Biodiesel a big winner in stronger RFS final rule

By Ron Kotrba | November 30, 2015

The U.S. EPA released its final rule for renewable volume obligations (RVO) under the renewable fuel standard (RFS) Nov. 30, and the figures for biomass-based diesel are higher than the proposal released in May. The agency issued its biomass-based diesel RVO for years 2014-’17, while RVOs for all other categories—renewable fuel, advanced biofuels and cellulosic biofuels—were issued for 2014-’16.

The final RVOs for biomass-based diesel are 1.63 billion gallons for 2014, 1.73 billion gallons for 2015, 1.9 billion gallons for 2016, and 2 billion gallons for 2017. The proposal issued May 29 called for 1.63 billion gallons of biomass-based diesel for 2014, 1.7 billion gallons for 2015, 1.8 billion gallons for 2016 and 1.9 billion gallons for 2017.

Another important category for biodiesel, the advanced biofuel bucket, also increased slightly for 2015 and 2016 years compared to the May proposal. The final rule for advanced biofuels issued Nov. 30 requires 2.67 billion ethanol-equivalent gallons for 2014, 2.88 billion gallons for 2015 and 3.61 billion gallons for 2016. The proposal for advanced biofuels issued in May called for 2.68 billion ethanol-equivalent gallons for 2014, 2.9 billion gallons for 2015 and 3.4 billion for 2016.  

Biodiesel producers are excited and encouraged by the higher biomass-based diesel volumes in the final RFS rule after the industry has suffered considerably for the past two years operating without a federal mandate.

Ron Marr, director of regulatory affairs for Minnesota Soybean Processors, which owns and operates a 30 MMgy biodiesel plant in Brewster, Minnesota, told Biodiesel Magazine that the EPA’s final RFS rule is good and solid. “When you look at where we were in 2013 when the EPA issued its proposal that flat-lined biodiesel at 1.28 billion gallons, and now we’re up to 2 billion gallons in the RFS for 2017, that is fireworks,” he said. “The increased volumes really show all the hard work and dedication of the D.C. [National Biodiesel Board] lobbying efforts, supported by Jefferson City, along with all the member involvement from the comments they submitted on the proposed rule. Overall, this is very good news.” 

Marr also said that U.S. biodiesel producers manufactured 1 billion gallons in 2012, and with the new final rule, the industry will be producing twice that in 2017. “To double production volumes in just five years is truly amazing,” he said. 

NBB CEO Joe Jobe and his organization applauded the Obama administration for boosting the volumes from the proposal and recommitting to biodiesel. “It is a good rule,” Jobe said. “It may not be all we had hoped for but it will go a long way toward getting the U.S. biodiesel industry growing again … I want to thank President Obama, Administrator McCarthy and Secretary Vilsack for supporting growth in the program and for their commitment to biodiesel. We have seen three years of damaging delays, but the administration took a strong step forward today that should put biodiesel and the RFS on a more stable course in the years to come.”

Jobe said NBB will continue working with the administration toward stronger standards, and noted that the advanced biofuel standards “could and should have been higher,” he said. “The production capacity is there, and we have surplus fats and oils that can be put to good use.”

The nation’s largest biodiesel producer, Renewable Energy Group Inc., is also pleased with the final rule. “This increased final RVO provides a solid foundation for REG to continue growth,” said Daniel J. Oh, president and CEO of REG. “We asked EPA for two things in this process—longer-term certainty and growth for biomass-based diesel—and this final rule provides both. This supports a solid, positive growth trajectory for biomass-based diesel over the next two years, particularly when you consider that this was a 1 billion gallon industry less than four years ago.”

Michael Doyle, president of Agron Bioenergy, a 15 MMgy biodiesel plant in Redwood City, California, told Biodiesel Magazine that the news is “really encouraging.”

“It’s really positive that these volumes are going up,” Doyle said, adding that he’s also hopeful that Congress will renew the biodiesel tax credit as a producer’s incentive before year’s end.

The Iowa Biodiesel Board indicates that while the final RFS rule is better than the proposal, it is not perfect. “While we are thankful for the improved numbers from EPA and the White House, they still fall a little short of what the industry had asked for and what the industry is capable of,” said Grant Kimberley, executive director of the IBB. “This is especially true in light of the imports of subsidized foreign-produced biodiesel we’ve seen from places like Argentina and Southeast Asia. Yet, overall, we are still pleased with the modest increase and grateful to have more market certainty. In future years, we hope implementation of this policy will have clearer direction for our producers well in advance, and reflect actual production capabilities.”

R. Delbert LeTang, president and CEO of SG Preston, a company with plans to construct five renewable diesel production facilities in North America, told Biodiesel Magazine that the EPA’s final RFS rule is an “exciting piece of news.”

“These figures show a lot of progress,” he said. “It tells us there is a growing acceptance for the ability of our industries to attain these kinds of volumes.”

Total renewable fuel volumes are also up in the final rule vs. the proposal. For 2014, the total renewable fuel RVO is 16.28 billion gallons, 16.93 billion gallons for 2015, and 18.11 billion for 2016. Total renewable fuel volume proposals issued in May were at 15.93 billion gallons for 2014, 16.3 billion gallons for 2015, and 17.4 billion gallons for 2016. In addition, the cellulosic requirements are also higher. The final rule calls for 33 million gallons in 2014, 123 million in 2015, and jumping to 230 million gallons in 2016. This is compared to the proposed numbers that were 33 million gallons for 2014, 106 million gallons for 2015 and 206 million gallons for 2016.

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