Thirteen years after the passage of the Renewable Fuel Standard (RFS), the domestic corn ethanol industry produces 16 billion gallons of ethanol a year and the biodiesel industry produces 2.7 billion gallons of biodiesel and renewable diesel a year. Conversely, advanced and cellulosic fuels, those leading to greenhouse gas reductions greater than 50 percent, have reached production of only about 500 million gallons per year. This is despite the Congressional mandate that these fuels make up the majority of the 36 billion gallons called for by 2022 under the RFS.
The industry has been unable to produce the volumes called for under the advanced and cellulosic categories due to a variety of reasons – including the pace of technology, falling petroleum prices, and regulatory uncertainty, to name a few. Since the industry continues to miss these targets, in January of 2019, the Environmental Protection Agency (EPA) will propose resetting fuel volume targets of advanced and cellulosic fuels for the years 2020 through 2022. However, there are many administrative steps the EPA could be actively taking to unlock the production of additional gallons of advanced and cellulosic gallons.
That’s the finding of the Biomass R&D Technical Advisory Committee (TAC), an independent advisory board to the federal government. The TAC recently released a report, Identification of Regulatory Barriers to Advanced Biofuels, which identifies the regulatory steps EPA could take to increase the growth of advanced and cellulosic fuels. The TAC grouped potential actions into near-term and intermediate opportunities. Longer-term opportunities were briefly addressed, but represent steps that would require Congressional intervention to re-visit the basic parameters of the RFS.
- Recognize the use of bio-intermediate products, such as a bio-intermediate produced at one site and then refined at another site. Currently, the RFS only allows biofuels to be processed at one facility. One such example is biocrude, an intermediate product that is formed by converting biomass (often wood waste) into a crude oil intermediate, which then can be refined into renewable gasoline.
- Allow the co-mingling of biomass, by establishing a process in which two different qualified feedstocks can be co-mingled, or qualified and non-qualified biomass can be co-mingled. The TAC notes that there are already protocols for quantifying volumes of various crops in the commodity sector, and the same methods could be applied to the biofuels industry. Not allowing co-mingling is seen as an impediment to investment and to the growth of the use of a variety of feedstocks, in particular, woody biomass.
- Determine the eligibility of wastes for the RFS. Currently, a variety of industrial wastes that could be used to produce biofuels, such as pulp and paper waste, don’t currently qualify for the RFS.
- Clear the pathway backlog. These are projects that are ready to produce qualifying biofuels but are awaiting approval to be a qualifying facility. Currently, the backlog is about 3 years for approval, and there are several projects waiting for approval. While the number of pending pathways for facilities to produce qualifying biofuels is unknown, it’s considered that there are anywhere up to two dozen.
- Allow biomass feedstocks to qualify for crop insurance, a key step to reducing financial risk to producing new and novel biomass energy feedstocks.
- Finalize an electricity pathway (e-RIN), which would allow qualifying biomass that is used to produce electricity to qualify under the RFS. This would also help incentivize the use of electric vehicles.
EPA should take steps to understand the total volume of fuels represented by these opportunities and take them into consideration when setting reset volumes for 2020 through 2022. Additionally, the EPA should be transparently setting goals on meeting already agreed upon steps to increase advanced and cellulosic fuel volumes, such as finalizing the Renewables Enhancement and Growth Support (REGS) Rule, which EPA proposed two years ago.
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