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Biodiesel is the bright spot in RFS

Biodiesel growth as EPA appears to suggest adjusting down cellulosic, advanced and ethanol volumes in the future
By Ron Kotrba | August 07, 2013

Yesterday the U.S. EPA finalized 2013 renewable volume requirements under the renewable fuel standard (RFS), allowing four extra months for compliance by extending the deadline to June 30, 2014.

For the biodiesel industry, whose biomass-based diesel volume was already finalized last year, the announcement was somewhat anticlimactic. The agency did uphold the 2.75 billion gallon advanced biofuel requirement for 2013, as written in the statute, and this was commended by the National Biodiesel Board because, as the board continues to promote, biodiesel is the only advanced biofuel to achieve nationwide commercialization and exceed 1 billion gallons of production annually two years in a row. EPA indicated it would use the flexibility in RFS, however, to reduce the statutory volumes of advanced biofuels as needed in the future. Next year, the statute calls for 3.75 billion gallons, but given EPA’s statement about reducing advanced biofuel volume requirements in future years, plus significant pressure from the oil lobby, it is almost certain the agency will reduce this volume. The question is by how much.

The 2013 cellulosic volume requirement in the statute was set at 1 billion gallons. Yesterday the EPA reduced that to a mere 6 million gallons.

While EPA kept the overall renewable fuel volumes for 2013 at 16.55 billion gallons, the agency made special mention of the ethanol blend wall, explaining again that it proposes to use flexibilities in RFS to adjust overall renewable fuel obligations to adjust for the blend wall, which the agency says will be hit next year.

Then there’s biodiesel, the seemingly lone bright spot in a fuel standard under siege. Even though the RFS allowed for a minimum of 1 billion gallons in years after 2012, it also allows EPA to boost the volume if the agency determines the industry can in fact produce enough fuel to fill an expanded biomass-based diesel carve-out. As you all remember from last year, the agency did not just placate the growing biodiesel industry with a small, nominal increase in the standard; rather, it blew the doors off the hinges with a 28 percent jump. This was—and is—huge. While the agency is considering reducing future volumes of advanced, cellulosic and even conventional ethanol (renewable fuel), it took the first chance it got to boost the biomass-based diesel standard by a significant margin.

The NBB is pushing hard for another increase next year, backed with solid data and evidence that the biodiesel and renewable diesel industries—particularly with the large Diamond Green Diesel renewable diesel facility that recently came online, as well as several REG plants that are back in operation, in addition to many new projects underway spearheaded by a variety of companies—are ready to lead the way as beacons of success in a troubled RFS.