Biodiesel industry responds to EPA denial of RFS waiver requests

By Ron Kotrba | November 16, 2012

After the year of drought and an unprecedented number of waiver requests to suspend the renewable fuel standard (RFS), EPA made its highly anticipated decision to deny them all. Several states, including Arkansas, Maryland, Delaware and North Carolina, petitioned EPA earlier this year to put the RFS on hold because the nationwide drought coupled with an increasing federal biofuels mandate would strain corn supplies to the brink, causing crop prices to skyrocket. Even though several governors pled with the agency to waive the standard because of severe economic harm to their states’ economies, particularly the livestock industries, EPA found that waiving the mandate would only ease corn prices by 1 percent. Therefore, the agency, along with modeling and analysis from USDA and U.S. DOE, concluded that the threshold needed to waive the RFS as prescribed in the Energy Policy Act of 2005 had not been met.

“For biodiesel producers in North Carolina specifically, this is the type of policy stability that the industry is looking for,” Piedmont Biofuels Founder Rachel Burton told Biodiesel Magazine.

A little stability can go a long way in the biodiesel industry, a sector that has seen more than its fair share of volatility over the past few years with the on-again, off-again federal tax credit, RIN integrity issues and disputes over indirect land-use change and greenhouse gas emissions benefits.

“We domestically produce a clean renewable fuel that shows significant greenhouse gas benefits in comparison to petroleum diesel fuel,” Burton said. “The RFS is designed to support renewable fuels like biodiesel here in the U.S.”

The waiver requests largely focused on ethanol, a vast majority of which in the U.S. is made from feed corn. Biodiesel, however, is made from a diverse mix of feedstocks, many deemed as wastes, which, along with the built-in protections in the RFS, give this industry tremendous flexibility in handling a drought, said Ben Evens, director of federal communications at the National Biodiesel Board. “We are pleased with the EPA’s decision and applaud the agency for making the right call,” Evans said.

“We appreciate the EPA reaffirming that RFS2 and biodiesel are working effectively as part of an ‘all-of-the-above’ strategy for energy security,” said Daniel Oh, president and CEO of Renewable Energy Group Inc., the largest U.S. biodiesel producer. “EPA also noted how waiving the biodiesel requirement would actually increase costs for consumers, which we have asserted for some time.”

“The RFS requirements are part of a plan to reduce pollution, increase jobs, increase our energy security, make our fuel sustainable and make our fuel production distributed,” said Roman Wolff, president of the Houston-based process technology firm Enhanced Biofuels LLC. “We are not about to put this plan on hold due to weather. The U.S. is on a path to energy security and biofuels are a key element in this. The biofuels industry invested, created jobs and infrastructure based on the RFS requirements being in place, the EPA should not—and did not—change the rules in the middle of the game.”

The agency’s September decision to ratchet up the biomass-based diesel portion of RFS from 1 billion gallons this year to 1.28 billion gallons in 2013, plus today’s announcement about the waiver denials along with the recent progress in restructuring the RIN program to help avoid fraudulent activity and provide obligated parties assurance in good faith RIN purchasing, are all expected to bring back much-needed certainty to the biodiesel marketplace. Perhaps the only thing that would make these victories even sweeter for some would be passage of a retroactive $1 per gallon federal biodiesel tax credit by the end of the year.

“We believe there remains a good chance that Congress will pass a tax extenders package that includes the biodiesel tax incentive in the lame duck session,” Evans told Biodiesel Magazine. “That's why we are asking everyone in the biodiesel community to get engaged on this issue and call their elected officials in Washington to push for this legislation. We need to make sure Congress hears on a daily basis that the biodiesel tax incentive is creating jobs and economic activity across the country.”

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