Five biofuels groups unite behind RFS2 as "critical foundation for advanced biofuels"

April 20, 2011 |

In Washington, the Renewable Fuels Association, the Advanced Biofuels Association, the Algal Biomass Organization, the Advanced Ethanol Council, and BIO pledged to work cooperatively to preserve the status quo on the Renewable Fuel Standard through at least 2013, agreeing that only the RFS provides the stable market support and pricing system necessary to attract private investment to the development of advanced biofuels.

The groups agreed at the Advanced Biofuels Leadership Conference that they would write an unprecedented joint letter supporting RFS2 as a “foundational platform”, for the first time bringing together organizations supporting advanced drop-in biofuels, advanced ethanol, and first-generation ethanol in a joint agreement on broad biofuels policy.

The groups agreed that the discussion on energy on Capitol Hill had to be broadened considerably beyond a debate over the cost of biofuels incentives, but must follow President Obama’s formula at looking also at the cost of incentives for the traditional oil & gas industry.

Why the focus on RFS2? The action comes in response to numerous attempts on Capitol Hill to repeal annual biofuels blending targets in the RFS, which stem back to the 2008 oil and food price spikes and returned in 2011 in the face of more price pressure on food and energy.

At the same time, Sarah Thornton of BIO presented a white paper at ABLC, concluding that the “the compliance value for cellulosic biofuels [in RFS2] is a calculable premium, inversely related to oil prices. EPA enforcement therefore provides a significant degree of price certainty for cellulosic biofuels, substantially mitigating additional capital risk associated with commercialization of advanced biofuels.”

At the same time, all groups agreed that the RFS2 provides assurance that all advanced and cellulosic biofuels produced up to annually prescribed volumes will have a market.

They also agreed that a critical element was the EPA’s implementation of the RFS; that it should should provide necessary market assurance and make advanced biofuels investment attractive to private investors.

BIO’s Brent Erickson said, “the RFS as its been implemented provides a stable policy and defines a value proposition that advanced and cellulosic biofuel producers can present to investors. The RFS provides obligated parties a number of compliance options, and they can be expected to follow the lowest cost option. EPA’s enforcement of RFS therefore says that if advanced biofuel producers can produce fuel at a competitive price, there will be a market for it.

More than 450 advanced biofuels leaders, including 120 C-level executives, are attending ABLC this week in Washington, and 40 of the “50 Hottest Companies in Bioenergy”.

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