In what could be seen as a sign that an unpopular decision is about to be rendered by the Obama Administration on ethanol and biodiesel, a select group of Senate Democrats have met with the White House. The Hill reports White House adviser John Podesta met with the group on Thursday to discuss the Environmental Protection Agency’s (EPA) plans regarding the Renewable Fuel Standard (RFS).
The senators said they wanted to discuss “urgent concerns” with the RFS, which requires that diesel and gasoline refiners mix a certain amount of renewable fuels such as biodiesel and ethanol into their traditional fuels each year. The Environmental Protection Agency proposed last year to keep the biodiesel volume in 2014 at least year’s level, despite an increase in biodiesel production, and reduce the ethanol volume.
The EPA has not yet finalized its 2014 volumes for renewables.
[Minnesota Senator Al] Franken and his colleagues took particular issue with the biodiesel mandate.
“Such a decision would not only harm the economic growth surrounding biodiesel production in our states, but would be a setback in our national efforts to continue boosting U.S. energy security while also reducing greenhouse gas emissions,” they wrote.
The National Biodiesel Board (NBB) seems concerned about the meeting as well and issued a statement from from Vice President of Federal Affairs Anne Steckel:
“While we are encouraged by these discussions, the biodiesel industry remains concerned that the Administration still appears to be considering a proposal that would backtrack from last year’s proven production and that threatens biodiesel plants around the country. The fact is that biodiesel is the most successful Advanced Biofuel under the RFS, yet it could see its production cut significantly. This meeting, which was originally requested by a diverse group of 14 Democratic senators from across the country, makes clear that there are serious concerns about the impact that the proposal would have on jobs and economic growth nationwide, in states from Rhode Island to Minnesota to Washington state. This is a critical decision, not just for the biodiesel industry but for the future development of clean, American-made renewable fuels that will help us reduce our dangerous dependence on petroleum.”
“The number needs to be out, it’s really ridiculous,” said NCGA president Martin Barbre, pictured here on the right with Perciasepe. “He said ‘we’re behind time frame’ and we had some delegates stand up and say ‘you’re not behind time frame, you’re way late.’” The final rule was expected by the end of June but EPA officials say it is being delayed because of the massive volume of comments that need to be studied in order to make a decision.
Barbre says while they appreciate the fact that EPA is taking the time to make sure they make the right decision, delaying it until almost the end of the year causes problems in the market. “Sort of what has created this issue with RINS and that run up in the RINS price is the lateness of the oil companies getting the numbers,” said Barbre. “They’re supposed to have these number in the spring, they get them in the fall, and by the end of the year they have got to have met their obligations. So it puts them in somewhat of a bind.”
“We’re not usually on the side of defending the oil companies, but in this case they just need to get the numbers faster so they can get themselves where they need to be,” Barbre added.
Today’s final action includes a voluntary third-party quality assurance program option for RINs that regulated parties may exercise as a supplement to the “buyer beware” liability as prescribed under existing regulations. The program provides a means for ensuring that RINs are properly generated through audits of renewable fuel production conducted by independent third-parties using quality assurance plans (QAPs), provides an affirmative defense for the transfer or use of invalid RINs that had been verified under an approved QAP, defines the conditions when RINs must be replaced, and a process for determining who will replace the RINs…
- Minimum requirements for a QAP, including such things as verification of feedstocks, verification that volumes produced are consistent with amount of feedstocks processed, and verification that RINs generated are appropriately categorized and match the volumes produced
- Qualifications for independent third-party auditors
- Requirements for audits of renewable fuel production facilities, including minimum frequency, site visits, review of records, and reporting
- Conditions under which a regulated party could assert an affirmative defense to civil liability for transferring or using an invalid RIN
- Identification of the party or parties who are responsible for replacing invalid RINs with valid RINs and the timing of such replacement
- A two percent limited exemption for calendar years 2014, 2015, and 2016 that exempts a small fraction of a party’s Renewable Volume Obligation (RVO) from the requirement of replacement of invalid RINs used for compliance if they were RINs verified through a QAP
- Changes to the EPA Moderated Transaction System (EMTS) that would accommodate the quality assurance program
There’s an interim period that covers back to February 21, 2013 through the end of this year which will finalize two proposed QAP programs, QAP A and QAP B.
Beginning January 1, 2015, there will be a single QAP, and the associated verified RINs will be referred to as Q-RINs.
Michigan farmer Jeff Sandborn, chair of the Ethanol Committee, said they spent the week talking with administration officials and members of Congress after being updated on the issues. “Right now, Congress faces rapidly evolving issues crucial to our members. The information and understanding coming out of these meetings will help each of our delegations make the strongest case possible for farmers.”
