The Boss From Hell? EPA, Congress and advanced biofuels

July 31, 2014 |

boss-from-hell

Here are 5 Tell-Tale Signs that you have the Boss from Hell.

And when it comes to the US federal government and advanced biofuels, all five are kinda pointin’ right at ol’ Uncle Sam.

Congress passed the Renewable Fuels Standard in 2007, as part of the Energy Independence and Security Act, and appointed EPA to take on much of the oversight. The intricacies and nuances of turning policy into reality are confusing to most people — who can’t tell stover from bagasse and really don’t care, because they’ve got bills to pay and kids to raise.

But nearly all of us have been employees at some stage in our lives. Most of us have encountered, at least once, The Boss from Hell.

So, let’s consider the management of the Renewable Fuel Standard in that more broadly-understood framework.

uncle-sam-final1

The habit: You have a performance goal – reaching that goal is essential to earning your bonus this year. Reaching that goal means putting through a new, improved work process that will save time, money, aggravation for all. So you make a plan, and the boss won’t sign it for no known reason, won’t explain his/her inaction, and generally leaves you in limbo for two years.

The perpetrator: Yes, you have The Boss From Hell.

In the case of biofuels: Yes, EPA has held up approving new pathways under the Renewable Fuel Standard for dozens of applicants for more than two years, for no well-understood reason. A pathway certifies that a given feedstock and processing technology produces a fuel that qualifies under the RFS.

Without that pathway approval, you can make ’em, but you can’t sell ’em as renewable fuels. Which means of course, that no one is going to make ’em. Or finance ’em. Or grow ’em. Or harvest ’em, either.

2

The habit: The boss says you have to complete a project before you go home. It’s going to take all day to complete it. He/she will get back to you with the particulars as soon as possible. 10:00 comes and goes.

The boss keeps saying “working on it,” and won’t give you a time estimate. 12:00 comes and goes. You skip lunch, worried. 2:00 comes and goes. There’s no way you’re going to get this task done on time.

You start wildly guessing what the task might be and how it might be done, to try and get some work done on it. 3:00 comes and goes. You’re freaking out. At 3:30pm the boss finally comes in and gives you the task, says’ “finish before you leave or you’re fired”, and you have to stay until midnight to finish it, missing every personal obligation you had that evening, and waking up completely stressed and exhausted the next morning.

The perpetrator: Yes, you have The Boss From Hell.

In the case of biofuels: Each year, the EPA is supposed to issue an order (called a Renewable Volume Obligation) stating a minimum of biofuels blending that must occur under the Renewable Fuel Standard. It is supposed to be released in November, and everyone has a few weeks to plan production of biofuels and petroleum fuels so that all the purchasing is optimized and the refinery operations are efficient as they can be.

Only, EPA still hasn’t issued the RVO for 2014, as of July 30th. Eight months late. Refiners and renewable fuel producers are simply guessing as to the volumes that have to be produced — hoping they get it right. Once the actual RVO is announced, they’ll have to “true up” their production planning.

If they’ve guessed low on the obligation, companies will have to scramble to reduce petroleum production and ramp up biofuels production as fast as possible – dumping petroleum feedstock on the market, while biofuels feedstocks have to bought possibly on the spot market at whatever ridiculous price a shortage can produce.

If they’ve guessed too high on the obligation, the reverse will happen. People will be dumping biofuels, and there’ll be a shortfall on petroleum (not the kind that produces a shortfall of gasoline, just skyrocketing prices).

3

The habit: You’ve been offered to take on a significant new job involving great pay, but requires a move to a new town, and the company is young. Your kids are also young, they need stability, so you ask for an assurance that the assignment is long-term before you agree to uproot.

They wave a 4-year commitment in front of you, and a 4-year funding commitment for the project. So, you move. You meet every obligation that’s put in front of you. Any shortfall in one area is made up in another, and you execute on time and budget.

