Jim Lane
This week, in Washington and Brussels, four news flashes on global renewable fuel volumes appeared on the radar. Can you safely ignore them and get on with other work, or is there something to get deeply informed about? Let’s look into it.
Ignore This #1. The Point of Obligation RFS Crisis.
The issue.
Several parties petitioned the US EPA to shift obligations under the Renewable Fuel Standard from them to someone else. Basically, to anyone else. The petitioners want relief from buying RINs, thinking about renewables, or experiencing any pain associated with the change in the fuels marketplace which the Congress mandated in the 2007 EISA Act.
The Bottom Line:
Unless EPA goes completely insane, it’s a no-brainer to ignore.
Why We’re Talking About It:
The EPA has proposed to deny the petitions, but hasn’t actually finalized the denial. And, the EPA has proposed to open up a broader comments period on the issue. In short, it’s done everything it can to ps off the losers and not yet make winners feel secure.
The Latest News:
A group of trade associations representing various segments of the fuel industry (which don’t usually agree on anything) have signed onto a letter – for the first time ever – that will go to EPA Administrator Gina McCarthy and will help inform the Trump transition team.
Get this: the list includes, the American Petroleum Institute, Advanced Biofuels Association, Growth Energy, National Association of Convenience Stores, Renewable Fuels Association, National Association of Truck Stop Operators, Petroleum Marketers Association of America, Society of Independent Gasoline Marketers of America. So you have renewable fuel producers, retailers, and oil refiners.
Why you can safely ignore:
It’s a change no one of any importance really wants.
Ignore This #2 The US GAO Report
“Renewable Fuel Standard, Program Unlikely to Meet its Targets for Reducing Greenhouse Gas Emissions.”
The issue:
Senator James Lankford of Oklahoma, chairing a Senate subcommittee, requested a report from the Government Accounting Office on the issues related to advanced biofuels R&D. Specifically, how the federal government has supported advanced biofuels R&D in recent years and where its efforts have been targeted and expert views on the extent to which advanced biofuels are technologically understood and the factors that will affect the speed and volume of production.
Lankford, in case you were wondering, introduced a bill to repeal the corn ethanol mandate in 2013 with the Ghost Fuels Deletion Act and again in 2014 with the Phantom Fuels Elimination Act. He again called for repealing the RFS in June 2015. So, if you regarded this report as a political exercise, you wouldn’t be alone.
The Bottom Line:
You can safely ignore this 38-pager.
Why We’re Talking About It:
The issuing of the Report gives occasion for renewable fuel-haters to Dis the RFS and say that the program is not working. Meanwhile, BIO has used the report as an opportunity for EPA shaming, stating:
“EPA’s delays and methodology for setting the annual RFS chilled investment in advanced biofuels…Further, EPA continues to be too slow in making decisions on RFS pathway review and approval process…BIO has repeatedly pointed out that EPA’s delays and reductions in the annual volumes have caused increases in transportation-related greenhouse gas emissions.”
The Latest News:
The GAO report is here. The 1-pager is here. Here’s an excerpt to give you the flavor.
Biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and some drop-in fuels. A few of these fuels, such as biodiesel and renewable diesel, are being produced in significant volumes…[but have]…feedstock limitations. Current production of cellulosic biofuels is far below the statutory volumes and… production costs are currently too high…Drop-in fuels are…too costly. Among the factors…the low price of fossil fuels relative to advanced biofuels…Experts also cited uncertainty about government policy…the RFS and federal tax credits…investors do not see them as reliable and thus discount their potential benefits when considering whether to invest.
Why You Can Safely Ignore:
Everyone already knows all this, the GAO report is a statement of the obvious. We might add, the entire report was written based only on talking to academics and government officials. This is a political haymaking and not much more.
Consider this as a Warning Label for the Report: “No Actual Fuel Producer, Oil Refiner, Technology Developer or Investor was disturbed during the Making of this Report.”