“We greatly appreciate the deputy administrator’s willingness to participate in an open, well-considered conversation,” said NCGA President Martin Barbre of Illinois. While Perciasepe mainly dealt with the proposed Waters of the United States rule, he also fielded questions from growers pertaining to both the reduction in volume, and the continued delays of final RFS rule.
Hardware and software that bolt onto diesel truck engines and allow pure biodiesel to run through the system has gained some key approvals from the U.S. government. Optimus Technologies is the first to receive the Environmental Protection Agency’s (EPA) approval for an advanced biofuel conversion solution for existing medium‐ and heavy‐duty trucks. This company news release says that while the system can be used with a wide variety of fuels, this also marks the first time anyone has been able to be compliant with 100 percent biofuels, creating opportunities for ethanol refiners as well.
The solution is based on a combination of Optimus’ Vector bi‐fuel (diesel or biofuel) conversion system ‐‐ hardware and software that bolts‐on to existing diesel engines ‐‐ and certified, pure biofuel. Fuels tested were derived from a variety of bio‐sources including non‐food grade corn oil, recycled cooking oil, and pure biodiesel (B100). While Optimus may be first to the U.S. market, such solutions have been available in Europe for more than a decade.
“We’re very excited that the EPA has approved our technology,” said CEO Colin Huwyler, “Our solution represents a tangible opportunity for fleets to shrink their operating costs while improving the environment. And, our solution does not require multi‐million dollar start‐up costs like CNG does.” Fleet operators have been surprised to find that CNG solutions require capital‐intensive modifications to fueling stations and maintenance facilities, extending payback periods well beyond 5 years. Optimus’ solution can leverage current facilities with only minor modifications, offering paybacks as little as one year.
The news release goes on to point out that a network of biofuel suppliers are supplying the fuel at the standard Optimus needs.
“We are very glad that Optimus has secured EPA approval,” stated Rory Gaunt, CEO of Lifecycle Renewables, a leading renewable fuel provider based outside of Boston, MA. “We have been a strong supporter of Optimus’ efforts. Now, we will be able to expand our market reach and grow into servicing commercial and government fleets with our high quality, renewable fuels.”
Emissions testing shows that Optimus has a significant overall reduction in tailpipe emissions in comparison to diesel, with particulate matter reduced by about 40 percent.
A California-based company making biodiesel in India has gained important approvals from the U.S. government and the European Union. This news release from Aemetis, Inc. says the U.S. Environmental Protection Agency (EPA) approved issuance of D4 Renewable Identification Numbers (RINs) for Aemetis’ imported biodiesel produced from waste fats and oils (WFO) at Aemetis’ 50 million gallon per year plant on the East Coast of India, as well as the EU certification.
The superior quality and low carbon intensity biodiesel produced at the Aemetis India plant has recently earned [the EU's] International Sustainability and Carbon Certification (ISCC) Category 2 certification. With the recent construction and commissioning of a biodiesel distillation column at the India plant, the company is producing a colorless biodiesel with 99.5% esters and nearly no monoglycerides, water or other contaminants. Aemetis biodiesel has met and exceeds all D6751 biodiesel specifications, allowing for use in all diesel engines.
“Receiving ISCC Category 2 and EPA certifications are great steps in ramping up India to full capacity with the capability to grow and implement new technologies,” said Eric McAfee, Chairman and CEO of Aemetis. “After the successful installation of the India plant distillation unit, in June Aemetis made its first shipment of Category 2 biodiesel to customers in the E.U.” added McAfee.
Aemetis’ India plant is able to make biodiesel from a wide variety of feedstocks.
The program is designed to maintain liquidity in the market for RINs under the Renewable Fuel Standard (RFS) providing a means for ensuring that RINs are properly generated through audits of renewable fuel production conducted by independent third-parties using quality assurance plans (QAPs). According to EPA, the QAP is intended to improve RIN market liquidity and efficiency and improve the ability of smaller renewable fuel producers to sell their RINs.
Other provisions in the final rule regarding RINs include modifications to the exporter provisions of the RFS program to help ensure that an appropriate number and type of RINs are retired whenever
renewable fuel is exported.
EPA has now determined that crop residue does meet the lifecycle greenhouse gas (GHG) reduction requirements for cellulosic biofuel under the Renewable Fuel Standard (RFS) provided that “producers include in their registration specific information about the types of residues which will be used, and record and report to EPA the quantities and specific types of residues used.”
