The Renewable Fuel Numbers: 8 takeaways from EPA’s 2017 draft, from the industry in their own voices

July 6, 2017 |

The US EPA has issued its draft RVO for 2018 (and for biodiesel, for 2019), and here are the proposed numbers:

At first glance, the proposal looks like a carbon copy of the 2017 RVO finalized last year. Advanced biofuels have been reduced by a token 40,000 gallons, cellulosic has been reduced by a more substantive 30% but from the miniscule base of 312 million gallons to 238 millions, and the biomass-based diesel and corn ethanol pools have been kept exactly where they are.

Let’s look at the individual sectors and see how industry reaction informs us on 8 key themes. Here are 11 industry leaders, in their own words.

We’ve excerpted, organized and bolded comments from the industry in order to make the themes as clear as possible for the reader. Otherwise, this is the actual industry reaction in its own voice.

Staying the course

Bob Dinneen, RFA: “We are pleased EPA is proposing to maintain the conventional biofuel requirement at the 15 billion gallon level required by the statute, just as EPA finalized in its 2017 RVO. Consumers only see the full benefits of the RFS when EPA implements the policy as intended by Congress. By staying the course and maintaining a strong RFS, consumers will continue to benefit from the policy, including a greater choice at the pump, while breathing cleaner air and seeing a boost to local economies.

Emily Skor, Growth Energy: “The release of the proposed RVOs is the first real test of the current administration’s pledged support for renewable fuels, and we are encouraged to see the EPA demonstrate President Trump’s continued commitment to the Renewable Fuel Standard.

Wesley Spurlock, National Corn Growers Association: “We are pleased to see EPA pick up where last year’s RFS rulemaking left off and propose a rule that keeps the RFS on track for conventional ethanol production.

Brian Jennings, American Coalition for Ethanol: “ACE is grateful EPA is proposing to maintain the 15-billion-gallon conventional biofuel blending requirement for 2018. This issue is of paramount importance to America’s farmers—who are reeling from oversupplies and low prices—and the rural communities that depend upon a strong farm economy.”

Cellulosic: Missed Opportunity

Brooke Coleman, Advanced Biofuels Business Council:   “EPA’s proposal fails to build on last year’s growth in advanced biofuels…targets for conventional biofuels are solid, and there’s no reappearance of impropriate waivers that drive needless investment uncertainty. Yet EPA’s proposal misses an opportunity to drive U.S. leadership in cellulosic fuels.  If finalized, reductions to those targets – however small – will only pull us off the path toward American energy dominance. The argument that softening federal targets would protect domestic producers simply doesn’t hold up to the numbers.”

Jan Koninckx, DuPont: “the proposed cellulosic biofuel volume is shortsighted as it is inconsistent with current production trends and future potential… EPA’s 2018 proposed RVO rule falls short of creating long-term policy certainty. This proposed rule would reduce the advanced and cellulosic biofuel volume obligations by approximately twenty-five percent.  Rolling back these volumes just as new technologies and capacity are being commercialized is counterproductive.”

Brian Jennings, American Coalition for Ethanol:  We urge the Agency to take advantage of the comment period to fine tune the cellulosic and advanced blending targets so further investment can be made in domestic cellulosic and advanced biofuel facilities.”

Jeff Broin, POET: “We have initial concerns that the overall reduction in biofuels gallons will cool advances in cellulosic ethanol technologies. For the biofuels industry to grow, we need to see robust cellulosic ethanol production using multiple feedstocks from across the country, and the annual EPA volumes must keep our industry on that path.

The EPA’s Waiver Authority

Brent Erickson, BIO: “Further, BIO continues to strongly disagree with EPA’s prior interpretation of its general waiver authority under the RFS statute and with EPA’s ongoing stockpiling of carryover RIN credits. The RFS statute does not allow EPA to rely on demand-side factors under the oil industry’s control as a basis for decreasing the fundamental requirement to use as much renewable fuel as the biofuel industry can produce. And the statute does not grant the agency leeway to create a permanent carryover RIN bank.”

Brian Jennings, American Coalition for Ethanol: “ACE strongly opposes EPA’s previous misapplication of the RFS general waiver authority to use so-called ‘infrastructure constraints’ as an excuse to ride the brakes on RVOs.  That is why we are petitioners in Americans for Clean Energy et al. vs. EPA, a lawsuit pending in the U.S. Court of Appeals for D.C.  We are encouraged by the oral arguments made about this case in April and look forward to the Court deciding in our favor soon.”

Anne Steckel, National Biodiesel Board: “Targets like this ignore reality and the law, inhibiting growth in the industry. NBB supports increases in the volume requirements, believing the agency must be more aggressive in meeting Congress’s goals to prioritize and move this country toward advanced biofuels.

