EPA lowers mandate for cellulosic biofuel, keeps ethanol at 15B gallons

Source: By Donnelle Eller, Des Moines Register • Posted: Thursday, July 6, 2017

Iowa officials largely cheered the Trump administration’s new renewable fuel targets Wednesday, saying the standards are the first big test of the president’s commitment to ethanol and biodiesel.

But industry and political leaders called the biodiesel and next-generation cellulosic ethanol goals weak, even as they hailed keeping conventional ethanol levels steady.

“I commend the Trump administration for its commitment to keeping the Renewable Fuel Standard at the level set by Congress,” Gov. Kim Reynolds said Wednesday. But, “I am disappointed biodiesel levels are not higher.”

If finalized, it would be only the second time in history that the total renewable fuel goal would be lowered.

“There was a big push within the petroleum industry to get President Trump to walk back his commitment to corn ethanol,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

At least “on the corn side, he did uphold” his promises, Shaw said.

The U.S. Environmental Protection Agency Wednesday proposed a Renewable Fuel Standard that would:

  • Keep conventional ethanol, typically made from corn, at the statutory maximum of 15 billion gallons next year.
  • Drop the level of cellulosic biofuel, considered the next generation of ethanol, 73 million gallons to 238 million gallons in 2018.
  • Maintain the biomass-based diesel standard for 2019 at the 2018 levels of 2.1 billion gallons. This mandate covers biodiesel, often made from soybeans and vegetable and animal fats.

Congress adopted Renewable Fuel Standard in 2005 and expanded it in 2007, wanting a cleaner source of fuel that makes the nation less reliant on foreign oil production.

The program requires oil companies to blend increasing volumes of renewable fuels with gasoline and diesel, culminating with 36 billion gallons in 2022.

U.S. Rep. Dave Loebsack, a Democrat, said Trump “once again has turned his back on Iowa’s farmers and rural communities” with his renewable fuels proposal.

“We must aggressively push for the EPA to expand the RFS and the use of biofuels, not slash it,” he said. “Folks in Iowa know that the RFS is working.

Corn and soybean prices are about 50 percent lower than they were in 2012, a year following a widespread drought.

Last year, Iowa led the nation in corn production; it ranked second for soybean production.

“The Renewable Fuel Standard has been a resounding success: cleaner air, greater energy independence, and stronger rural communities,” said Texas farmer Wesley Spurlock, the association’s president.

Tom Brooks, chairman of the Iowa Biodiesel Board, however, said the biomass-based diesel proposal “would set this important American manufacturing sector back at a time when we stand ready to take a large leap forward.”

“Iowa, as the nation’s top biodiesel-producing state, has expanded capacity in anticipation of better times ahead — but that is now looking bleaker,” said Brooks, general manager of Western Dubuque Biodiesel in Farley.

U.S. Sen. Chuck Grassley, an Iowa Republican, called the proposal “a mixed bag.”

“While I’m glad the EPA’s proposal holds steady the requirement of 15 billion gallons for conventional ethanol, the lack of any increase for biodiesel is a missed opportunity,” he said. “The proposal fails to recognize the ability of the domestic biodiesel industry to produce at much higher levels.”

Jeff Broin, CEO of Poet, a large South Dakota ethanol producer, said the reduced cellulosic ethanol goal “will cool advances” in technology.

Poet is pushing to make cellulosic ethanol from corn cobs, husks and other biomass in Emmetsburg; DuPont is doing the same with a new plant in Nevada.

Quad County Corn Processors makes cellulosic ethanol from corn kernel fibers in Galva. Other U.S. plants use algae and other biomass.

“For the biofuels industry to grow, we need to see robust cellulosic ethanol production using multiple feedstocks from across the country, and the annual EPA volumes must keep our industry on that path,” Broin said.

The cellulosic ethanol standards have been criticized as overoptimistic, given the next generation has been slow to develop until recent years.

Shaw, executive director of the Iowa Renewable Fuels Association, said “maintaining the 15 billion gallon conventional biofuels level “is good news for E15, motorists and farmers.”

“Unfortunately, a change in administrations did not change the EPA’s under-appreciation for the potential of U.S. biodiesel production,” Shaw said. “Keeping biodiesel levels frozen at 2.1 billion falls short of U.S. industry capabilities, even before imports are considered.”

Shaw, Reynolds and others said it will be important to push for higher biodiesel and cellulosic ethanol levels through public comments.

Renewable fuels advocates have been nervous about Trump’s stand on ethanol and biodiesel with Scott Pruitt leading EPA. Pruitt aggressively opposed the Renewable Fuel Standard as the former Oklahoma attorney general.

On Wednesday, Pruitt said: “Increased fuel security is an important component of the path toward American energy dominance.”