EPA’s 2018 Renewable Fuel Targets Disappoint Producers

In Washington, the Environmental Protection Agency released its final Renewable Fuel Standard renewable volume obligations for 2018. The agency finalized a total renewable fuel volume of 19.29 billion gallons , of which 4.29 BG is advanced biofuel, including 288 million gallons of cellulosic biofuel.

As the Renewable Fuels Association explained: “That leaves a 15 BG requirement for conventional renewable fuels like corn ethanol, consistent with the levels envisioned by Congress in the 2007 Energy Independence and Security Act. The 2018 total RFS volume finalized today represents a minor increase (10  million gallons) over the 2017 standards, and a modest increase (50 million gallons) over the 2018 volumes originally proposed by EPA in July.”

Your takeaway:  a flat-line from 2017 for advanced biofuels and an upward revision from EPA’s original proposal, after four months of hoo-hah and industry protest, of 50,000 gallons.

How small a number is 50,000 gallons? Let me put it this way. That’s, on average, one teaspoon of fuel for every 85 Americans.

So, the EPA has given its annual RFS volume obligation burp and it was about as foetid as it usually is, and once again the biofuels industry, looking at its vile and inadequate bowl of gruel, is humbly asking the Beadle for “more please, sir” in a scene right out of Oliver Twist.

Child as he was, he was desperate with hunger, and reckless with misery. He rose from the table; and advancing to the master, basin and spoon in hand, said: somewhat alarmed at his own temerity:

“Please, sir, I want some more.”

…The master aimed a blow at Oliver’s head with the ladle; pinioned him in his arms; and shrieked aloud for the beadle.

The Industry response

The level of disappointment is generally linked in a linear fashion to amount of low-carbon, advanced biofuels you are capable of making. If you can make very little, this year’s RVO was OK, if not great. Corn ethanol is just fine.  If you can make lots of low-carbon fuels, you were somewhere between ‘meh’ and apoplectic.

That the blows to low-carbon, low-emission fuels are being rained down on industry by the Environmental Protection Agency is an irony that perhaps only God in his Heaven, or Ford in his Flivver, can comprehend the meaning of.

The industry response, which is published in excerpt form below, reminded us here in Digestville of the words of Lord Norwich when he resigned from the British cabinet in 1938 in a protest of appeasement and the Munich Agreement.

“The Prime Minister has believed in addressing Herr Hitler through the language of sweet reasonableness. I have believed that he is more open to the language of the mailed fist…we have taken away the defenses of Czechoslovakia in the same breath that we have guaranteed them, as through you were to deal a man a mortal blow and at the same time insure his life.”

The response in detail

The National Biodiesel Board – Doug Whitehead, chief operating officer

“EPA Administrator Pruitt has disappointed the biodiesel industry for failing to respond to our repeated calls for growth. These flat volumes will harm Americans across several job-creating sectors—be they farmers, grease collectors, crushers, biodiesel producers or truckers—as well as consumers. Nevertheless, we can’t thank our members and our biodiesel champions at the state and federal levels enough for their tireless advocacy and education efforts. We’ll continue to work with the administration to right this wrong for future volumes.”

The Advanced Biofuels Association – Mike McAdams president

“The Advanced Biofuels Association applauds EPA for releasing the final 2018 Renewable Volume Obligation mandates on time and for adjusting the proposed volumes for the cellulosic and advanced pools.  The announcement demonstrates strong, continued support for the Renewable Fuels Standard (RFS). It will also signal to industry that investment in this space is recognized and rewarded with increasing RFS mandates. Given all of the challenges of this year, ABFA is delighted that we were able to hold the line for the biomass-based diesel pool.

“We look forward to working with EPA further to finalize the biointermediates section of the pending Renewable Enhancement and Growth Support Rule, a much-needed regulatory fix that will expand the success of the advanced industry. ABFA appreciates EPA’s continued support of the RFS as our members bring new advanced biofuels production to America and deliver increasing volumes of low-carbon fuels to American consumers.”

The Renewable Fuels Association – Bob Dinneen, CEO

“We are pleased that the final rule maintains the statutory 15-billion-gallon requirement for conventional renewable fuels like corn ethanol. Under the RFS, ethanol has helped to lower prices at the pump, reduce greenhouse emissions, displace harmful toxic gasoline compounds, reduce crude oil imports, and boost local economies. Maintaining the 15-billion-gallon conventional biofuel requirement will accelerate investments in the infrastructure necessary to distribute mid-level ethanol blends like E15 and E30, and flex fuels like E85.

“It is also encouraging that EPA appears to have absorbed the tens of thousands of comments from American ethanol producers, farmers, consumers, veterans, and others who suggested the proposed rule was unnecessarily pessimistic with regard to the total renewable fuel volumes, and cellulosic ethanol volumes specifically. The final rule is a marked improvement, increasing both total renewable fuel and cellulosic biofuel volumes by 50 million gallons over the proposed levels. Still, we would encourage EPA to closely monitor the commercialization of new cellulosic technologies, particularly regarding corn kernel fiber conversion, because we believe greater cellulosic production is likely. The RFS needs to remain a forward-looking program, driving investment in these new technologies.”

Renewable Energy Group (REGI)– Randy Howard, interim CEO

“The Administration heard us when we said the Advanced Biofuel RVO should grow in 2018, not be cut as EPA originally proposed.  While we would have liked to see a larger increase, we consider this a crucial win – signaling a policy of continued RVO growth under the Trump administration.

