Why is the BBD RVO so low and what can NBB do about it?

By Don Scott, Director of Sustainability, National Biodiesel Board

Special to The Digest

EPA proposes to continue growing the Required Volume Obligations (RVO) for Biomass Based Diesel (BBD) under the Renewable Fuel Standard (RFS), but at a paltry 100 million gallons a year to 2.1 billion gallons for 2018. Continued growth is a positive sign, and the industry would likely be stalled completely without NBB’s persistent efforts to grow the RVO for biodiesel and renewable diesel.

NBB has proven successful in the uphill battle to grow BBD, because of the technical merits of our arguments and the consistent application of grassroots support for a unified industry. NBB has been boisterously declaring that the truth matters.

The truth is that there are no significant supply or distribution constraints when it comes to biodiesel and renewable diesel.  Ample capacity exists to provide diverse feedstocks; excess capacity has already been installed to process renewable fats and oils into high quality low carbon transportation fuel; and no significant barriers exist to integrating more BBD into our nation’s fuel supply.  To continue growing, the biodiesel and renewable diesel industry must remain united and keep revealing the true facts with regard to production and use of BBD.

To accelerate growth, NBB must embrace the reality that carbon and sustainability matter.  Environmental advocates have little reason to increase BBD volumes, because they perceive that cellulosic and other, yet-to-be-commercialized Advanced Biofuels may be superior when it comes to reducing carbon and net emissions of greenhouse gases (GHGs). This provides EPA’s motivation for a modest BBD set aside while leaving biodiesel and renewable diesel to compete against sugar cane and cellulosic ethanol.

The former provides reason for NBB to remain consistent on its approach to restructuring the producers tax credit.  Both provide reason to continue to prove that biodiesel is, in fact, the lowest carbon fuel and should merit adequate inclusion in the RFS program.  Strong advocacy exists to promote development of cellulosic fuel, and those advocates contend that competition to satisfy the undifferentiated Advanced Biofuel RVO is the best incentive they can offer to tackling the production hurdles of large-scale cellulosic production.

This strategy allows EPA to rely on BBD to fulfill any shortfall.  So, the RFS program will not fail to meet its goals, however the uncertainty placed on the biodiesel and renewable diesel industry is an unnecessary cost, which has real and negative impacts on the growth the BBD industry.

The enthusiasm toward cellulosic fuels is well-placed, because when we grow protein to feed the world, the plants we grow, produce more fats and carbohydrates than we can eat.  The surplus in fats that exist as byproducts of protein production include fats and oils used for BBD.  The surplus carbohydrates include starches and sugars used to produce ethanol.  The most plentiful of all these surpluses are the insoluble carbohydrates in the fibrous parts of plants.  Fats and oils are the most energy dense ways of storing solar energy.  Carbohydrates are less dense when it comes to energy storage, but since solar energy is so plentiful, energy density can be overcome if conversion to liquid fuel is relatively efficient.  Biodiesel and ethanol were the first renewable fuels to be commercialized, because they are very easy to convert into transportation fuel.

The challenge to commercializing cellulosic fuel from insoluble carbohydrates is that it is much more difficult to convert the relatively sparse stored energy from the fibrous parts of pants into liquid fuel.

A rational approach would be to continue to encourage development of cellulosic technology, but not at the expense of BBD which has proven commercial viability given proper policy support.  The missing piece is that biodiesel can reduce GHG emissions as much or more than cellulosic biofuel.  Environmental advocates have convinced themselves otherwise due to the abundance of unutilized cellulosic feedstock and the misconception that BBD made from fat competes with the food supply.  The dense storage of solar energy in fats and oils, and the ease of conversion into biodiesel result in a lifecycle GHG reduction of 80-85% compared to petroleum diesel. Unfortunately, the pseudoscience of indirect land use change (ILUC) has weighed an inappropriate penalty on BBD.

NBB’s past efforts have been successful in achieving Advanced Biofuel status through improved modeling and reducing the penalty for ILUC.  NBB must continue these efforts to further eliminate this improper penalty. The real GHG reduction potential of biodiesel is greater than 80% compared to fossil fuel.  When the false penalties are removed from EPA’s carbon accounting, BBD exceeds the 60% GHG reduction required for cellulosic biofuel and BBD provides the lowest cost tool to reduce carbon in the RFS.

NBB is on track to achieve this through investment in technical projects.  Uncovering the truth and restoring integrity to lifecycle accounting is the path toward growing the biodiesel and renewable diesel industry.