Mixed views of RFS shared at policy briefing
A recent briefing on the renewable fuel standard (RFS) evoked a variety of different opinions from members of the advanced biofuel and environmental community, the overall consensus being that in order for the advanced biofuel industry to continue to grow, the EPA and Congress has to be as consistent as possible with the mandate.
The event was keynoted by Sundrop Biofuels CEO Wayne Simmons, who provided an overview of the advanced biofuel industry and emphasized that there are real facilities breaking ground, being constructed and producing fuel on commercial scales today.
In order to continue to attract financing dollars and expand, however, the industry needs a constant regulatory environment, Simmons said. “Stakeholder groups are making a lot of noise around short-term issues and claiming the RFS is totally broken and needs to be totally repealed—we don’t see it that way…the statute, as it set out, gave the EPA the regulatory authority and flexibility to make changes, to address many short-term issues…we want to refocus the debate on the purpose and point of the RFS.”
At this point, changing the rules of the game would unwind all that’s been created and all that’s potentially in front [of the industry], Simmons said.
Keynote speaker Heather Zichal, president Obama’s deputy assistant for energy and climate change, discussed the specifics of Obama’s Climate Action Plan, adding it has really struck a constructive nature amongst the public since its debut. “We don’t pretend to have all of the answers, in how to prepare for the changing climate, but we’re going to establish a task force made up of local elected leaders to provide recommendations to the federal government as to what would be helpful on the local level,” she said.
After discussing government investments in next-generation biofuel projects, Zichal said calls for repeal of the RFS are nothing but short sighted, and compared the potential of the U.S. advanced biofuel industry to the successes the country’s natural gas industry has achieved. “We’re now the largest producer of it [natural gas] in the world, and an exporter of the fuel and technology,” she said. “The same transformation is happening for biofuels, and is giving the U.S. the opportunity to develop a new, competitive industry.
Following Zichal’s remarks, a roundtable consisting of four advanced biofuel industry stakeholders and one member of a research and advocacy organization conveyed their respective stances on the RFS.
John Reese, downstream policy and advocacy manager for Shell Oil products, said that the company generally supports the RFS, but that the EPA needs to take action to avoid impacts of the blend wall. Shell is the largest distributor of biofuels in the world, he said, and has played a key role of the expansion of the industry in the U.S. “We have a little bit different interest than others in the oil industry.”
While Shell believes the U.S. needs stable, long-term policy to support investment in cellulosic biofuels, Reese said there’s been a lot of misunderstanding about the blend wall. “Every year, EPA takes down projected volume numbers and divides them by expected demand of gasoline and diesel, and comes up with a percentage called the annual RFS,” he explained. “As obligated parties, we multiple that percentage by the amount of gasoline and diesel we produce for consumption in the U.S., and that gives us our renewable volume obligation (RVO), and tells us how many RINs (renewable identification numbers) we have to have to meet that obligation. “
Shell can only legally supply as much gas and diesel for U.S. consumption as it has RINs, which are basically permits to supply gas and diesel for U.S. consumption, Reese said. “The problem is that the mandates in the law exceed the ability to consume the renewable fuels, so there will be a shortfall in RINs available. The only RINs that count for compliance are ones that come from consumption of renewable fuels in the U.S. transportation sector…as our mandates affect our ability to consume renewable fuels, we end up with that shortfall of RINs, and you’ll see it reflected in RIN prices, and it limits the supply of gasoline and diesel fuel in the U.S. because we can only supply as much as we have permits for.”
Reese concluded by deeming the blend wall issue as a serious problem that must be addressed. “EPA does have authority to make adjustments and grant waivers, and we’ve urged them to do that, but we don’t think that’s a long-term solution,” he said. “Having an annual debate on whether this program is creating severe economic harm does not provide a stable regulatory environment for investments in cellulosic biofuel long-term. Waivers are too short-term, and aren’t comprehensive enough to provide certainty for long-term investments.”
Andrew Rojeske, general manager of renewable energy at Dynamic Fuels, described the company as a pioneer of renewable diesel, attributing the company’s success and accomplishments to its plug-and-play technology choice. He reiterated the need for consistent policy for continued success, and added that time, money and technology choice are also key elements for industry expansion.
Following Rojeske, Heather White, executive director of the Environmental Working Group—the only non-biofuel producer on the panel—used her time to speak to convey strong and harsh sentiments against U.S. corn ethanol, remarking that she believes it should be completely phased out of the RFS, and that the current grandfathering clause of existing ethanol plants should be eliminated.
Chris Ryan, president and CEO of isbutanol-producer Gevo, explained the company has made $200 million in investments toward developing its business, and said changing public policy tends to scare away investors. “Our view is to maintain the RFS, maintain policy as consistent as possible, over as long-term as possible, to attract the investments and allow this industry to grow.”
The final speaker on the panel, John Kasbaum, commercial sector senior vice president at KiOR, described the company’s product as a drop-in, hydrocarbon-based fuel that is currently being produced at the company’s first plant in Columbus, Miss. “We don’t have a blend wall issue—we help resolve the blend wall issue, because these materials fully fit under the cellulosic category under the RFS,” he said, remarking that the company supports the RFS. “Let’s not change the rules in the middle of the game…we have significant investments right now in the company’s future.”
A guest speaker at the RFS briefing was Rep. Alan Nunnelee, R-Miss., who touted American energy, but did not specifically mention renewables or the RFS. “Cheap, reliable sources of energy are absolutely critical,” he said. “Energy policy has series implications for national security. Washington needs to get the policies right, and I’m hopeful we will.”