When Celanese introduced its innovative hydrocarbon-to-ethanol technology in November 2010, it was clear that the most attractive fuel markets for TCX® would be those with (1) abundant domestic resources, (2) a desire to reduce their dependence on imported oil and (3) government policies that do not favor one technology over another. It also was clear that the United States is the world’s single largest market for fuel, and the first two of these three criteria applied. The last one is a bit trickier.
In 2005, Congress passed the Renewable Fuels Standard, which was updated and expanded in 2007. The RFS, as it is known, requires increasing volumes of alternative fuels to be blended into U.S. fuels, topping out at 36 billion gallons in 2022. Of those 36 billion gallons, 15 billion are set aside for ethanol. A mandate to blend 15 billion gallons of ethanol into gasoline sounds good, right? But only if it’s made from corn.
Additionally, there’s an effective cap of 10% of the total fuel pool that can be ethanol, and that cap is just below 15 billion gallons, meaning there is no demand for additional ethanol to be blended, regardless of low cost or the many other advantages of any non-corn-based product. This has created a monopoly for corn-based ethanol and without a change in the law, there is no room at the inn for TCX® or any other similar innovative ethanol solution in the U.S. market.
Our challenge is to work with others to break the stranglehold corn-based ethanol has on the U.S. fuels market.
We have been educating members of Congress and DC policy makers about the advantages of technologies like ours and making the case for opening the RFS to competition from all ethanol sources. In January, Rep. Pete Olson (R-TX), whose congressional district includes our facility in Clear Lake, introduced HR 3773, the Domestic Alternative Fuels Act of 2012. This bill would allow ethanol from fossil fuels other than petroleum to compete for the 15 billion gallons of ethanol mandated by the RFS, essentially creating a level playing field for TCX® and other non-corn-based ethanol technologies.
Rep. Olson has secured a dozen additional sponsors of his bill, evenly divided between Republicans and Democrats. At the time the bill was introduced, several key outside groups spoke up in support of the bill. Some of these groups stand to benefit from a bill that enables natural gas-based ethanol to compete with corn, and some share concerns about the impact the RFS has had on price of corn and hope that opening the RFS to competition will result in reduced corn prices.
Celanese has developed a terrific technology that can address demonstrated demand for viable alternative fuels, provide octane and oxygenate benefits and help lower the cost of transportation fuels. In light of these advantages and the positive reception TCX® has received on Capitol Hill, we will continue to pursue an aggressive strategy to change the RFS. By leveling the playing field for all routes to ethanol, we can create an environment where the US consumer can benefit from more affordable transportation fuel. We see that as a win for everyone.