U.S. produced record 3.5M gallons of cellulosic last month

Source: Amanda Peterka, E&E reporter • Posted: Thursday, September 25, 2014

The nation produced nearly 3.5 million gallons of cellulosic biofuel in August, more than all the other months of the year combined and the most production ever for a single month, U.S. EPA reported.

Before August, year-to-date production of cellulosic biofuel was slightly greater than 62,000 gallons. Last month, EPA reported 4,156 gallons of cellulosic biofuel production, while the previous two months both recorded zero production.

According to the agency, the production spike in August was made up almost entirely of renewable compressed natural gas and liquefied natural gas produced from landfill biogas. A new agency rule that went into effect in August determined that the fuels qualified as “cellulosic,” a category of renewable fuels that produces 60 percent less greenhouse gases when burned compared with a petroleum base line.

EPA had previously predicted that the rule would lead to greater volumes of cellulosic biofuel, which refiners are required to blend into petroleum-based gasoline and diesel or purchase credits.

“This action has the potential to provide notable volumes of cellulosic biofuel to the marketplace,” EPA said in July on issuing the final rule.

August’s production, which is logged by EPA through an electronic system, comes as the White House is weighing a final rule that would set the 2014 renewable fuel requirements for refiners. In its proposal last November, before the agency approved the new fuels, EPA predicted that the cellulosic industry would reach 17 million ethanol-equivalent gallons, basing the target on estimations of cellulosic ethanol entering the market.

But so far this year, EPA has logged only minimal amounts of cellulosic ethanol, although three large cellulosic ethanol plants are ramping up production throughout the end of the year, producing ethanol from crop waste. Regardless of what their production is at the end of the year, the nation now appears poised to hit that 17 million target if the new sources of cellulosic biofuel produce similar amounts of fuel each month for the rest of the year.

The oil industry has long criticized EPA for continually failing to accurately predict the amount of cellulosic biofuel in the market; high targets, it says, cause refiners to pay penalties for fuel that doesn’t actually exist in the market. EPA, in turn, has retroactively ratcheted down its cellulosic projections to reflect actual market conditions.

Patrick Kelly, fuels analyst at the American Petroleum Institute, said in an interview yesterday that the industry was still critical of EPA’s projections for the industry and that it was by happenstance only that the agency might actually be correct this year.

“The point is that it doesn’t really lend any more credibility to EPA’s ability to forecast,” Kelly said.

It’s unclear whether and how EPA will take into account the new sources of cellulosic fuel when it issues its final rule setting the renewable fuel standards for 2014.