On August 1, the U.S. Environmental Protection Agency (EPA) held a public hearing on the proposal for the Renewable Fuel Standard (RFS). The National Biodiesel Board (NBB) had several witnesses testify before the EPA staff and advocate for higher volumes of advanced biofuels and biomass-based diesel.
“The current numbers shortchange the progress we have made. They are a step back for the RFS, job creation, small businesses and rural economies. Let me assure you—these steps backwards are not about paper, but people,” said Donnell Rehagen, Chief Executive Officer at NBB.
NBB supports increases in the volume requirements, believing the agency must be more aggressive in meeting Congress’s goals to prioritize and move this country toward advanced biofuels. This would create jobs, improve the economy and benefit public health and the environment throughout the country.
The EPA proposal would maintain the minimum required biomass-based diesel volumes at 2.1 billion gallons for 2019. The EPA also proposed to set the 2018 RFS for advanced biofuels based on a minimum applicable volume of 4.24 billion gallons, a decrease from 4.28 billion gallons for 2017. A final rule is anticipated this fall.
With a group of roughly 20 speakers, NBB flagged key data and information for EPA staff as they take comments on this proposal. Specifically, NBB discussed market realities and underutilized capacity, the impacts on small businesses and manufacturing, feedstock availability and consumer choice.
On Market Realities and Underutilization
“The market today has shown it can be used in a variety of locations, in all temperatures and in numerous, diverse applications. This market extends across the country—in rural areas, in urban areas, on-road, off-road and even in homes, buildings and factories. That’s the flexibility of biodiesel, which can be used throughout the distillate fuel market. This market is expected to increase, and the RFS program should ensure continued growth in renewable fuels for that market,” said Scott Fenwick, Technical Director at NBB.
“EPA’s current proposed volumes would stall biodiesel, an important Iowa manufacturing sector, at a time when it is already operating below its capacity. The U.S. can meet production demand and has substantial room for growth, which EPA’s proposal does not acknowledge,” said Grant Kimberley, Executive Director of the Iowa Biodiesel Board.
“Domestic production capacity is significantly underutilized, with 4.2 billion gallons of registered capacity according to EPA’s own assessment. This doesn’t even include non-registered plants or foreign production we expect will continue to reach our shores. EPA’s proposal doesn’t acknowledge the ability of the domestic industry to step up to the plate when given proper signals by EPA,” said Doug Whitehead, Chief Operating Officer at NBB.
On Small Businesses, Investments and Manufacturing
“While we have looked at expanding our biodiesel production, the continual uncertain Renewable Volume Obligations (RVO) policy has stymied our expansion appetite,” testified Ron Marr of the Minnesota Soybean Processors.
“We, and many other small producers, have had to struggle in a difficult business environment when EPA proposes RVOs that are well below what the biodiesel industry can produce. NBB has proposed very reasonable volumes of at least 2.75 billion gallons for biomass-based diesel in 2019 and at least 5.25 billion gallons of advanced biofuels for 2018. These volumes are well within the capabilities of the biodiesel industry and should be strongly considered. Anything less certainly misses the opportunity to help meet the objectives of the RFS and perpetuates the difficult business climate in which small producers like Newport Biodiesel must operate,” said Bob Morton of Newport Biodiesel.
“If EPA were to leave the biomass-based diesel RVO at 2.1 billion gallons for 2019—or worse—reduce the RVOs based on ill-conceived and illogical arguments, EPA not only will badly damage American investment made in this industry, but will severely limit and discourage further investment and growth in this important manufacturing sector,” said Paul Teta, VP and General Counsel at Kolmar Americas, Inc.
On Feedstock Availability and Impacts to the Farming Economy
“The U.S. soybean harvest last year was a record 4.3 billion bushels—380 million bushels larger than the previous year. Those additional bushels represent an extra half a billion gallons of vegetable oil that the global market has had to absorb, resulting in lower prices for agricultural producers and lower profit potential. The U.S. Department of Agriculture (USDA) forecasts a similar crop of 4.25 billion bushels in 2017. I note these examples of excess supplies as our modeling results indicate RVOs could be increased to levels supported by the National Biodiesel Board and feedstock prices would still be less than their five-year average,” testified J. Alan Weber, partner at MARC-IV.
“Biodiesel also makes farming more profitable. It contributes about 63 cents per bushel of soybeans, while lowering the price of meal for livestock producers and the food supply. … Biodiesel has revitalized many rural areas of Iowa, and reversing course would harm those communities,” said Grant Kimberley, Executive Director of the Iowa Biodiesel Board.
On Consumer Choice
“Consumers choose biodiesel. They choose it because of the lower costs at the pump, because it provides better lubricity than petroleum diesel and because of the air quality benefits for their communities,” said NBB’s Scott Fenwick.
On the Law’s Requirements
The RFS—a bipartisan policy passed in 2005 and signed into law by President George W. Bush—requires increasing volumes of renewable fuels to be blended into the U.S. fuel stream.
“The RFS was designed to drive investment and innovation by providing stability and incentives for the development of clean alternative fuels. This proposal falls short of that goal. This proposal only perpetuates the status quo that Congress decisively sought to change in passing the RFS—the lack of real, sustainable alternatives to petroleum, particularly diesel fuel,” said NBB’s Anne Steckel.
“The biomass-based diesel industry has responded to Congress’s directives under the RFS program. It has made investments, it has diversified its feedstocks and it has become more efficient—all the while, promoting the goals of the program: creating a better environment, improving the economy and strengthening this country’s energy independence and security,” said NBB’s Doug Whitehead.
The law is divided into two broad categories: conventional biofuels, which must reduce greenhouse gas emissions by at least 20%, and advanced biofuels, which must have a 50% reduction. Biodiesel is the first advanced biofuel to reach commercial-scale production nationwide and has made up the vast majority of advanced biofuel production under the RFS to date.