RFS: New Revenue Stream for Biomass Facilities?

Unbeknownst to many in the biomass power sector, there may be a role for biomass power producers to play in the RFS.
By Bob Cleaves | April 10, 2017

Many in the renewable fuels sector are familiar with the Renewable Fuel Standard, known as the RFS, adopted by Congress in 2005 and implemented by the U.S. EPA. The intent of the law is to incentivize the production and use of renewable fuels alongside traditional fossil fuels. The most famous example of this is corn ethanol, which is mandated by the RFS to be 10 percent of the gasoline blend sold at the pump.

Unbeknownst to many in the biomass power sector, there may be a role for biomass power producers to play in the RFS. Electric vehicles (EVs) represent an increasing share of the automotive market, with sales rising 37 percent in 2016 over the previous year. Bloomberg New Energy Finance projects that this trend will continue—in 2040, EVs will account for 35 percent of all new vehicles sold. But the only way that electric vehicles are truly carbon friendly is if their power comes from a nonfossil fuel source. If EVs are powered by electricity produced from a biomass—the same ingredients that go into liquid transportation fuels—shouldn’t those biomass facilities be eligible to sell the same credits awarded to, for example, ethanol producers?

We think they should, and the EPA agrees. The way the program works is that biofuels producers sell credits known as RINs (short for renewable identification numbers), which fossil fuel producers must purchase. The last hurdle for biomass power producers to take part in the RFS program is for the EPA to make a final ruling in our favor, and create a pathway for biomass power producers to sell RIN credits.

This seemingly simple change could have dramatically positive benefits for all involved. Biomass power producers will have a new and growing source of revenue as the EV market continues to thrive. EV drivers can rest assured that the power they are using to plug in their cars is low-carbon. And the EPA will be able to count biomass power toward cellulosic biofuels production, which has lagged far behind the targeted amount set by the agency.

The Biomass Power Association has been advocating for the EPA to finalize the rule. We are hopeful that they will do so soon.

Author: Bob Cleaves
President, Biomass Power Association