Starting 4 weeks into the new job, the company tells you that it may not last 4 years, it may now last 2, possibly 1, possibly six months. There’s a fight on the Board of Directors, and every meeting a group tries to kill your project, and you don’t know whether to leave, stay, or just tear your hair out.

Meanwhile, your suppliers and contractors now start to bail, saying they can’t live with the uncertainty. Your banker triples your interest rate, citing instability. Your JV partner bails out, saying there’s no point in investing capital if your company can’t be relied on.  Your family is freaking out, not knowing if they’ll have to move again.

And the Board keeps on wrangling, and never makes a final decision.

The perpetrator: Yes, you have the The Bosses From Hell.

In the case of biofuels: The Renewable Fuel Standard has mandated volumes through 2022, and then EPA would set them from that point on forward, forever. But a cabal of renegade lawmakers and their financial supporters (generally, those doing well under the old order) are trying to repeal the RFS. Every year. And frustrate just about every one of its supporting mechanisms along the way. They’ve sued, lobbied, and proliferated a series of legal and legislative challenges all the way.

Apparently with an object of making business conditions so unstable and odious that no company in its right mind could make renewable fuels. Then point to the resulting shortfall and say “look, no gallons!”

4

The habit: Each year, there are bonus-earning opportunities at your company, and earning them is competitive and performance-based. This year, you have killed yourself to improve your performance — you could really use the bonus to replace your aging car — while the guy in the other cubicle, who won last year, has totally slacked off and lost work focus,

So, you think to yourself, this colleague is getting impossible to deal with, but at least I’ll get the performance bonus and he won’t.

Then, you get to the end-of-year evaluation, and you boss announces that he/she hasn’t had time to review performance numbers for this year, and instead bonuses will be based on last year’s performance. Your slacker colleague wins, and you lose.

The perpetrator: Yes, you have the The Boss From Hell.

In the case of biofuels: To qualify as a biofuel under the Renewable Fuel Standard, you not only have to be made from a qualifying bio-based feedstock, you have to have a minimal reduction in lifecycle greenhouse emissions compared to baseline gasoline.

Each year, the biofuels industry has improved its processing efficiency and reduced GHG-causing inputs. Meanwhile, a lot more emission-heavy shale oil has creeped into the petroleum supply.

Putting the two together, individual biofuels producers are (industry supporters surmise) generating much higher emissions reductions than they are being credited for. But they are not having their lifecycle numbers updated, and meanwhile gasoline is still being based on the average emissions in 2005, long before the advent of unconventional oils in the volumes seen today.

5

The habit: Each year, you have a very big project to complete and you are supposed to get some extra budget in recognition that your team is small and young and the work project is large and sophisticated.

The boss is supposed to provide you with that resource starting January 1. Each year, you don’t get it. And don’t get it. And don’t get it. Some years, you get it by July. Sometimes, as late as November., One year, you didn’t get it at all until the following year, when you had a retroactive “windfall” added to your account. This year, it looks like you won’t get it at all.

And why are you not getting this resource? Is it scarce or controversial? Absolutely not. In fact, the Board of Directors acknowledge that this, in fact, is their favorite program; this spend is about as popular as spending gets.

Meanwhile each year you have havoc in your department trying to meet your obligations without the expected funding. You put off creditors, you have to hassle customers for quick payment, you overwork your staff.

What happened is this. Your Boss has a really, really controversial and unpopular program, and each year it is just about impossible to get funding for. So the Boss bundles your funding with this terrible program, and waits until the last possible moment so that the Board has to fund both to get you your funding. But this year, the Board may have decided that it has truly had enough with funding the wrong project to fund the right one too.

The perpetrator: Yes, you have the The Boss From Hell.

In the case of biofuels: Each year, there are a large number of popular tax credits. One of them is a tax credit for biodiesel production, which helps producers along. It’s very popular in Congress. In fact, so popular that it is generally held hostage each year so that it can be attached along with all the other “tax extenders” to some creepy bill that the leadership wants but can’t otherwise get the votes for. Congress has to either vote for both, or vote for none. This year, the tax extenders package has still not passed.

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