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 p—s
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%
renewables 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
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