the environment and for our families. Thank you guys very much for joining me.

John Eichberger:
I really appreciate. I appreciate the relationship we've had with RFA since we started the Fuels Institute a little more than eight years ago. Thank you very much for joining me on Carpool Chats.

Troy Bredenkamp:
Thanks, John.

Cassie Mullen:
Thank you for all you do, John. Appreciate it.

John Eichberger:
For all of you guys out there, thank you for joining us and we'll see you on the next episode of Carpool Chats.

Cassie Mullen:
Thanks.