Dinneen says EPA should be commended for using a straightforward approach to accounting for the cellulosic content of biofuel feedstocks. “The ‘cellulosic content threshold’ method finalized in today’s rule is a common sense approach that minimizes administrative and accounting burdens for commercial producers, but upholds the spirit and intent of the RFS,” Dinneen said.
The EPA also finalized some minor amendments related to survey requirements associated with the ultra-low sulfur diesel (ULSD) program and misfueling mitigation regulations for 15 volume percent
ethanol blends (E15) in announcements made on Wednesday.
While the ethanol industry awaits the Environmental Protection Agency’s decision on the amount of ethanol to be blended into the nation’s fuel supply, ethanol producers are looking at other ways to make sure the green fuel increases its blend amounts.
In this edition of the Domestic Fuel Cast, we hear from Growth Energy CEO Tom Buis, Dean Drake with the consulting company the Defour Group, Scott Zaremba, president of Zarco Incorporated, and Ken Parrent, the ethanol director for the Indiana Corn Marketing Council, as they give their thoughts on how consumer demand will be a bigger driver for higher ethanol blends after attending an Indiana Corn Growers Association ethanol forum that focused on marketing mid-level ethanol blends and ran following the recent 2014 Fuel Ethanol Workshop in Indianapolis.
“During your time in office you have supported the development and growth of the biodiesel industry. Now, biodiesel producers around the nation have the ability to generate nearly two billion gallons a year of the only EPA-approved advanced biofuel, which is commercially available across the United States,” the lawmakers wrote in a letter to President Obama. “Therefore, we believe now is not the time for a critical shift in biodiesel policy. We urgently ask that you raise biodiesel’s RVO for 2014 above 1.28 billion gallons.”
The letter, which was led by Reps. Collin Peterson, D-Minn., and Adam Kinzinger, R-Ill., can be found here. The lawmakers signing the letter represent 22 states.
In a draft RFS rule released in November, the EPA proposed holding biodiesel volumes at 1.28 billion gallons – a sharp drop from last year’s actual production of nearly 1.8 billion gallons. Biodiesel producers around the country have warned that such a proposal will cause severe contraction in the industry. A nationwide survey of producers conducted by the National Biodiesel Board (NBB) in April found that more than half have already idled a plant this year and 78 percent have reduced production from last year. Nearly two-thirds – 66 percent – have already laid off employees or anticipate doing so.
NBB officials have previously expressed their shock and disappointment on the proposal because of the success biodiesel has already shown in exceeding the targeted amounts of renewable fuels. They call on the Obama Administration “to finalize a strong RFS volume as quickly as possible.”
Environmental Protection Agency administrator Gina McCarthy said earlier this year that they planned to issue a final rule on the proposed volume requirements under the Renewable Fuel Standard (RFS) in “late spring or early summer” but spring is gone and summer is here and there’s been no word yet.
Senator Chuck Grassley (R-IA) said last week that he thought the decision was delayed now until fall. “The fact that they’ve delayed it is a little bit of good news,” he said during an interview on June 19. “The bad aspect of it is that it retards investment in ethanol … and it doesn’t just effect ethanol but biodiesel too.” Grassley said he really doesn’t know when the EPA will announce the final rule, although he does believe it will be better than the proposal released in November. “I don’t think they’ll be that bad, but whatever is less than present law is going to be bad anyway, maybe just less bad.”
Meanwhile, Grassley says the wind energy industry, which is huge in Iowa, is still waiting on Congressional action to extend tax credits. “As a father of the wind energy tax credit, I want to get it renewed,” he said. “It’s part of a package of 53 renewals that have to be passed by the Senate and it’s up to Reid when he brings it up … we don’t get any indication from him on it.” Grassley says he will continue to push to make that happen.
Biodiesel producers from across the country are in Washington, D.C. today to make a final push back against the federal government’s latest proposal for the amount of biodiesel to be mixed into the nation’s fuel supply. The National Biodiesel Board says nearly 100 biodiesel producers, feedstock suppliers and other advocates from at least 27 states are on Capitol Hill to voice there concerns over the Environmental Protection Agency’s (EPA) proposal that would cut renewable volume obligations for biodiesel to well below last year’s production levels and that have resulted in nearly two-thirds of biodiesel makers laying off employees.
“People are losing their jobs in this industry as we speak, and it’s largely because Washington has delivered sporadic, inconsistent policy,” said Anne Steckel, NBB’s vice president of federal affairs at NBB, the industry trade association. “As President Obama has said, America should be the world leader in biodiesel and in Advanced Biofuels. And we can be. But we need this Administration and this Congress to stand behind strong energy policy that encourages investment and growth.”
