Biodiesel campaign hits paydirt in RFS proposal 

Source: Amanda Peterka, E&E reporter • Posted: Tuesday, June 2, 2015

Stakeholders from all around the biofuels debate groaned last week when U.S. EPA proposed renewable fuel targets.

But one industry group cheered.

The National Biodiesel Board called the proposed targets — which call for year-by-year increases in the use of its favorite fuel through 2017 — a much-needed “step in the right direction” by providing certainty to producers.

“I was really pleased to see that EPA took the time and really listened to the advocacy and outreach that our industry did conveying to them how it was essential they continue to grow the biomass-based diesel program and the overall advanced [biofuel] program,” Anne Steckel, the trade group’s vice president of federal affairs, said in an interview.

EPA’s proposal covers targets for conventional ethanol and advanced biofuel — including biodiesel — for the years 2014, 2015 and 2016. It also would set the 2017 mandate for biodiesel.

While the proposal generally calls for an increase in biofuel production compared to a prior scrapped proposal for 2014, overall renewable fuel levels would remain below the levels that Congress wrote into the renewable fuel standard in 2007. Several biofuel producers came out in opposition to the proposal Friday, saying it handed the RFS program over to oil refiners that don’t want to use more biofuels (Greenwire, May 29).

For biomass-based diesel, a fuel made from soybean oil, animal fats and used cooking grease, the proposal would set the 2014 mandate at 1.63 billion gallons, the level of fuel that was actually produced last year.

EPA’s proposal would require refiners to use 1.7 billion gallons of biodiesel in 2015 and 1.8 billion gallons in 2016. In 2017, the proposal would set the biodiesel mandate at 1.9 billion gallons.

The targets represent a substantial increase from the agency’s original proposal for 2014, which EPA withdrew last year after receiving pushback from stakeholders. That proposal would have kept the biodiesel target level at 1.28 billion gallons for both 2014 and 2015.

The proposed increases “will both contribute to market stability for the renewable fuels program and continue to promote a growing and competitive advanced biofuels marketplace,” EPA said in its proposal Friday.

When it passed the renewable fuel standard into law, Congress decided to treat biodiesel differently than other fuels. Rather than setting year-by-year targets through 2022, as it did for other types of renewable fuels, lawmakers said only that EPA must mandate at least 1 billion gallons a year of biodiesel by 2012. After that, they left the decision up to the agency whether and by how much to increase the annual target.

For more than a year, the biodiesel trade group has led an aggressive campaign in favor of higher mandates for the industry while at the same time staying out of debates over other aspects of the RFS, including the ethanol portion of the requirements. The campaign has included advertising, trips to the agency and lobbying on Capitol Hill. Congressional supporters of biodiesel have held several events to push EPA for higher targets.

Steckel credited the group’s campaign with the increased mandates.

“We have a compelling story,” she said. “We’re really different than everybody else in the entire program, so we focused on our story and telling it, and we were glad to see that the administration has recognized that.”

‘Hardly done fighting’

The nation’s largest biodiesel company, Renewable Energy Group, called the EPA targets an improvement over the prior proposal and showed “federal policy is heading in the right direction.”

According to the biodiesel board, more than 50 biodiesel facilities have either idled or gone bankrupt since 2012 as a result of a lack of robust RFS targets and Congress allowing the industry’s $1-a-gallon tax credit to expire.

“Not having certainty of a target to shoot toward has been very detrimental for our industry,” Steckel said.

Oil refiners say that EPA doesn’t have the authority to increase the biodiesel target until 2017, however. When Congress passed the RFS into law, it stipulated that EPA set the biodiesel level at least 14 months before the beginning of the compliance year.

According to the American Petroleum Institute, that means that EPA must give producers at least 14 months’ notice before raising the biodiesel target.

“The language is very unambiguous in the statute, and it would be hard to interpret it any other way,” API senior fuels policy adviser Patrick Kelly told reporters last week.

The biodiesel group disagrees. In its proposal, EPA noted that Congress did not provide any guidance to the extent to which the biodiesel mandates should grow after the year 2012. The agency said it considered relevant factors, including the impact of biodiesel tax credit, on the industry when choosing the targets.

EPA also said it believed that it was possible for the biodiesel industry to exceed the proposed levels, depending on market conditions. As of 2013, the total domestic biodiesel capacity registered under the RFS program was 2.7 billion gallons.

Under the RFS program, the biodiesel mandate is contained in the larger mandate for advanced biofuel use. After enough of the fuel is produced to satisfy the biodiesel mandate, it can compete in the broader advanced biofuel mandate. There, biodiesel’s toughest competition has come from imported sugarcane ethanol from Brazil, which EPA also considers an advanced biofuel.

Steckel said that, despite being pleased with the proposal, her group would continue to push for higher targets for both biodiesel and advanced biofuels.

The American Soybean Association on Friday expressed similar sentiments, saying in a statement that more robust biodiesel volumes would lead to further growth in the industry.

“We’re hardly done fighting for biodiesel,” ASA President Wade Cowan said.