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Bioenergy no 4 july 2015

MARKETS AND FINANCE Bioenergy Int Bioenergy Inteerrnnaattiioonnaall NNoo 8800,, 44--22001155 3333 On May 29 the US Environmental Protection Agency (EPA) released its proposed Renewable Fuel Standard (RFS) renewable volume obligations (RVOs) for biofuels for 2014, 2015 and 2016. Whilst still a proposal it seems that none are happy with it. ESTABLISHED BY CONGRESS UNDER THE Energy Policy Act of 2005 (EPAct) and expanded two years later under the Energy Independence and Security Act of 2007 (EISA), the annual Renewable Fuel Standard (RFS) programme sets the produced or imported volumes of biofuels. Socalled Renewable Volume Obligations (RVO) are set on ethanol, cellulosic biofuel, biomassbased diesel, and advanced biofuel, as well as the total proportion of produced or imported renewable fuels, which applies to all gasoline and diesel in the US transportation fuel supply. Under the Clean Air Act (CAA), the US Environmental Protection Agency (EPA) is required to set the annual standards for the RFS programme for each year. The original RFS programme (RFS1) under EPAct required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012. After expansion under EISA the revised RFS programme (RFS2) increased the volume of renewable fuel to be blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022. Furthermore, EISA required EPA to apply lifecycle greenhouse gas (GHG) performance threshold standards to ensure that each category of renewable fuel emits fewer GHGs than the petroleum fuel it replaces. Actual volumes On March 18 this year the American Fuel and Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) jointly filed a lawsuit in the US District Court for the District of Columbia to force the EPA to issue long overdue rules implementing the RFS. On April 10 the parties filed with the court a draft Consent Decree under which the EPA would propose volume requirements by June 1. On May 29 the Agency released its proposal for the years 2014, 2015, and 2016 as well as 2017 for biomass-based diesel. The proposal is to set the RFS for 2014 at the levels that were actually produced and used as transportation fuel, heating oil or jet fuel in the contiguous US and Hawaii. According to the EPA the volume targets specified by Congress in the Clean Air Act for 2014, 2015 and 2016 are unachievable as these “envisioned growth at a pace that far exceeded historical growth rates” compounded by what the Agency describes as “constraints in the fuel market to accommodate increasing volumes of ethanol, along with limits on the availability of non-ethanol renewable fuels.” For 2015 and 2016, the EPA is proposing increases in both advanced biofuel and total renewable fuel in comparison to 2014 levels, taking into consideration expected volumes of cellulosic biofuel for 2015 and 2016, and it proposes annual increases in the required volume of biomass-based diesel for 2015, 2016, and 2017. All unhappy? Whilst still a proposal it seems that no stakeholder is happy with it, perhaps with the exception of the US biodiesel industry, and it is likely that the EPA will be inundated with commentary during the public consultation period. One of the two original plaintiffs, the American Fuel and Petrochemical Manufacturers (AFPM) welcomed the Agency’s use of its statutory waiver authority to cut mandated biofuel volumes “in recognition of the blend wall.” However it describes the proposal as “overly ambitious” and that it “clearly demonstrates” why Congress must act to repeal the RFS. – In acknowledging that the proposal seeks to force more ethanol use than the marketplace can handle, the EPA is playing Russian Roulette with fuel supply and consumers. Corn ethanol’s gain would come at the expense of consumers and the environment. The use of ethanol in motor fuels has reached a saturation point and since the Agency did not appropriately address the issue, Congress must, claimed Chet Thompson, President AFPM. The Renewable Fuels Association (RFA) has called on the EPA to do away with the “blend wall” methodology and allow the statutory volumes in the RFS to drive marketplace change. According to the RFA the blend wall falsely claims ethanol has reached its saturation point at a 10 percent ethanol blend and that higher-level ethanol blends, such as E15 and E85, are not yet large enough to justify a higher RVO. – The EPA successfully enforced a 13.8 billion gallon RVO in 2013. The industry produced 14.3 billion gallons of ethanol last year. There is no reason to promulgate an RVO rule that takes us backward. But the frustrating fact is the Agency continues to misunderstand the clear intent of the statute – to drive innovation in both ethanol production and ethanol marketing. The Agency has eviscerated the program’s ability to incentivise investments in infrastructure that would break through the blend wall and encourage the commercialisation of new technologies, said Bob Dinneen, President and CEO of the RFA in a statement. Ethanol industry colleague Brooke Coleman, Executive Director, Advanced Ethanol Council (AEC) was slightly more positive. – The good news is it is clear that EPA and the Obama Administration want to send a signal to the marketplace that domestic renewable fuel markets are going to grow. The blending targets are definitely stronger and theoretically create new markets. And the blender pump program shepherded by Agricultural Secretary Vilsack, if implemented the right way, could create more market access for renewable fuels. But Clean Air Act regulations have to have backbone to actually achieve their ambitions. While this is just a proposal, we still have to convince the Obama Administration to put the backbone back into the law, said Coleman. The National Biodiesel Board (NBB) voiced measured support for the proposal to increase volumes for biodiesel and other Advanced Biofuels while calling for improvements in the final rule. – This proposal is a significant step in the right direction. It is not perfect, but it will get the US biodiesel industry growing again and put people back to work, said Joe Jobe, CEO, NBB while noting that the proposal for 2017 is only slightly higher than actual biodiesel production of 1.8 billion gallons over the last two years. Editor’s note: Public consultation on the EPA proposal is open until July 27. The proposal can be found at http://www.gpo.gov/fdsys/pkg/FR-2015- 06-10/pdf/2015-13956.pdf Text: Alan Sherrard BI80/4920/AS Photo: Shutterstock,Pincasson 64CJPGVFMTPOUIFSPBEBHBJO


Bioenergy no 4 july 2015
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