Missed Opportunity for biodiesel

Anne Steckel, National Biodiesel Board: “This proposal continues to underestimate the ability of the biomass-based diesel industry to meet the volumes of the RFS program. This is a missed opportunity for biodiesel, which reduces costs, provides economic benefits and results in lower prices at the pump. NBB believes EPA should set the advanced-biofuel requirements for 2018 based on a volume of at least 5.25 billion gallons and the biomass-based diesel volume for 2019 at 2.75 billion gallons.

Randy Howard, REG: The RVO is only one tool that aids biomass-based diesel growth and it is our job to convince policymakers that it should not restrain growth of American-made renewable fuel. So, we look forward to additional meetings with the Administration in the coming weeks to show how an industry that is only running at about 65 percent capacity, has ample feedstock supply, and is helping fill growing diesel demand can help President Trump reaffirm his commitment to growing the supply of all American made fuels.”

Tom Brooks, Iowa Biodiesel Board: “If these volumes stand, the U.S. could restrict one of its most powerful opportunities to support American manufacturing of energy. Iowa, as the nation’s top biodiesel-producing state, has expanded capacity in anticipation of better times ahead – but that is now looking bleaker.

Weakening the signal: More certainty needed

Bob Dinneen, RFA: “We are concerned that by reducing the cellulosic RVO, this proposal may weaken the signal to the marketplace and we want to better understand EPA’s methodology. With many current ethanol producers investing in bolt-on technologies to produce cellulosic ethanol from existing facilities, we want to ensure that the final 2018 RVO continues to grow the market for cellulosic biofuels.”

Brent Erickson, BIO: “BIO believes the agency is wrong to waive more than half of the RFS program’s required advanced biofuel volumes and more than 20 percent of the required overall volume while failing to enable advanced biofuel producers to reach the market.”

Emily Skor, Growth Energy: “While we are pleased with the EPA and Administration’s commitment to a 15-billion-gallon target for conventional biofuels, we would like to see final levels for cellulosic and advanced biofuels continue to give producers and stakeholders certainty in their investment in second generation technology.”

Timeliness

Wesley Spurlock, National Corn Growers Association: “We call on the EPA to keep the RFS moving forward in line with the law and in a timely manner. Doing so will bring greater stability and certainty to the marketplace and spur increased investment in renewable fuels.

Brian Jennings, American Coalition for Ethanol: “Given the delay in issuing the proposal, it is imperative that Administrator Pruitt ensures the process moves forward in a timely manner to meet the final rule publishing date of Nov. 30.”

Mike McAdams, Advanced Biofuels Association: “EPA’s commitment to timely release of the 2018 RVOs is a strong signal of the Administration’s support of and commitment to the RFS. The single most important policy driver for the advanced and cellulosic biofuels industries is the Renewable Fuels Standard (RFS), and today’s release puts us on track for the 2018 RVOs to be completed by the statutory deadline of November 30.”

Brent Erickson, BIO: “BIO and its members are concerned with EPA’s delays in issuing this proposal. We will work with the agency and the Administration to finalize annual rules in a timely manner and carefully consider the program’s impact on investment in advanced biofuels. “BIO and its members have stressed to EPA the importance of speedier decisions on RFS pathway approvals. To date, EPA has simply taken too long to make its decisions on pathway approvals, with devastating results to individual companies.”

No Blend wall

Emily Skor, Growth Energy: “Information from the Department of Energy, as well as from the numerous retailers across the country selling higher biofuel blends, confirm what we’ve known for years – there is no ‘blend wall.’ More and more of America’s drivers are choosing higher biofuel blends, like E15, and fulfilling the promise of the RFS.

Imports and exports

Brian Jennings, ACE: “The RFS is meant to drive increasing levels of domestic biofuel production and use and we are encouraged EPA is taking a hard look at whether Brazilian sugarcane ethanol should continue to be preferentially treated under the RFS in a manner that displaces lower carbon, domestically produced corn ethanol in the marketplace.

Randy Howard, REG: “We remain confident in a positive outcome in the trade complaint against unfairly subsidized imported biodiesel from Argentina and Indonesia, and are just as confident that U.S. production can make up for any lost import volumes.  And finally, there is momentum to reinstate and reform the federal biodiesel tax incentive to focus it on domestically produced fuel.

Tom Brooks, Iowa Biodiesel Board: “I want to be clear that the influx of foreign-produced biodiesel we’ve seen in our market from places like Argentina and Southeast Asia is no indication that the U.S. cannot meet production demand. On the contrary, most biodiesel plants in Iowa and elsewhere are operating below capacity. The imports are pricing us out of our own market due to trade and other federal policies that need correction. This includes a loophole in the federal tax incentive for biodiesel, which allows other countries to claim our incentive, while also claiming their own country’s subsidies.

Mike McAdams, Advanced Biofuels Association: “While we are disappointed to see a reduction for advanced biofuels, ABFA has long supported EPA’s efforts to match the RVO standards with actual production, especially in the cellulosic pool. However, we are frustrated that some in the industry are hoping to use the RFS to eliminate international competition. Whether supplied domestically or internationally, the increased blending of these advanced biofuels remains critical for U.S. emissions reductions.

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