Biden’s Energy Plans and How Biodiesel and Ethanol is integral to the transition phase

Total Emissions in 2018 = 6,677 Million Metric Tons of CO₂ equivalent. Percentages may not add up to 100% due to independent rounding.

Electric vehicles are receiving a lot of attention lately due to the new administration’s stance on global warming and clean energy. During the campaign trail Biden spoke many times about the need for American leadership in the global climate change action and as the new president, he has already said the US will recommit to the Paris Agreement on climate change.

Many clean energy enthusiasts and investors jumped into electric vehicles and solar energy companies as a result of the new national policy shift. Little attention is paid however, to the less sexy liquid-based fuel alternatives to the current petroleum dependency, ethanol and biodiesels. The Clean Energy Revolution plan of Mr. Biden recognizes ethanol and biodiesels as integral part of a transition solution to full clean energy economy.

The Intergovernmental Panel on Climate Change (IPCC) in 2018 provided policy target for biofuel and electricity sectors in curbing emissions as follows:

For biofuel 2020, 2030, 2050, 2%, 5.1%, and 26.3% respectively, for electricity, 1.2%, 5%, and 33%. Based on national and international targets, the road to low emission world will include substantial amounts of biofuel way until the next 30 years.

So what company should you look into take advantage of this transition period and why you shouldn’t write off biofuel to go 100% EVs just yet? To answer those questions, I have compiled for you a bunch of article clippings from difference sources regarding the United States research and support of biofuels and advanced renewable fuels. You can read through all of them below, but before that, let me share with you my two play for biofuels and ethanol

(1) AEMETIS (AMTX) (2) VALERO (VLO)

AMTX currently holds status of penny stocks (below $5). It produces ethanol which is considered first-generation biofuel and have partnership in India. Its business strategy includes converting first generation refineries to second generation biofuel refineries. Second generation biofuels are produced from biomass that does not directly compete with plants used for food production.

AMTX is a good swing stock, could potentially be a good long-term hold as well.

VLO is well known oil giant which is positioning itself for the future with climate change policy shifts, reported to be today’s largest producer of ethanol. This is a good long-term investment stock based on its history and proven brand and growth.

Article clippings for educational reading on future of biodiesels and ethanol

Biden transition team holds talk with biofuel groups 12/24/2020

Compliance with US biofuel blending laws and Biden’s low-carbon climate vision
POET (PTBBU) is a top company in cellulosic bio-ethanol space – industry positions itself as part of Biden’s fight against climate change
Michael Regan will head the EPA, reached out to agricultural and biofuel trade groups
Increasing access to fuels with higher blends of ethanol
What is industry relationship with U.S Renewable Fuel Standard (RFS)
- Refiners must blend billions of gallons of biofuels into nation’s fuel mix or buy credits from those who do – can apply for exemption to the rules
- Trump quadrupled # of exemptions that biofuel groups say hurt demand for ethanol
Biofuel industry placed themselves in climate discussion, claims higher ethanol content in gasoline can reduce carbon emissions.
- Biden pledged to invest in developing next-generation fuels and research to develop cellulosic biofuels

US Biofuel Volumes Could Increase Substantially Under Biden Administration & Aggressive Decarbonization Push ( November 2020)

Biden’s climate plan, ‘Clean Energy Revolution’ is$1.7 trillion USD in renewable energy inf. to spent over 10 years
- $400 billion USD earmarked for research/innovations to “achieve 100% clean energy economy and net-zero emissions no later than 2050”
Biden supports House Select Committee On Climate Change recommending implementing of LCFS (Low-Carbon Fuel Standard) pioneered by California for transition to zero-emissions vehicles
- Committee believes biofuels were key “transition fuels” to help reduce emissions through 2030 and then gradually be replaced by alternative fuels such as hydrogen and electricity
- Post-2030, biofuels can be used in other sectors such as trucking, shipping, and aviation, with biojet mandate
Biden likely to eliminate Small Refiner Exemptions (SREs) which would help boost ethanol adoption
Limited global supply for HVO feedstock and push for EVs and alternative fuel vehicles can limit biodiesel market
Biofuel will server as a “transition fuels” providing lower-carbon emissions while newer technologies, vehicle fleets, and infrastructure are developed and implemented to try and reach a net-zero emissions future in 2050

Biden on Biofuels: Statements of the Candidate (2019 – 2020)

