Poet's Broin says E27 is needed to satisfy RFS

By Kris Bevill | November 15, 2010
Posted Dec. 9, 2010

Poet LLC CEO Jeff Broin told attendees at a recent energy conference that the U.S. will need to eventually utilize the equivalent of E27 in the nation's fuel supply in order to meet renewable fuel standard (RFS) targets. Ethanol has already become a "major force" in the U.S. transportation fuels market, he said, but the ethanol blend wall is preventing the industry from further contributing to the nation's fuel supply and market expansion is a necessity.

"The market's getting full," he said. "In fact, it is full. Today we're at about 92 percent saturation. There's more capacity out there today than the blend wall will absorb, but secondly, we have a law that's in conflict with a rule. Today, E10 doesn't even fill up first-generation biofuels in this country and certainly will not make room for fuels of the future - advanced biofuels and cellulosic biofuels. So, we've got a problem. At some point in time, we've got to get to about 27 percent ethanol in this country in our gasoline in order to meet the RFS."

The move to E15 is a step forward, Broin said, and if and when the U.S. EPA approves the use of E15 for vehicle models 2001 and newer, 54 percent of the American car fleet will be able to use the higher ethanol blend. Broin stated that increasing the allowable ethanol blend limit from E10 to E15 will be the equivalent of eliminating all oil imports from Iraq. "So it's a big deal. That's a lot of volume," he said. However, more choice is needed at the pump and he believes Growth Energy's Fueling Freedom Plan is the best way forward for the industry. The plan would redirect tax credits to incentivize the nationwide build-out of blender pumps and would require all automobiles sold in the U.S. to be flex-fuel capable. "Once we have the vehicles and infrastructure, we can compete with oil," Broin said. "But we're not there yet."

Poet also remains heavily focused on cellulosic ethanol production. Broin said the company plans to contribute 3.5 billion gallons of cellulosic ethanol to the RFS by 2022 through a combination of direct and indirect production methods. One billion gallons will be produced through the addition of cellulosic technology to existing Poet plants, he said. The company continues to work on commercializing its corn cob-to-ethanol technology at its research facility in Scotland, S.D., and has so far reduced the production costs to $2.35 per gallon. Once the technology is ready for widespread use, Poet anticipates licensing it to other corn ethanol producers, who will then contribute a total of 1.4 billion gallons of cellulosic ethanol to the RFS by 2022. Another 1.1 billion gallons of cellulosic ethanol will be produced by Poet joint ventures using other types of biomass, he said.

Broin and other industry leaders are immediately focused on extending the Volumetric Ethanol Excise Tax Credit, which is reportedly addressed in the pending tax extension legislation being finalized in the U.S. Senate. Broin said he would like to see a one-year extension at the current rate of 45 cents per gallon, which would allow Growth Energy time to roll out its Fueling Freedom Plan.