On July 27, the U.S. EPA took one step closer toward putting the renewable fuels standard (RFS) back on track by closing the comment period on the long-awaited renewable volume obligations (RVOs) for the 2014, 2105 and 2016 proposed rule. The EPA must now begin the arduous process of analyzing the hundreds of thousands of comments and challenges it received on the rule. Unfortunately, the EPA still has a long road ahead, as any final rule is likely to be challenged in the courts, once again leaving the advanced and cellulosic industry in suspended animation. The proposed rule, a policy that covers three years, has been perceived as a mixed bag by many organizations. The oil industry has issues with the 2016 RVOs breaching the blend wall. The ethanol industry is frustrated, to say the least, with the use of the general waiver authority to reduce the statutory obligations. In Washington, the mudslinging between the established industries has been nonstop for two years, with rallies, protests, television and print ads. In the midst of all this mudslinging, the advanced and cellulosic sectors have borne the brunt of an ever-increasing degree of collateral damage. As many of you know, the RFS was created to &ldquo;reduce dependence on foreign sources of petroleum, increase domestic sources of energy, and help transition to alternatives to petroleum in the transportation sector&rdquo; as well as &ldquo;provide a reduction of carbon dioxide emissions.&rdquo; Without question, the intent of Congress under RFS2 was to encourage the development of a robust advanced and cellulosic biofuels industry. This concept was embodied in the statute when it called for 21 billion gallons of advanced and cellulosic biofuels to be produced and consumed by 2022, while capping corn-based ethanol at 15 billion gallons in 2015. Unfortunately, companies producing advanced and cellulosic biofuels continue to fall victim to the uncertainty around the program. It&rsquo;s this uncertainty that has made it virtually impossible to instill confidence in the financial sector, discouraging the investment required to build the new facilities, as envisioned under the act.&nbsp;&nbsp; For the advanced biofuels industry, the proposed rule is a major improvement over the original proposed rule of 2014. The EPA has made progress in regard to the increased targets proposed for the advanced, cellulosic and biomass-based diesel pools. Furthermore, the proposal utilizes actual production numbers from 2014 and most of 2015 to set volume targets, a pragmatic solution that the Advanced Biofuels Association has advocated for the past 18 months. In doing so, they have removed most of the likely legal challenges for those years. However, the rule does not address the looming &ldquo;reset&rdquo; which, as the policy stands, would be required by the numbers the EPA has proposed. This compounds the level of uncertainty and leaves the industry in limbo without reliable, long-term drivers for the future. The EPA also fails to address many of the barriers to entry that companies face when trying to participate in the program. As outlined in our comments, the EPA still has a lot of work to do to address colocation and intermediate feedstocks issues, pathways, definitional and compliance issues, and issues with the application of the cellulosic waiver authority. Simply put, RVOs are important, but they are unachievable unless companies are able to acquire financing, build the necessary facilities and permit their fuels for participation under the program. While ABFA greatly appreciates the EPA&rsquo;s determination in continuing to support and improve the existing program, there is still much to be done. The time frame to overcome these challenges needs to be expedited, not expanded. It is for that reason ABFA will continue to pursue legislative reforms to strengthen the RFS. Only by working together&mdash;through legislative and regulatory channels&mdash;can we help achieve the ultimate vision of the RFS and build the next generation of biofuels..&nbsp;&nbsp; Author: Michael McAdams President, Advanced Biofuels Association mcadams@hklaw.com www.advancedbiofuelsassociation.com

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On July 27, the U.S. EPA took one step closer toward putting the renewable fuels standard (RFS) back on track by closing the comment period on the long-awaited renewable volume obligations (RVOs) for the 2014, 2105 and 2016 proposed rule.

Is the Third Time the Charm?

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