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 Efforts American 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 ARRA Funding Projects

U.S. Investments into Renewable Energy DOE 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 ARRA Funding Projects

U.S. Biomass by Region 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 3 rd 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 CountryBlendPolicy BrazilE20- E25 Mandated ParaguayE12Mandated U.S.A.E10Mandated (10 states) Optional (40 states) 2/3 of supply blended ColumbiaE10Mandated JamaicaE10Mandated Costa RicaE7Mandated CountryBlendPolicy CanadaE5 – E10 Optional AustraliaE10Optional ChinaE10Ten Provinces FranceE10Optional IndiaE5Mandated 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 (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 Both Sugar and Ethanol 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 Both Sugar and Ethanol 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!