What Happens Beyond 2012?

By Ron Kotrba | December 21, 2009
This past year, the biodiesel industry has been consumed by the implementation of RFS2-and in recent months the extension of the $1 per gallon federal tax credit-and little has been said about what happens after 2012 regarding biomass-based diesel. If one looks at the schedule of volume requirements under RFS2, there is absolutely nothing slated beyond 2012. The 2009 volume (which obviously hasn't been enforced yet because of the lack of a final EPA rule) is set at 500 million gallons. For 2010, 650 million gallons of biomass-based diesel is supposed to be blended into the nation's fuel supply. Then, in 2011, 800 million gallons is the volume requirement. Finally, the carve-out tops off in 2012 at 1 billion gallons. But there is no further specific mandate for biomass-based diesel beyond 2012.

Perhaps for those who aren't so familiar with how RFS2 is structured, a little explanation is in order. There are two broad categories of biofuels under the standard: conventional and advanced. Conventional biofuel is essentially corn ethanol. Advanced biofuel is either cellulosic biofuel, or ethanol made from biomass; biomass-based diesel; or a third category, called undifferentiated advanced biofuel. Biomass-based diesel can be methyl esters, hydroprocessed renewable diesel, Fischer Tropsch diesel from gasified biomass, and more. Undifferentiated advanced biofuel can be either cellulosic biofuel, biomass-based diesel or some other type of advanced biofuel that meets the greenhouse gas (GHG) criteria.

Let's take a closer look at 2012 and 2013 in the schedule of volume requirements. For 2012, the total volume of all fuels is 15.2 billion gallons, 13.2 billion of which is to come from conventional biofuel, or corn ethanol. The remaining 2 billion gallons is to come from advanced biofuel; specifically, 1 billion gallons of biomass-based diesel, 500 million gallons of cellulosic biofuel, and 500 million gallons of undifferentiated advanced biofuel. In 2013, however, the total standard is 16.55 billion gallons, 13.8 billion of which is to be from corn ethanol. The remaining 2.75 billion is to come from advanced biofuel; specifically, 1 billion gallons of cellulosic ethanol and 1.75 billion gallons of undifferentiated advanced biofuel. Basically, as the standard exists today, the clock stops on the specified category of biomass-based diesel after 2012. It's hard to say what kind of technological advances cellulosic ethanol producers will come across between now and then, but depending on the economics, obligated parties should find it more economical to blend traditional methyl ester to satisfy their advanced biofuel quota than cellulosic ethanol. I also believe biodiesel producers can capitalize on that undifferentiated category (again depending on how the GHG emissions numbers play out in EPA's final rule) as early as when the final rule is released because predictions are that cellulosic ethanol production will not be able to meet its targets. Looking ahead to 2022, the advanced biofuel mandate is 21 billion gallons, 16 billion of which is specifically cellulosic ethanol. Thus there's a potential market for 5 billion gallons of traditional biodiesel and other forms of biomass-based diesel.

I understand that feedstock limitations have much to do with biomass-based diesel's relatively low volume in the mandate, but feedstock research and development is advancing and it is very possible that a higher mandate would drive feedstock development even further.

While much of the biodiesel lobbying effort is currently consumed by RFS2 implementation and extending the federal tax credit, I believe the industry needs to push for a greater biomass-based diesel mandate. Even better, we should push for a biodiesel-specific nationwide blend requirement of B2, increasing to B5 and beyond as feedstock availability allows.
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