EPA's year-long RFS delay has forced advanced biofuels into retreat

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Oct. 15, 2015 - Nearly a year beyond the Nov. 30, 2013, deadline to set volume requirements for the Renewable Fuel Standard (RFS), the EPA still isn't saying when to expect an announcement. But National Biodiesel Board CEO Joe Jobe says the advanced biofuels industry remains “hopeful and cautiously optimistic that they will ultimately get it right even though it will have taken them a year to do so.”

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Speaking at the 2014 National Advanced Biofuels Conference in Minneapolis this week, Jobe joined other industry leaders in explaining the high cost of the RFS delay. He pointed out that small and mid-sized advanced biofuels producers have suffered the most from uncertainty over the federal mandates for the petroleum industry to blend conventional corn ethanol and advanced biofuels with gasoline. While larger producers could continue operations, he said smaller producers “have been faced with an impossible business decision of either continuing to run at a loss or stop running and be at risk of losing all of your employees, losing your customers, losing your suppliers.”

Jobe explained that delay in announcing the 2014 mandates is especially painful because “2013 really was a demonstration of how fundamentally sound the energy policy called the Renewable Fuel Standard was and how well it could work.” He noted that with the 2013 RFS in place, requiring greater volumes of biofuels, investors invested and the industry grew dramatically, with the greatest growth focused on biodiesel.

For biodiesel, “the first fully commercialized advanced biofuel,” Jobe said, production nearly doubled from just over 1 billion gallons for 2012 to just under 2 billion gallons for 2013. “By July of 2013, we were at about an annualized monthly run rate of about 2.1 billion gallons, which is equivalent to about 5 percent of the over-the-road diesel supply. So we had actually hit our 10 year vision of 5-by-15 two years early.”

If the final announcement for the 2014 RFS fails to revise the sharply lower biofuel mandates which an EPA draft proposed late last year, Jobe says the result will be disastrous for the biofuels industry as a whole - and for the U.S., which needs biofuels as part of the national effort to reduce the use of reliance on strictly fossil fuels. Calling the biofuels industry “beleaguered” and “under attack by uncertain policy signals,” Jobe says EPA based its proposal to lower RFS levels on its “nonsensical” argument that with U.S. gasoline consumption down, EPA had to “address the ethanol blend wall.”

Jobe explained that EPA's answer was to cut the ethanol volume to 6 percent below the 2013 level and effectively make a 50 percent cut for biodiesel. With EPA's proposal to set the advanced biofuels cap at 1.28 billion gallons for 2014, he says, after biodiesel production reached nearly 2 billion gallons in 2013, “once you figure there was about 300 million gallons of excess production carried forward into this current year, 1.28 becomes less than 1 billion gallons.”

Advanced Biofuels Association President Michael McAdams told the conference that uncertainty over the RFS requirements has been compounded by continuing questions about renewing lapsed short-term tax breaks for renewables and other problems caused by a dysfunctional Congress “that works only 13 percent of the year.” He said the uncertainty has dried up financing for biofuels, forcing companies to abandon plans to launch new projects in the U.S. and instead look for opportunities overseas in countries like Brazil, China and India, where “the partnership between their government and this industry has been somewhat more stable.”

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