RFS delay has ‘chilled necessary investment’ in industry — report
Source: Amanda Peterka, E&E reporter • Posted: Tuesday, May 5, 2015
The Biotechnology Industry Organization report also found that the delays at U.S. EPA have limited the industry’s ability to create more than 80,000 direct jobs. Reduced investment in the industry has had the greatest impact on the cellulosic biofuel industry, which produces biofuels out of non-food plants like agricultural residue and grasses, BIO said.
The trade organization represents many of the companies that have built or are in the process of opening large-scale advanced biofuel plants in the United States.
“We find that EPA’s delays in rulemaking over the past two years have chilled necessary investment in advanced and cellulosic biofuels just as they reached commercial deployment,” BIO wrote.
Congress passed the renewable fuel standard in 2007 to spur the development of both conventional ethanol and advanced biofuels. While Congress laid out targets for biofuel use through 2022, the law requires EPA to issue an annual rulemaking to set the final mandates for most renewable fuels by Nov. 30 of the preceding year. The deadline for the biodiesel target, on the other hand, is supposed to be set 14 months before the year begins.
EPA, though, has not yet issued standards for 2014 or 2015. In late 2013, the agency floated a controversial proposal that called for rolling back the mandates for all categories of renewable fuels, but EPA backed off the proposal after receiving pushback from stakeholders.
The BIO report comes shortly after EPA announced that it would issue a proposed rule setting the mandates for 2014, 2015 and 2016 by June 1 as part of a settlement agreement with oil industry trade groups (E&ENews PM, April 10).
In 2015, the RFS called for 5.5 billion gallons of advanced biofuels, including 3 billion gallons of cellulosic biofuel, a goal that previous studies estimated would require 110 operating plants throughout the country.
According to BIO, the advanced biofuel industry is about four years behind that goal. In all, the industry has a shortfall of $20.6 billion in investment, “which can be attributed to policy instability, the general economic recession and the challenges of scaling up new technologies,” BIO said.
The recession and technology issues in the 2011 and 2012 time frame account for about $6.9 billion of that total shortfall, according to BIO. The group estimated that EPA is responsible for a majority of the remaining $13.7 billion.
BIO blamed not only the delays in the annual rulemakings but also delays in approving new biofuel technologies.
Cellulosic biofuel producers have had to wait, on average, 29 months for EPA to approve petitions for new technologies, the report said. EPA last year took steps to streamline the approval process, but according to BIO, 29 companies still have pending petitions.
The group warned that investment is being shifted overseas. According to the report, more than $600 million has been invested overseas in biorefineries whose technology was originally researched and developed in the United States.
“Additional commercial biorefineries originally planned for the United States are now looking for locations overseas or have simply been put on hold indefinitely,” BIO said.
Advanced biofuels companies raised similar concerns about the proposal to lower RFS targets (Greenwire, Oct. 29, 2013).
EPA did not respond to a request for comment on the report. The agency has acknowledged the delays and maintained that it is working to get the RFS program “back on track.”
“It’s simply mission critical that the RFS get back on track, and we have a long-term trajectory in this country for lowering the carbon content of transportation fuels,” EPA Director of Transportation and Air Quality Christopher Grundler said at a recent ethanol industry conference (Greenwire, Feb. 20).