Making Cellulosic Ethanol Happen: Good and Not So Good Public Policy

This January 2007 report by David Morris provides an analysis of federal policies that are both good and bad related to creating a viable cellulosic ethanol industry based on two building blocks: 1) Commercial technologies that produce ethanol from cellulose and 2) A cultivation, transportation and storage infrastructure that delivers cellulose to biorefineries.

A viable cellulosic ethanol industry depends on successfully achieving two objectives: commercializing the technology to produce large quantities of ethanol from cellulose, and creating an infrastructure that can deliver large quantities of new cellulosic materials to these new production plants. In the initial version of the 2005 Energy Policy Act (EPAct), Congress designed a simple and likely quite effective policy to achieve the first objective: a large mandate for ethanol specifically made from cellulose. At the last minute, Congress added to EPAct a provision intended to encourage ethanol plants to rely on renewable fuels rather than fossil fuels.

Although well-intentioned, the added provision undermines the nation's ability to achieve the first objective--rapidly and cost-effectively commercializing cellulose to ethanol technology, while at the same time doing nothing to effect the second objective-- creating an infrastructure that delivers large quantities of new cellulosic material. Congress has the opportunity to remedy the problems created by this added provision, while developing new incentives to encourage the use of renewable fuels for heat, as well as electricity and transportation.