Ignore This #3 The Canada Course Correction
The Issue:
Canada’s Ecofiscal Commission recently released a report entitled Course Correction, which calls on the Canadian government to rethink its biofuels policies.
The Bottom Line.
Skip it. Everyone else did. Including the Canadian government, who celebrated the report’s criticism of biofuels policies but announcing an expanded national Low Carbon Fuel Standard.
Why We’re Talking About it:
Probably because so many economists, academics, technical experts, and businesses have rejected the report’s data, methodology and findings. Keeping it perversely alive.
Why You Can Safely Ignore:
As Gord Miller, former Environmental Commissioner of Ontario told the National Post: “As I see it, Ecofiscal’s Course Correction report, if embraced, would have the following net result: greenhouse gas emissions would increase, urban air quality would deteriorate, and consumers would pay more for fueling their vehicles. Moreover, all access to the liquid transportation fuel market for current and future renewable or alternative fuels would be eliminated, and research and development of biofuels would be shut down. If anything, it’s Ecofiscal’s work that needs a thorough review from a broader perspective.”
One You Can’t Ignore: The European Commission’s new Clean Energy Package
Report proposes to phase out, or significantly reduce, the use of conventional biofuels in Europe.
The issue:
In the proposed Renewable Energy Directive for the period post-2020, the European Commission proposed to reduce the maximum contribution of conventional biofuels, such as ethanol made from corn, wheat and sugar beet, to the EU 2030 renewable target – from a maximum of 7% of transport fuels in 2021 to 3.8% in 2030. The Commission also proposed a binding blending obligation of 6.8 % to promote other ‘low emissions fuels’ such as renewable electricity and advanced biofuels used in transport.
The Bottom Line:
Sorry, this one you have to pay attention to.
Why We’re Talking About it:
As Novozymes (NVZMY) Vice-President for Biorefining Thomas Schrøder summed it up perfectly: “The proposed gradual phase out of all conventional biofuels would only increase the share of fossil fuels in transport and add GHG emissions. By 2020, the aim was to have 10% renew
ables in transport, by 2030, the ambition is lowered to 6.8%. The European Commission failed to reflect in its proposal the latest science and evidence that demonstrate the very high sustainability profile of a series of conventional biofuels. For example, conventional ethanol effectively reduces GHG emissions today (by 64% on average compared to petrol) even when indirect impacts are accounted for. They have a legitimate role to play in the EU energy mix.”
Schrøder adds: “As far as advanced biofuels are concerned, the proposal to have a specific mandate of minimum 3.6% by 2030 is welcomed…However, advanced biofuels are not meant to replace perfectly sustainable conventional biofuels; they are meant to replace an increasing share of fossil fuels and reduce more GHG emissions.”
Why You Can’t Safely Ignore:
The proposal is likely to make it’s way into the EU’s Renewable Energy Directive, and it’s not going to be a simple case of switching all the stranded ethanol production over to advanced biofuels. This is not an attack on ethanol, it’s an attack on feedstock. Or, rather the perception of scarcity implicit in the “food vs fuel” debate. EU regulators hope to secure food for Europeans by phasing out the conversion of grains and oils to fuels. Yet, what happens when supply outstrips demand? Commodity prices fall, and production exits the market, reducing the very grains and oil supply that the new directive is supposed to secure.
The fashionable beliefs in the EU about the nature of agricultural commodity markets, remind us of the European idea, fashionable in the 1920s, that you could end the catastrophe of war through unilateral disarmament. Instead, European democracies were simply unprepared for the military crises of the late 1930s and Europe experienced its greatest catastrophe since the 30 Years War and the Black Death as a result. Never underestimate the EU Commission’s appetite for policies that could plunge the region into a food and emissions crisis, while proclaiming all the while its interest in the opposite result.
Jim Lane is editor and publisher of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read Biofuels daily read by 14,000+ organizations. Subscribe here.
