Comment: Wavering policy spells disaster for renewable fuel

Source: By Javier Garoz Neira, CEO of Abengoa Bioenergy, The Hill • Posted: Friday, January 31, 2014

The advanced renewable fuel industry is in danger. Abengoa Bioenergy has invested in what has until recently been a healthy market for innovation and new technology. Now, Washington’s weakening commitment to new clean fuels could render useless the billions of dollars already invested in advanced renewable fuel – and foreclose on the opportunity to draw billions more to a strong American industry.

Six years ago the Renewable Fuel Standard (RFS) created an attractive market for renewable fuels in the U.S. Homegrown renewable fuel now makes up 10 percent of the nation’s fuel supply. Since its inception, the RFS has lowered greenhouse gas emissions by 33.4 million metric tons, created more than 100,000 jobs and lowered gas prices. The RFS has created a stable market for farmers, making the U.S. agricultural industry the most advanced and sustainable in the world. The policy is working. The certainty of this forward-looking policy is the reason Abengoa chose to make significant investments in the U.S.

Abengoa has invested more than $2 billion in traditional corn ethanol plants, and another $1 billion in advanced biofuels projects here in the U.S. In addition to our six corn ethanol plants, our first cellulosic ethanol facility will open in Hugoton, Kan. early this year and produce more than 25 million gallons of fuel per year, accounting for up to 75 percent of the nation’s cellulosic fuel supply. The plant will run on a biomass boiler, generating all of the power necessary to not only run the facility but also contribute leftover renewable electricity to the local grid.

In addition, we are planning to retrofit three of our existing corn ethanol plants to turn them into advanced biofuel facilities. The changes to these three plants in York, Neb., Portales, N.M., and Colwich, Kan. will mean hundreds of new American jobs, new technology growth in the Midwest and additional advanced renewable fuel.

Building new facilities and upgrading existing plants requires additional investment; investment that we may not be able to make without a stable policy that supports our industry. With its latest proposal, the Environmental Protection Agency (EPA) has failed to provide that stability.

Each year, the EPA sets targets for renewable fuel production and each year, in accordance with the guidelines put forward in the RFS, those targets are the same or higher than the year before. This allows for a stable and expanding marketplace for renewable fuel. However, in an unprecedented move, the EPA’s 2014 proposed targets slash the amount of renewable fuel in our fuel supply compared to 2013 by a stunning 1.4 billion gallons. If the EPA moves forward with this cap on demand for renewable fuel, it will send an unmistakable signal to both consumers and the industry that they no longer support renewable fuel. This substantial change in the RFS will result in a shift in the fundamental dynamics of our fuel marketplace.

The EPA’s proposal has left our industry in limbo. We once thought we could count on consistent demand for renewable fuel through 2022. The long-lead policy strategy gave Abengoa and other companies time to invest in the new technologies and commercial scale facilities necessary to take things like cellulosic ethanol from an idea in a lab to a real part of our national fuel mix. We want to move forward and continue to invest in the renewable fuel industry, but we can only do so if the EPA restores certainty to the industry. If regulators fail to do so, there will be collateral damage: companies like Abengoa may be forced to take their investment elsewhere. This means closing down US facilities, laying off hardworking Americans, and halting the progress we have spent the last six years working so hard to achieve.

The decision in front of the EPA right now has the potential to kill the cellulosic industry in the United States. The EPA must amend the current proposal and set higher targets for renewable fuel production. This will keep the RFS working and ensure that the renewable fuel industry stays stable and continues to support the national economy.