Pathway to Nowhere
When the renewable fuel standard (RFS) was greatly expanded in 2007 (termed the RFS2) to include advanced and cellulosic biofuels, little was known about what new, innovative technologies would become available. By contrast, ethanol from corn or sugarcane and biodiesel from soybean oil had existed for more than a century. To address future innovation, the RFS2 included provisions that called upon the U.S. EPA to review and approve regulatory pathways by which new fuels and technologies can participate in the mandate, and generate tradable biofuel credits called renewable identification numbers (RINs). In reviewing pathway petitions, the EPA considers feedstock, conversion technology, finished fuel molecule, and greenhouse gas (GHG) impacts relative to petroleum-based fuels. To qualify as an advanced biofuel, the RFS2 stipulates a minimum reduction in GHG emissions by 50 percent, and 60 percent for cellulosic biofuels. The question for today is: Seven years after passage, have the pathway provisions of the RFS2 been successful? Unfortunately, we are nowhere close to where we should be.
Currently, the EPA is averaging approximately two years to approve a new pathway. The reason behind this lengthy process is that the agency insists it must do everything by regulatory rulemaking.Rulemaking entails a full-blown administrative review and sign-off by related agencies, including, but not limited to, the U.S. DOE, USDA and U.S. DOD. Under this approach, all bets are off for pathways that have political forces lined up against them. Such pathway petitions may languish for years without either an affirmative or negative determination. This has been the fate of several proposed pathways, including those for biogenic oils, palm oil, palm fatty acid distillates and sorghum biomass.
However, one should note that other EPA programs do not take this approach, such as the Toxic Substances Control Act’s chemical approval process, which limits the review to 90 days, at which point the product is automatically approved barring any adverse findings.
Today, the EPA has a total of 38 pending pathways. In acknowledgement of the problem, the agency recently issued a program announcement titled, "Improving the Petition Process for New Renewable Fuel Pathways." We are pleased EPA is exploring options to streamline this program. One concern to note is that in the document, the EPA states, "We expect the process (of review) to take six months. During this time, we suggest that parties considering new petitions pursuant…delay their submissions until the new guidance is provided." In other words, there will be some additional delay as EPA moves to make improvements.
Also noteworthy, in its guidance, the EPA states that new pathways will be based on the following criteria:
• Ability to contribute to the cellulosic biofuels mandate.
• Potential for reducing greenhouse gas emissions on a per gallon basis (such as nonfood feedstocks).
• Ability to contribute to near-term increases in renewable fuel use (consideration of the ability of the fuels to be used in the existing fuel distribution network).
On a positive note, the Pathways II Rule has been forwarded to the Office of Management and Budget for final review after two years at the EPA. The actual language of the rule remains confidential until such time as all the agencies have concurred. Only then will we see which pathways are included for approval and which were deep-sixed. Based on conversations with EPA, I expect butanol and biogas, among others, to be included in the regulation.
In conclusion, the pathway delays are a significant problem for the industry. For those attempting to raise capital, banks prefer enterprises with an approved pathway prior to making an investment in the technology. Some former companies have gone out of business while waiting for their pathway to be approved. For those of you currently submitted in the process, the EPA is now indicating that they may require you to resubmit depending on the outcome of their revisions to the pathway review process. All of these factors create delay and uncertainty and undermine otherwise promising biofuel technologies. The Advanced Biofuels Association has made pathways one of our highest advocacy priorities. We urge all of you who are impacted by regulatory delays and uncertainty to contact the EPA directly. Further, if you have any questions, please do not hesitate to reach out to me directly.
For now, we remain in the struggle together to build the advanced and cellulosic industry and alter the future of energy.
Author: Michael McAdams
President, Advanced Biofuels Association