Barriers to a biofuels transition in the U.S. liquid fuels sector

Demand for liquid fuels (i.e., petroleum products) has burdened the U.S. with major challenges, including national security and economic concerns stemming from rising petroleum imports; impacts of global climate change from rising emissions of CO2; and continued public health concerns from criteria and hazardous (i.e., toxic) air pollutants. Over the last decade or so, biofuels have been touted as a supply-side solution to several of these problems. Biofuels can be produced from domestic biomass feedstocks (e.g., corn, soybeans), they have the potential to reduce GHG emissions when compared to petroleum products on a lifecycle basis, and some biofuels have been shown to reduce criteria air pollutants. Today, there are numerous policy incentives—existing and proposed—aimed at supporting the biofuels industry in the U.S. However, the Renewable Fuel Standard (RFS) Program stands as perhaps the most significant mandate imposed to date to promote the use of biofuels. Overall, the RFS stands as the key driver in a transition to biofuels in the near term. By mandating annual consumption of biofuels, increasing to 36 bgy by 2022, the program has the potential to significantly alter the state of the U.S. liquid fuels sector.

Fuel transitions in the transportation sector are the focus of this thesis. More specifically, the increasing consumption of biofuels in the transportation sector, as mandated by the RFS, is examined. With a well-developed, efficient, and expensive, petroleum-based infrastructure in place, many barriers must be overcome for biofuels to play a significant role in the transportation sector. Identifying and understanding the barriers to a biofuels transition is the objective of this thesis.

Although fuel transitions may seem daunting and unfamiliar, the U.S. transportation sector has undergone numerous transitions in the past. Chapter 2 reviews major fuel transitions that have occurred in the U.S. liquid fuels sector over the last half century, including the phasing out of lead additives in gasoline, the transition from MTBE to ethanol as the predominant oxygenate additive in gasoline, and the recent introduction of ULSD. These historical transitions represent the uncertainty and diversity of fuel transition pathways, and illustrate the range of impacts that can occur across the fuel supply chain infrastructure. Many pertinent lessons can be derived from these historical transitions and used to identify and assess barriers facing the adoption of alternative fuels (i.e., biofuels) and to understand how such a transition might unfold.

Computer models can also help to explore the implications of fuel transitions. In order to better understand the barriers associated with fuel transitions, and to identify options for overcoming these barriers, many recent research efforts have used sophisticated modeling techniques to analyze energy transitions. Chapter 3 reviews a number of these recent modeling efforts with a focus on understanding how these methodologies have been applied, or may be adapted, to analyzing a transition to biofuels. Four general categories of models are reviewed: system dynamics, complex adaptive systems, infrastructure optimization, and economic models.

In chapter 4, scenarios created from a high-level model of the liquid fuels sector (the Liquid Fuels Transition model) are presented to explore potential pathways and barriers to a biofuels transition. The scenarios illustrate different pathways to meeting the requirements of the RFS mandate, and differ based on the overall demand of liquid fuels, how the biofuels mandate is met (i.e., the mix of biofuels), and the status of the ethanol blend limit in the motor gasoline sector. The scenarios are used to evaluate the infrastructure implications associated with a biofuels transition, and illustrate the uncertainty that exists in assessing such a transition.