The EPA's Scary Requirement

The 2011 RFS2 standards are set, but what will 800 million gallons really mean for the industry?
By Luke Geiver | December 20, 2010
At a minimum, 8 percent of U.S. fuel needs in 2011 will be met by renewable fuel, if the U.S. EPA's 2011 RFS2 volume requirements are met. Of that 8 percent, 800 million gallons will come from biomass-based diesel. Although that number pales in comparison to what a fully operational U.S. biodiesel producing market could produce, the number still appears to be a good thing. The NBB thinks so, as do several other producers, but is 800 million gallons attainable? According to the EPA in a statement from its final rule, the answer is yes. "The total biodiesel production capacity at facilities that are still operating is 2.4 billion gallons. Ramping up production will require some time and potentially some reinvestment, but based on feedback from industry we nevertheless believe that it can occur in time to meet a production goal of 800 million gallons."

For Ed Burke, a newly elected member of the RINAlliance board of directors, meeting the requirement shouldn't be a problem, and actually, "the number is on the low side," and it's low, he says, partially because "it's wrapped up into the ongoing saga of the tax credit." The EPA might agree, stating "biodiesel production appears to have been significantly affected by both the EU tariff on biodiesel from the U.S. and the expiration of the biodiesel tax credit." But, don't take 2008 or 2009 as an indicator of success to come, according to the EPA. "A regulatory mandate for biomass-based diesel did not exist in 2009, and the mandate for biomass-diesel in 2010 was a unique circumstance that allowed a significant number of 2008 and 2009 biodiesel RINs to be used for compliance in 2010."

Instead, the EPA points to current production rates and the new preset demand. As an example, the EPA looked at the first five months of 2010, when biodiesel production was higher than the same time period in 2009, which is attributed to the biomass-based diesel standard.

Finally, it appears there is an undeniable demand for biodiesel, and it can be met. But as Burke points out, there is still one problem. "What is scary to me with the EPA," he says, "you don't know if they are going to do an abrupt change."
 
 
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