Advanced Biofuels: Suspended in Bureaucratic Animation

By Michael McAdams,
President, Advanced Biofuels Association

For months the biofuels industry has focused on the EPA’s issuance of the 2014 Renewable Volume Obligations (RVO’s). Lobbying has been furious and consistent from all the various stakeholder groups that are impacted by the final numbers. It is expected that the final rule will be issued in mid to late September.

But, beyond the RVO numbers, not much has been said about this Administration’s inability to execute on its mandated task to review and approve new pathways under the RFS for feedstocks, technologies and types of fuels. Yes, indisputably, the various RVO numbers are important to the advanced and cellulosic industry; however, it is even more important for EPA to approve our companies for inclusion under the RFS program promptly.

Over the last four years, numerous advanced and cellulosic biofuel producers have applied for pathways under in the RFS program, which would allow them to compete on a level playing field with those already approved. As of this writing, 37 proposed pathways are pending final approval according to EPA’s website, and more are lining up to apply. By delaying these companies participation in the RFS, EPA has put them at risk in the short-term and removed potential sustainable gallons to be counted towards the RVO targets.

EPA sets new barriers to entry for fuels such as algae biofuels and renewable diesel

In addition to not approving pending pathways, EPA has also taken it upon itself to impose new barriers to entry into the RFS by creating distinctions within feedstock definitions and limitations on production of renewable oil’s into the final transportation fuels. For example, EPA currently is denying coverage to renewable fuels that result from renewable feedstocks, such as algae, processed at one location into a renewable oil or distillate and then finished into the final transportation fuel, e.g., renewable diesel, at another facility. Nowhere in the law will you find this type of guidance or direction from Congress. It is also fair to observe that EPA does not require collocation of processed soy bean oil production centers and biodiesel processing centers.

EPA attempts to justify such positions because of the threat of double counting the RIN’s, between the renewable oil, such as algal oil, and the final transportation fuel, heating oil or jet fuel. It disregards the many safeguards imbedded in the RFS rules to prevent against such fraud, including the numerous controls already required for the industry found in the newly released Quality Assurance Program. This imposes a standard on renewable oils that has never existed for crude oil from all around the world. Such regulatory positions create unnecessary barriers to entry, lower the number of gallons of renewable fuels produced and reduces the types of renewable feedstocks available for the creation of more environmentally friendly fuels, while protecting the already advantaged incumbent technologies.

Although our industry has waited two years, we should give EPA credit for finishing, at least partially, the “Pathways II Rule” before releasing the RVO’s. Sadly, however, EPA removed many of the pathways that were originally slated for inclusion in Pathways II, vaguely stating, after years of delay, that “the Agency is deferring a final decision on these matters until a later time.” For instance, EPA removed language that would have allowed [renewable] butanol to be added to gasoline with ethanol in it while still complying with the Clean Air Act.

The wait continues for important clarifications

As a result of this limited rule, the wait continues for many in the advanced and cellulosic biofuels industry for important clarifications, like: whether the wood they use from the tree from the actively managed forest is available for use as a feedstock; or whether a biogenic oil or fatty acid is a waste or not a waste; whether it requires its own life cycle analysis from what ever tree or plant it comes in order to qualify. Of course all of these new fuels must meet the magic 50 percent or 60 percent GHG reduction thresholds, including indirect land use, in order to comply with the program. It seems, however, that “we have lost site of the forest through the trees.” It is hard to believe that – over four years into the program – we don’t have a lifecycle analysis for the upstream portion of a planted tree that allows perfectly usable tree residues/wastes to qualify as a feedstock under the program.

A better system needed

Surely we can develop a better pathway system to assist in the development of this industry. I want to applaud EPA for recognizing this in March, citing their intention to revise the pathway process. We encourage them to look at the TSCA program for chemical registration which has a rigorous process and time line but makes final determinations far more expeditiously. In the end, EPA must demonstrate leadership and drive this process expeditiously by making clear, timely well reasoned decisions so that this industry may move forward. Punting on the tough choices won’t get the job done and will further stall and injure the advanced industry.

The advanced and cellulosic biofuel industry stands ready to continue to work constructively with EPA to solve these impasses. Without resolution, a damp blanket will weigh on our ability to finance the plants of the future and produce the variety of sustainable gallons that Congress envisioned when passing the RFS. With all of the current turmoil around the world, now is the time to do everything we can to deliver a diverse set of options for the production of advanced and cellulosic biofuels and all the jobs they would create in the United States.