BP gives up on cellulosic ethanol

In news that is sure to send shock waves throughout the ethanol industry and the EPA, one of the world’s largest oil companies is shelving plans to produce so-called cellulosic ethanol from non-food plants such as wood chips and switchgrass. As described in an article from the Wall Street Journal, “BP PLC Thursday said it is ending plans to build a commercial-scale cellulosic-ethanol plant in Florida, saying it instead will focus on research and development.”

The EPA’s RFS ethanol mandates dictate that all growth in ethanol production after 2015 must come from cellulosic sources, yet only a small fraction of the current requirements for this form of ethanol are being met today. Incredibly, oil companies are now paying fines to the federal government because they are not using this fuel that does not exist, as described in this article from the New York Times.

The EPA can no longer ignore the unrealistic quotas it set when the EISA 2007 Act, which included the RFS ethanol mandates, was passed by Congress. The weak economy has led to reductions in overall gasoline consumption, E85 vehicle sales and the fuel’s availability are far below original projections, and demand for ethanol-free alternatives is greater than ever. If fines for oil companies’ inability to sell the mandated levels of cellulosic ethanol are bad enough, the penalties for not meeting the increased corn-based ethanol mandates in the coming year will be massive.

Why is this important for general aviation? Fines, just like corporate taxes, are always passed on to consumers, meaning we’ll all pay more for mogas, avgas and Jet-A to offset the costs to oil companies for the current ethanol production mandates.

It’s no wonder that subsidies for ethanol blending ended last December, and calls for a repeal to ethanol mandates are becoming more frequent.

The GAfuels Blog is written by two private pilots concerned about the future availability of fuels for piston-engine aircraft: Dean Billing, Sisters, Ore., a pilot, homebuilder and expert on autogas and ethanol, and Kent Misegades, Cary, N.C., an aerospace engineer, aviation sales rep for U-Fuel, and president of EAA1114.

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