“The recent spike in oil prices stemming from the situation in Iraq should remind us all why these policies are so important,” Steckel added. “We constantly talk about the need to reduce our dependence on oil. Doing that requires massive investments and infrastructure improvements that simply won’t happen without strong energy policy. We can’t keep taking one step forward and two steps back.”
Biodiesel producers from Iowa, the nation’s top producer of the green fuel, are also making their voices heard. Grant Kimberley, executive director of the Iowa Biodiesel Board, issued the following statement:
“This swinging pendulum of government policy is wreaking havoc on small businesses with real employees who have banked their future on the promise of growing the American energy industry. EPA’s current RFS proposal represents a giant leap backwards for American-made fuel and advanced biofuels. Our Iowa biodiesel producers and soybean farmers strongly oppose it.”
A common message for all biodiesel producers in this fight is that the RFS is working to reduce greenhouse gases and lessen American dependance on foreign oil, as the original legislation back in 2007 intended. They also urge the EPA to follow the law and restore the numbers.
The Environmental Protection Agency announced Friday that the compliance deadline for the 2013 Renewable Fuel Standard is being extended from June 30 to September 30. The EPA intends to finalize the remaining portion of its rulemaking to establish the 2014 renewable fuel standards shortly.
EPA said the extension is warranted because they have not yet issued the 2014 annual standards rule. The agency received comments on the proposed rule “emphasizing the need for the EPA to promulgate the 2014 RFS standards quickly and the need for obligated parties to know their obligations for the following year when finalizing their 2013 compliance demonstrations.”
The American Fuel & Petrochemical Manufacturers (AFPM) was among those requesting the extension and President Charles Drevna says it was the right decision. “While we do not believe that delaying the compliance date eliminates the injury caused by the late promulgation of the rule, it will provide obligated parties with a degree of certainty by knowing their blending obligations,” said Drevna in a statement. “Now more than six months late, the agency’s inability to recognize the impact of continued delays is yet another reason that Congress must address this set of mandates whose very premise has proven obsolete.”
The 2013 RFS mandated 16.55 billion gallons of biofuels be blended into US transportation fuels, including 2.75 billion gallons of advanced biofuels.
The renewable fuels industry has not weighed in much on the debate surrounding the recent unveiling of the Environmental Protection Agency’s proposed regulation: Clean Power Plan. The proposed mandate, that is now open for comment, would reduce power plant emissions by 30 percent by 2030 using 2005 levels. According to Brian Jennings, executive vice president for the American Coalition for Ethanol (ACE), while acknowledging the ambitions rule to limit GHG emissions from power plants, it must be noted that the Renewable Fuel Standard (RFS) has been successfully reducing GHG emissions from the transportation sector since 2007 when the legislation was enacted.
Jennings said that in 2013 alone, the use of biofuels cut 38 million metric tons of GHG emissions from the transportation sector – the equivalent of the emissions from removing 8 million cars on the road or permanently parking every motor vehicle in Florida. “In other words, the RFS is the strongest and most successful law ever enacted to reduce dangerous GHG emissions from transportation fuels,” said Jennings.
“If the Administration is serious about using the Clean Air Act to implement a broad-based effort to reduce GHGs across various sectors, the best and most important way to do that is to ensure that the RFS works as intended to drive higher usage of renewable fuels versus how EPA has proposed to reduce the RFS for 2014,” continued Jennings. “EPA’s current RFS proposal sets a dangerous precedent by letting oil companies off the hook when it comes to compliance with Clean Air Act GHG standards for transportation fuel. If the Administration expects power plants to comply with this new proposal by curbing their emissions, how can it let oil companies shirk responsibility for complying with the Clean Air Act RFS provision by refusing to allow consumer access to higher blends of ethanol?”
Time is ticking down for the Environmental Protection Agency to make a decision on how much renewable fuel will be mixed into the nation’s fuel supply, and ethanol and biodiesel groups are pressing for a change to what’s being proposed.
On the biodiesel side, nearly 120 companies have just sent the White House a letter trying to reverse the proposed 1.28 billion gallons of biodiesel to be blended… a move in the wrong direction from the 1.8 billion gallons produced just last year. The letter adds to a chorus of dissent on the agency’s proposal coming from areas such as the Midwest where renewable fuels are made and from usually staunch Obama Administration backers on Capitol Hill.
In this edition of the Domestic Fuel Cast, we hear from U.S. Senators Heidi Heitkamp (D-ND), Dick Durbin (D-IL), Amy Klobuchar (D-MN), Al Franken (D-MN), Joe Donnelly (D-IN), and Maria Cantwell (D-WA), as they express their frustration with the EPA proposal… and what can be done to fix this.