EPA Gets it Right for American Advanced Biofuels

January 5, 2022 |

By Douglas L. Faulkner, President, Leatherstocking LLC and “The Cleantech Conservative”

And, Michael McAdams, President, Advanced BioFuels Association

Special to The Digest

Buried in the recent release of the three-year biofuels production volumes by the Environmental Protection Agency was an announcement of a proposed major change to future regulation of advanced biofuels.  The new rule’s technical complexities obscure both its difficult history and deep import.

The Agency has now moved to approve bio-intermediates, so that manufacturers could earn compliance credits for upgrading feedstocks such as woods and municipal solid wastes at a first facility into a renewable oil and then refined into renewable gasoline, diesel or jet fuels elsewhere.  This action has the potential to reduce the carbon content of finished renewable fuels and to increase their production.

A DECADE OF FRUSTRATION

The original Renewable Fuels Standard, issued in 2010, carried the general expectation that biomass would be converted to renewable fuels at a single facility; the implementing regulations were written accordingly for appropriate federal oversight and enforcement for first-generation biofuels.  But, reality on-the-ground soon began to overtake that assumption:  advanced biofuels companies began to note that this regulatory framework handicapped their growth, because of their inability too to generate compliance credits, the “currency” of the program known as Renewable Identification Numbers (RINs), for their different manufacturing processes.   Their non-food feedstocks, like woody biomass, became known as “bio-intermediates”, because they were partially converted at one place into a bio-crude then sent to a separate plant for final processing.

Regulations for bio-intermediates though soon took a different turn following a blitz of fraud which hit the program in the early years.  This eventually sent quite a number of folks to prison for falsifying feedstocks claims.  As a result, the Agency in 2012 targeted fraud prevention rather than production efficiency, resulting in regulations specifically denying a RIN to any company using a bio-intermediate developed off-site from the final facility.  This action effectively blocked the ability of advanced biofuels company to grow significantly.

The Agency tried to respond to this bottleneck by proposing in 2016 the Renewables Enhancement and Growth Support (REGS) rule to allow producers of those bio-intermediates to qualify for RINs.  Unfortunately, that rule was never finalized by the Obama Administration after public comments ended in early 2017 and no other regulatory action until now was ever advanced in its place.

A GLIMMER OF HOPE

The now-defunct federal Biomass Research and Development Technical Advisory Committee stepped into this breach to promote faster growth for the American advanced biofuels industry.  In late 2018, following instructions from the Secretary of Energy, the Committee formally recommended against stiff bureaucratic resistance three-tiers of steps to break down federal regulatory barriers:  from easier near-term opportunities under existing regulations (co-processing and bio-intermediates; co-mingling of biomass; and eligibility of wastes for RIN qualifications); to intermediate-term fixes requiring major regulatory actions (new pathway approvals; de-risking feedstock production; and biomass to electricity); to longer term moves requiring major legislative steps (qualifying different types of forests as allowable feedstocks; setting values for renewable carbon.  For more details please see:  https://biomassboard.gov/sites/default/files/pdfs/TAC-2018-Q4-Report_FINAL.pdf

(NOTE:  The Committee was established by Congress in the Biomass R&D Act of 2000; it was abolished by the Trump Administration just before it left office in 2020, hoping to re-create it as part of a never-realized bigger advisory committee.  Doug Faulkner helped launch the Committee as a senior appointee of the George W. Bush Administration and was the Committee’s Co-Chair before its demise.  Mike McAdams was a member of that Committee and has been privately lobbying for such changes for years.)

EPA TO INDUSTRY:  MERRY CHRISTMAS 2021

In line with those Committee recommendations,  the Agency has now moved to break the nearly decade-long logjam with a commitment to modernize its rules by seeking public comment on its proposed actions before moving to a final rule.  This change would clearly define the types of feedstocks and processes for updating those feedstocks into a bio-intermediate which could be upgraded cost-competitively into a final fuel at another site.  Specifically, feedstocks such as woods and municipal solid waste could be changed into a renewable oil at a first facility and then shipped and upgraded into renewable gasoline, diesel or jet fuels at a standard refinery for RINs.  This action when completed will thus unlock the potential for huge increases in the types of advanced biofuels Congress originally envisioned.   These fuels will allow industry to meet or exceed a minimum of a 50% carbon reduction from the baseline fuels when the program was enacted.  See Federal Register notice for details:  https://www.govinfo.gov/content/pkg/FR-2021-12-21/pdf/2021-26839.pdf

Recognizing that too much time has passed since the original REGS proposal the Agency has proposed a set of new and improved regulatory changes to finish the job and open the door to the long-anticipated and much-needed period of significant growth for advanced biofuels.  The Agency is re-issuing some rules from the original REGS with no changes (e.g., lifecycle calculations and proposed volumes); some original rules with changes (e.g., definitions; transfer limits; and compliance and enforcement); and some new rules (e.g., testing & measuring for renewable content; esterification; intracompany transfers.)  The public hearing for all of this was 04 January 2022 with written comments on the proposed rule due by 11 February.

READY, SET, LAUNCH

The authors applaud the Biden Administration for taking this bold step to fix a long-standing problem and hope it will consider implementing other regulatory changes holding back the advanced biofuels renaissance as laid out by the Biomass R&D Technical Advisory Committee.  We urge any concerned party to study the Agency’s proposal and submit detailed commentary supporting this step.   The press, the political class and the public should get ready for a new dawn for sustainable, renewable fuels.

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