Wednesday, July 9, 2014

By Michael McAdams, President, Advanced Biofuels Association

The pioneering companies that belong to ABFA are keeping busy this summer. Developing this emerging industry is a full-time job that involves many tasks. Raising necessary financing. Designing, building or purchasing commercial-scale production facilities. Optimizing production of low-carbon fuels, chemicals and feedstock.

While checking off these and other important assignments on their to-do lists, my members are also keeping a close eye on the Environmental Protection Agency (EPA).  Just last week EPA issued two final rules, with several more decisions still to come, that could make Summer 2014 the most consequential in the brief history of this emerging industry.

Most of the attention has rightly focused on the agency’s impending decision regarding the volume of biofuels that blenders will be required to use to comply with the Renewable Fuel Standard (RFS) in 2014.  We may already be halfway through the year, but this decision will have an outsized influence on the continued growth of our industry.  ABFA continues to hope that EPA will set the standard at a level that acknowledges the gallons produced and encourages production and consumption of all available advanced biofuels.  It would also be a breath of fresh air – and potentially provide needed stability and certainty – if EPA also proposed the 2015 standards when finalizing the 2014 rule.

While the renewable volume obligations are certainly critical, the agency released two other rules prior to the July 4th holiday that represent a step in the right direction and – with a little more continued work and action by EPA – could help keep advanced and cellulosic biofuels on a growth trajectory.

1. RIN Quality Assurance Program. A few cases of fraud by bad actors in the biodiesel market prompted EPA to finalize a voluntary Quality Assurance Program for verifying the validity of renewable identification numbers (or RINs) under the RFS program. This verification program should provide more certainty and assurance for biofuels gallons brought to the market. That said, we’re somewhat concerned about how the final rule may impact small producers. They had come to rely on a system of third party insurers that EPA will eliminate starting in 2015. So, we’ll need to keep a close eye on whether an alternate system of third-insurers develops to meet the needs of these small, innovative businesses.
2. Approval for New Advanced Biofuels. ABFA applauds EPA for qualifying a handful of new technologies, including biogas from landfills, municipal waste-water treatment facilities and agricultural digesters, as approved cellulosic and advanced fuel pathways under the RFS. But, we’re disappointed the list of approved new pathways isn’t longer. Too many cutting edge technologies – approximately 40 by our most recent count – are still trapped in limbo, stuck in an EPA approval process that simply takes too long. Entrepreneurs are standing on the sidelines ready to invest in innovative new fuels and feedstocks that will reduce greenhouse gas emissions by at least 50% compared to gasoline. EPA owes them a yes or no answer on their applications to qualify under the RFS program

We’ll continue working closely with environmental regulators and other stakeholders so they understand the importance of getting these technical matters right. And, we’ll be blogging in greater detail throughout the summer. Stay tuned, because it’s only going to get hotter in Washington as the anticipation builds for further EPA action on renewable fuels.