RFS2 brings hope, confusion to industry

The final rule for the revised renewable fuel standard (RFS2) was issued by U.S. EPA on Feb. 3, and soy biodiesel comes in at a 57 percent reduction in greenhouse gases (GHG) compared to petroleum diesel, making it eligible to meet the biomass-based diesel carve-out. To qualify as a biomass-based diesel or an advanced biofuel under the Energy Independence and Security Act of 2007, which RFS2 was part of, soy biodiesel was required to meet a 50 percent reduction in GHG emissions compared to petroleum.

The EPA also confirmed that the combined 2009/2010 volume requirement for biomass-based diesel is 1.15 billion gallons, the sum of 2009 and 2010 blend requirements as laid out in EISA. Since blended gallons and renewable identification number (RIN) credits from 2009 will count toward the 2010 volume, plus some carryover from 2008-in addition to reinstating some retired RINs whose wet gallons went to particular off-road markets, plus obligated parties being able to carry a deficit over-some analysts at the 2010 National Biodiesel Conference & Expo in Grapevine, Texas, said the actual volume blended in 2010 will be far less than anticipated.

Indirect land-use change is still part of the final rule, but the models used are "based on the soundest available science," and are "more sophisticated" than previously, and "better data" was available to the agency, according to Lisa Jackson, EPA administrator, during a Feb. 3 press conference. She also said EPA considered public comment and worked closely with USDA to implement a more realistic characterization of biofuels' GHG reductions, and learned its original accounts for crop productivity and yield, for instance, were incorrect. Jackson also said in its proposed rule, EPA only considered 40 nations but when 160 countries were pulled into its indirect land-use change modeling, the "impacts were different and less than we thought-we got a very different result," she said.

Ag secretary Tom Vilsack said one reason the numbers were different in the final RFS2 rule versus the proposed rule is that crop productivity is continually evolving and rapidly changing, and technology impacts and affects what happens on land. Vilsack also said there are resources in the farm bill for first-generation biofuel producers to retrofit their plants in order to update the process technology.

During the National Biodiesel Conference, which was held only days after the final RFS2 rule came out, EPA officials discussed several of the confounding issues resident in the rule, which included feedstock tracking and the enormous paper trail of facility registration, engineering reviews, RIN tracking and reporting, and even temperature standardization (the producer must use 60 degrees Fahrenheit for calculating volume and subsequent RINs).

Also, the final rule does not require soy biodiesel producers to track the origin of their feedstock and provide regular reports to the agency, as was expected under the proposed rule, but producers using animal fats or used cooking oils will be required to do so beginning July 1 if they want to generate RINs. Although producers using waste feedstock will have to keep feedstock supplier records and produce quarterly reports for EPA, Larry Schafer from the Diamond Group said the requirements are "not onerous." Paul Argyropoulos from EPA's Office of Transportation and Air Quality said if a producer is using animal fats, for instance, "they would have to say, 'Yeah, this is the feedstock I use, and this is where I got it,'" but they would not have to track it beyond their supplier. Producers using domestic crop oils will not have to track feedstock and provide reports to EPA as long as U.S. cropland acres do not exceed the 2007 baseline of 402 million acres.