“We’re going to dedicate $400 billion to clean energy research and innovations to develop and generate next generation biofuels, including ethanol.”” – Manning IA, 7-16-19
“Advanced Biofuels, including Ethanol, is going to be one of the top priorities, its not the answer but it’s a transition.” – Manning Iowa, 7-16-19
“It is a major major part of what I propose … There is so much to talk about that I propose in my climate bill. It’s critically important, the idea of Ethanol and Biofuels, it’s part of the answer.” Ottumwa IA, 6-11-19
“Doubling down on the liquid fuels of the future, which make agriculture a key part of the solution to climate change. Advanced biofuels are now closer than ever as we begin to build the first plants for biofuels, creating jobs and new solutions to reduce emissions in planes, ocean-going vessels, and more.” – From Biden’s Climate Plan

Biofuel Basics From the Department of Energy

Biomass can be converted directly into liquid fuels called “biofuels”, unlike other renewable energy sources
- Two most common types of biofuels in use today are ethanol and biodiesel – both are first gen biofuel tech
Bioenergy Technologies Office (BETO) working w/ industries to develop next generation of biofuels made from non-food (cellulosic and algae-based) resources
Ethanol is a renewable fuel that can be made from various plant materials, collectively known as “biomass”
- it is an alcohol used as blending agent w/ gasoline to increase octane and cut down carbon monoxide and other smog-causing emissions
- Some “flexible fuel vehicles” are designed to run on E85 (gas-ethanol blend containing 51% – 83% ethanol)
- Roughly 97% of gas in US contains some ethanol
Biodiesel is a liquid fuel produced from renewable sources such as new and used vegetable oils and animal fats , is a cleaner-burning replacement for petroleum-based diesel fuel.
- non-toxic and biodegradable, produced by combining alcohol with vegetable oil, animal fat or recycled cooking grease
- can be blended with petroleum diesel in any percentage
Renewable Hydrocarbon “Drop-In” Fuels – petroleum fuels such as gasoline, diesel, and jet fuel contains complex mixture of hydrocarbons which are burned to produce energy
- this can also be produced from biomass sources
- biomass renewable hydrocarbon fuels are nearly identical to petroleum-based fuels they are designed to replace & compatible with today’s engines, pumps and other infrastructure
Second Generation Biofuels aka Advanced Biofuel – fuels that can be manufactured from various types of non-food biomass.

Biofuels Explained from U.S Energy Information Administration

Biomass-based diesel biofuels are transportation fuels
- mostly for large trucks, buses, and tractors in US and around the world
- Biodiesel and renewable energy diesel can be used as distillate heating fuels
Biodiesel meets American Society For Testing and Materials (ASTM) spec & approved for blending with petrol-diesel
Renewable diesel – called green diesel, is a biofuel that is chemically the same as petroleum diesel fuel and can substitute 100% for petroleum diesel.
- qualifies as Advanced biofuel under RFS program – produced from cellulosic biomass materials such as crop residues, wood and sawdust, and switchgrass. ( California uses nearly all of U.S produced renewable diesel b/c of economic benefit of California’s Low Carbon Fuel Standard
Many countries use biodiesel, United States consumes 22%
Some local, state, and federal government agencies with fleets of school and transit buses, snowplows, garbage trucks, mail trucks, and military vehicles, use biodiesel blends, usually B20.
Fueling stations that sell biodiesel blends of B20 or higher to the public are available in nearly every state
Low-level biodiesel blends such as B2 and B5 are popular fuels in the trucking industry because biodiesel has excellent lubricating properties, so the blends can benefit engine performance.

Biofuels & Greenhouse Gas Emissions: Myths vs Facts (energy.gov)

Myths: Biofuels emit the same amount as gasoline or more
Fact: Biofuels burn cleaner, resulting in fewer greenhouse gas emissions, and are fully biodegradable, unlike some fuel additives
Cellulosic ethanol has the potential to cut greenhouse gas emissions by up to 86%.
Myths: Ethanol cannot be produced in large quantities from corn w/out disrupting food supplies
Facts: Corn-based ethanol is only one source of biofuel. Future ethanol to be produced from cellulose found in crop residues

Bio-products of biodiesel – what is glycerin (Google Search)

“Transport is the second biggest source of energy-related greenhouse gas emission world-wide, and the sector is rapidly growing.” – unfcc.int

“Biofuels such as ethanol have much lower carbon footprint than fossils fuels , and can be added to gasoline to reduce emissions.” Nick Nuttall, Director of Communications and COP23 Spokesperson at UN Climate Change, said: “The world has embarked on an unprecedented journey to a sustainable and more secure future – how societies power-up their lives, from homes and businesses to transport and agriculture – will be crucial to success and partnerships of all kinds will be an indispensable catalyst for positive momentum”.

