State Department Cooperation in Hemispheric Alternative Energy: Lessons

by:Matthew McManus

Division Chief, Energy Producer Country Affairs

U.S. Department of State

Overview

Why Biofuels are Strategic U.S. Domestic Initiatives U.S. & International Cooperation Case Study: Biofuels in the Dominican

Republic Sugar vs. Fuel Ethanol:

a case for both

Strategic Value of Biofuels Biofuels are renewable & can be sustainably developed

Biofuels have a lower carbon footprint than conventional fossil fuels Final EPA Rulemaking quantifies the reduced environmental impact of key

biofuels, including lower lifecycle GHG – sugarcane ethanol by up to 61%, corn around 20%.

Greater than 40 percent reduction in most tailpipe emissions. Biofuels can be cultivated using proven agricultural methods on existing land

Biofuels Increase American Energy Security, Economy U.S. largest oil user, at 18 mmbd; oil use trending down sharply, down 2 mmbd in

two yrs. China growing, now consumes about half as much as U.S. does. U.S. is world’s largest oil importer, but 40% CAFÉ increase/biofuels reducing

demand. Biofuels now represent nearly 10 percent of US Gasoline supplies; EPA reviewing

increase to 15 % blending. Equal to our fourth largest “foreign” supplier… Balance of payments, trade, economic benefits for USA

Biofuels: global implications Best practices are being shared among interested countries and regions

U.S. Domestic Renewable Energy EffortsAmerican Recovery & Reinvestment Act (ARRA)

Enacted in February 2009 $36.7B in Energy and Efficiency Funding R&D, Commercialization of Renewable Energy

& Research $4B Loan Guarantees for Renewable Energy $0.4B Advanced Research Projects- Energy

http://www.DOE.gov ARRA Funding Projects

U.S. Investments into Renewable EnergyDOE Allocation of (ARRA) Renewable Energy Funds

Energy Efficiency Projects (up to $17B) Geothermal ($350MM with equal matching) Solar and Wind ($500MM) Fuel Cells & Hydrogen ($400MM) Biofuels Projects

Algae and Advanced Biofuels (up to $85MM) Cellulosic/Biorefineries (more than $600MM)

Hydroelectric Infrastructure Smartgrid Tidal

http://www.DOE.gov ARRA Funding Projects

U.S. Biomass by Region

www.NREL.gov , Domestic Biomass Locations

International Cooperation on Biofuels

Brazil-US MOU to Advance Cooperation on Biofuels Joint Development on R&D of Next Generation Harmonize Standards to permit expansion of Global Biofuel Market Assisting 3rd countries in CenAm/Caribbean w/ Biofuels

Dominican Republic, El Salvador, Guatemala, Haiti, Jamaica. Most oil dependent region in world – imported oil for maritime,

aviation, road and electric power needs. Goal is to substitute locally grown commodity for imported one,

starting with E10 blending. Jamaica introduced E10 blends this year; DR pending and ES

legislating. U.S/OAS Feasibility Studies and Technical Assistance. Brazilian,

Vargas Foundation, Agronomy Studies.

A sample of ethanol blending around the world

Country Blend Policy

Brazil E20-E25

Mandated

Paraguay E12 Mandated

U.S.A. E10 Mandated (10 states) Optional (40 states)2/3 of supply blended

Columbia E10 Mandated

Jamaica E10 Mandated

Costa Rica E7 Mandated

Country Blend Policy

Canada E5 – E10

Optional

Australia E10 Optional

China E10 Ten Provinces

France E10 Optional

India E5 Mandated

These charts are unofficial and based on second hand sources, and are intended merely to show directional adoption of ethanol fuels. Additionally, many other countries have legislation or policy work pending to address adoption of some blends of biofuels

Biofuels in the Dominican Republic

POLICY: Renewable Energy Law, Law 57-07 (2007) Introduces ethanol for motor fuel

DIVERSIFICATION OF ENERGY SUPPLIES: Opportunity to improve energy security with some domestic production Opportunity to introduce clean energy into the domestic energy matrix

ECONOMIC GROWTH: Potential to add jobs & generate additional revenues

AGRICULTURAL EXPERTISE & POTENTIAL: As a regional leader in sugar, the Dominican Republic has tremendous

experience and skill in a strategic crop There exists the potential to make use of un-used or fallow land

REGIONAL LEADERSHIP: Can leverage support of Brazil and U.S. to be a Caribbean leader in domestic

biofuels use.

The Dominican Republic has an opportunity to implement an effective domestic biofuels campaign

Utilizing Sugarcane to produce Sugar AND Ethanol

Permits increased market flexibility by diversification

Permits a more robust energy strategy

Capitalizes on available land and regional expertise

Benefits from international expertise and cooperation

A responsible and calculated diversification of cane production to serve both the food and energy markets could be advantageous to

the Dominican Republic

Room enough for BothSugar and Ethanol

Jan-04 May-05 Oct-06 Feb-08 Jul-09 Nov-100

5

10

15

20

25

30

0

0.5

1

1.5

2

2.5

3

3.5

4

sugar ethanol

SU

GA

R ¢

/lb

ET

HA

NO

L $

/ga

l

• A break-point line concept helps identify when conditions are economically favorable for a given end-use• Market conditions will change constantly, but both sugar and fuel ethanol will maintain strong support

Room enough for BothSugar and Ethanol

Jan-04 May-05 Oct-06 Feb-08 Jul-09 Nov-100

5

10

15

20

25

30

sugar ethanol

SU

GA

R ¢

/lb

ET

HA

NO

L $

/ga

l

• A horizontal break-point line concept helps identify when conditions are economically favorable for a given end-use

• Market conditions will change constantly, but both sugar and fuel ethanol will maintain strong support

Conclusions Biofuels have national security, energy security, balance of

trade and economic benefits to the U.S. Amidst declines in U.S. crude oil use, growing auto

efficiency and biofuels use reduces our foreign oil dependence

EPA has reviewed lifecycle GHG emissions. DOE is working to promote next generation and advanced

biofuels. State is working with Brazil to advance global uptake of

biofuels, and to partner with oil dependent countries to assist them to produce biofuels for their domestic market.

Thank you!