We Came in Peace: The Renewable Fuel Standard and the spirit of innovation

The EPREINC scenario

One chart was prepared by the Energy Policy Research Foundation for its Congressional testimony on the Renewable Fuel Standard yesterday. Now, there are voices in the biofuels industry who are going to point out that EPRINC is an oil industry-funded research organization, which it is.

But that’s like saying that we can’t learn anything from the RFA about the impact of oil policy because RFA is supported by ethanol producers.

So let’s take the data on its merits.

EPRINC’s scenario foresees a big shortfall between the production of renewable fuels and the targets established in the Renewable Fuel Standard. Accordingly, they contend, EPA is required (under RFS2 rules)  to issue zillions of credits to allow oil companies to make up for the shortfall — those credits would cause rising costs, which would “lead to falling demand and lower production of transportation fuels.”

“According to EPRINC, “reduced production brings about rising prices which resulted in NERA concluding that by 2015, diesel prices would rise by 300% and gasoline prices would rise by one-third.”

On the other hand, it’s worth pointing out that the EPRINC scenario points to around 18 billion RFS credits earned in 2022. The US renewable fuels industry has more than that in current capacity — not to mention the potential for imports.

In other words, for EPRINC’s scenario to be reality, every single technology coming forward would have to fail to commercialize in the next eight years.

Every. One. Would. Have. To. Be. An. Epic. Fail.

Shell’s technology. Fail. BP – fail.  DuPont – fail.  Total – fail. Neste Oil’s. Solazyme, KiOR, INEOS, Abengoa, Gevo, Waste Management, Valero, Flint Hills Resources, DSM, POET, Beta Renewables, Inbicon. Solazyme. Epic fail. And a lot more.

The NBB’s growth scenario would have to drop from 3.5 billions gallons to Zero. Available imports of renewable fuels from the rest of the world would have to drop to Zero.

What kind of belief in know-how — and the innovative sprit — does this level of pessimism express?

Now – let’s look at an alternative scenario. And then we discuss the options and the path forward – via the page links below.