Proposed Changes to the RED, and a Stalled Farm Bill

By Erin Voegele | September 21, 2012

It’s been a busy week in the world of biofuel policy, both internationally and domestically.

In the E.U., a leaked proposal from the European Commission reportedly shows a plan to alter the Renewable Energy Directive to place a cap on the quantify of biofuels produced using crop-based feedstocks, such as corn, wheat and soybeans, that can be used to meet the volume requirements of the RED.

An official version of the proposal is set to be released next month.

Until the official proposal is released, it’s hard to determine exactly what kind of impact it could have on the RED and the European biofuel industry. However, information provided by the office of the EU Energy Commissioner indicates that the 10 percent volume requirement will be maintained, but half of that will have to come from advanced and cellulosic sources.

While the words “cap on crop-based biofuels” may, at first glance, seem to be detrimental to the first generation ethanol and biodiesel industries, I think the new proposal might actually bring the European mandates more in line with those of the RFS in the U.S.

The information the Energy Commission shared with me indicated that the crop-based allowance under the RED would actually be approximately equal to current European biofuel output, which leads me to believe that the altered RED would serve to incentivize second- and third-generation biofuel production, much like our RFS program does. However, it is highly possible that U.S. biofuel exports could be impacted.

Meanwhile, in the U.S., today marks the final day of the legislative calendar before the November presidential election. That means today offers federal lawmakers the last chance to pass the Farm Bill before it expires at the end of the month. At this point, the passage of a new Farm Bill—or a simple short-term extension of the current Farm Bill—seems highly unlikely.

That means that it could be taken up during the lame-duck session of congress following the election. If not, a new crop of freshmen senators and congressmen will be tasked with addressing the bill next year.