“It would have been even better if EPA continued that policy of growth with the 2019 Biomass-Based Diesel RVO as we advocated.  We feel the Administration missed an opportunity in not continuing a sensible and consistent growth trajectory for biomass-based diesel. We firmly believe the US industry is fully capable of delivering increasing volumes of biomass-based diesel to meet a growing RVO as Congress intended when it created the RFS.  We will continue to work with EPA in 2018 to develop workable plans for additional growth in 2019.”

POET – Jeff Broin, CEO

“Biofuels are a critical component of the US fuel supply, and today President Trump and the EPA confirmed that fact. With starch-based biofuels remaining at full volumes, Americans will continue to benefit from cleaner air by replacing harmful cancer causing chemicals in gasoline, and stronger energy security by offering homegrown fuels that cost less. Unfortunately, this final rule fails to recognize the enormous opportunity before us to harness our nation’s vast cellulosic resources for higher performing and lower cost fuels.”

Novozymes (NVZMY)– Adam Monroe, President, Americas

“The EPA’s final 2018 RVO ruling acknowledges the benefits of today’s biofuels, but fails to look to the future and the coming development of advanced manufacturing facilities for cellulosic biofuels, which have the potential to radically improve our nation’s domestic fuel supply. We thank the Trump Administration for maintaining the targets for starch-based ethanol, but the EPA must do more to realize President Trump’s vision of a revitalized RFS that creates more jobs across America and strengthens U.S. energy security.”

Growth Energy – Emily Skor, CEO

“We applaud the administration for standing up against efforts to destabilize the Renewable Fuel Standard. The EPA’s on-time announcement upholds the statutory targets for conventional biofuels, which will provide much-needed certainty for hard-pressed rural communities. We would like to have seen a boost to the target blending levels for cellulosic biofuels, and we will continue to work with the administration to advance the RFS goal of further stimulating growth and showing U.S. leadership in 21st century fuels. The RFS remains America’s single most successful energy policy and continually works to save consumers money, protect the environment, drive rural growth, and secure U.S. energy independence.”

Advanced Biofuels Business Council – Brooke Coleman, Executive Director

“The Trump Administration deserves credit for rejecting political pressure to destabilize the RFS, but EPA’s failure to appreciably increase advanced biofuel levels brushes aside a huge opportunity to promote rural jobs and energy innovation. Unwarranted cuts to cellulosic biofuel targets send the wrong signal to global investors in this emerging industry. The cellulosic biofuels industry is growing and stands ready to drive the next great wave of manufacturing jobs across the heartland. There are things EPA can do quickly to unleash the full potential of cellulosic biofuels. We are not there yet with this rule, but we look forward to working with the Administration to get there.”

Biotechnology Innovation Organization (BIO) – Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section:

“We are disappointed that EPA did not significantly raise the advanced biofuel volumes in line with the industry’s ability to produce them. The agency is arbitrarily limiting growth for low carbon biofuels in 2018 and into the future by looking backward, rather than forward. The cellulosic biofuel industry is positioned for continued growth in 2018. EPA has begun to make progress in approving new cellulosic biofuel technologies and production facilities, such as those that use corn kernel fiber as a feedstock. Unfortunately, EPA did not adequately account for the potential of new technologies as it set the 2018 cellulosic volumes.”

Americans for Energy Security and Innovation (AESI) Co-Chairs Jim Talent and Rick Santorum:

“The EPA’s biofuel targets preserve a vital market for homegrown fuels. The administration deserves credit for protecting U.S. energy investments and rejecting deeply flawed arguments from a few refinery owners looking to pad their pockets at the expense of rural jobs.

“Proposals to shift the Point of Obligation or create new categories of biofuel credits, exported or otherwise, were designed to undermine 12 years of investment, limit competition, and increase the cost of fuel. The administration was right to protect the Point of Obligation last week, and it was right to uphold the RFS today. But the EPA can do much more to realize the president’s vision for a strong and growing RFS that creates new economic opportunities across rural America and solidifies U.S. energy security. We cannot sacrifice this opportunity to accelerate growth, particularly on cellulosic biofuels.”

Iowa Renewable Fuels Association – Monte Shaw, Executive Director

Many people are saying the RFS numbers released today, while disappointing, were expected,” stated Iowa Renewable Fuels Association Executive Director Monte Shaw. “I disagree. Based on the 2018 biodiesel level finalized a year ago, biodiesel producers had every right to expect a 100 million gallon increase for 2018. But the EPA failed to raise the advanced biofuels level by an equal amount, resulting in only a 33 million gallon potential increase for biodiesel in 2018 – a cut of 67 million gallons from what was signaled a year ago.”

Iowa Corn Growers Association – Mark Recker, President

We are pleased to see the EPA hitting the statutory target for corn ethanol. This comes as good news for Iowa corn farmers who now face tough economic times and for consumers who want affordable, homegrown fuel choices. We thank U.S. Senators Grassley and Ernst for their steadfast, unwavering support of maintaining a strong RFS through this rule making process.

Iowa Biodiesel Board – Grant Kimberley, executive director

“We have always pushed for steady biodiesel growth under the Renewable Fuel Standard, fulfilling both the potential of the industry and the intent of the law. We have consistently met and exceeded the volumes set by EPA. We believe we will exceed expectations again, but these flat volumes send a weak signal to the market at a time when our plants could significantly increase production and expand capacity. Many plants in Iowa and beyond stand ready to make new investments in boots on the ground and brick and mortar projects, which would create jobs and spur growth in agriculture and rural America.

“The RFS decision now brings a heightened urgency to extending the federal biodiesel tax credit, which will augment U.S. demand and could re-energize economic growth. It’s up to Congress to advance this good policy.