Until the transition towards a global carbon neutral vehicle fleet is completed, bridge technologies such as ethanol can contribute to a decrease in emissions of the transport sector in a significant way, and we are looking forward to showcasing what is possible in Bonn.”Eric Sievers, Investment Director of EERL

Advanced biofuels show real promise for replacing some fossil fuels – Science Daily (2020)

biofuel & bio-energy integral scenarios for displacing fossil fuel use and producing neg. emissions through carbon capture and storage
- net greenhouse gas mitigation benefit for these systems had been controversial w/ concern around carbon losses and from changes in land use and foregone sequestration benefits from alternative land uses
New studies from Colorado State University predicts significant benefits stemming from use of advanced biofuel technologies
Biofuel deserves another look – challenge for industry to demonstrate commercial viability for cellulosic biofuels
- Switchgrass, native grass that grows in many parts of North America is leading candidate for sustainable production of plant material
- half of carbon switchgrass comes into refinery becomes a byproduct that would be available for carbon capture and storage. No extra cleanup needed before underground storage
- For land currently transition out of growing crops or maintaining for pasture grazing, cultivating switchgrass for cellulosic ethanol production had a per-hectare mitigation comparable to reforestation and several-fold greater than grassland restoration
- Using switchgrass is helpful in parts of the country where planting more trees is not an option
- In area where grassland is native, there’s clear advantage to using biofuels
Using biofuels imperative to meeting climate goals
- Biofuel is band-aid patch to tackling climate change -imperative to take proactive stance on biofuels and other negative emissions technologies to limit pact of global warming to 1.5 degrees Celsius
- Alternative to fossil fuels as quickly as possible
- We should cleanup up some carbon pollution because we are too slow at reducing our emissions – Field
  - grow more trees and and store more carbon on the land
  - alternatives include carbon-negative biofuels, as plants pull carbon out of the atmosphere to grow and carbon is used to build plant tissues
  - plant material can be converted to energy and some resulting carbon dioxide byproducts can be captured and pumped underground in storage in depleted oil wells
  - Cellulosic biofuels could help reduce fossil fuels in aviation, shipping and trucking, all fields that are challenging to move to electricity

Valero (VLO) lays out strategy to reduce greenhouse gas emissions (November 2020)

Oil giant outline plans to adapt to market moving towards cleaner fuels
Valero’s investments in les carbon-intensive fuels will offset refinery by 63% by 2025
- This is 31.8 million metric tons of greenhouse emission in 2011 to 11.9 million in 2025
- Possible for offset by 72% over next five years if board approves certain project under consideration
Transition makes sense with states like California implementing policies to encourage low-carbon fuels
Valero is “already nation’s largest “producer of renewable diesel – build second renewable plant next year
Renewable diesel can reduce greenhouse gas pollution by 15% to 80% compared to petroleum diesel,

Is Biofuel a mistake? Professor John DeCicco (2016)

LCA (Life Cycle Analysis) adds up all of GHG emissions associated with producing and using a product to give a “carbon footprint”
- Is basis for Renewable Fuel Standard (RFS) and California’s Low-Carbon Fuel Standard and used by research & businesses w interest in transportation fuel
- Short-coming: evaluates only emissions – CO2 flowing into the air , but fail to assess whether biofuel production increased the rate at which croplands remove CO2 from atmosphere.
- Assumes energy crops such as coy and soybeans can be regrown form one year to the next, they automatically remove as much carbon as they release during biofuel combustion. This assumption is hard-coded into the LCA computer models.
- Planting vast areas with energy crops could alter land use and displaced carbon-rich habitats such as grasslands.
- Crops for biofuel triggered damaging indirect effects, such as deforestation, as farmers competed for productive land
- National 2011 Research Council concluded crop-based biofuels such as corn ethanol “have not been conclusively shown to reduce GHG emissions and might actually increase them.”
- 2013 Paper published by the author claims In the US, to date, renewable fuels actually are more harmful to the climate than gasoline
- Author agrees still urgent to mitigate CO2 from oil, which is largest source of anthropogenic CO2 emissions in the US, and second-largest globally after coal.
  - as a cure for climate change, biofuels are “worst than the disease”
Two strategies for mitigating CO2 emissions from transportation fuels
- (1) reduce emission by improving vehicle efficiency, limiting miles travel or substitute truly carbon-free fuels such as electricity or hydrogen
- (2) remove CO2 from atmosphere more rapidly than ecosystems are absorbing now
  - reforestation and afforestation
  - rebuilding soil carbon and restoring carbon-rich ecosystems such as wetlands and grasslands
- Approach help protect biodiversity – another global sustainability challenge, instead of threatening it as biofuel production does
- Insight offered: Once carbon has been removed from the air, it rarely makes sense to expend energy and emissions to process it into biofuels only to burn the carbon and re-release it into the atmosphere.