Best stock to invest in – EPA Issues On-time, Robust Renewable Fuel Standard For 2017-18



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Jim Lane

In Washington, the US Environmental Protection Agency released
the 2017 renewable fuel volume obligations (and the 2018 volume
obligations for biomass-based diesel), with a strong push beyond
what has been termed the “blend wall” and stimulating refiners to
implement more “cost-effective changes at their refineries to
blend more renewable fuel.”

The agency finalized a total renewable fuel volume of 19.28
billion gallons, of which 4.28 BG is advanced biofuel and 311
million gallons is cellulosic biofuel. Thus, the implied RVO for
conventional biofuels like corn ethanol will be 15BG—up from the
14.8 BG proposed in May.

“Renewable fuel volumes continue to increase across the board
compared to 2016 levels,” said Janet McCabe, the agency’s acting
assistant administrator for the Office of Air and Radiation.
“These final standards will boost production, providing for
ambitious yet achievable growth of biofuels in the transportation
sector. By implementing the program enacted by Congress, we are
expanding the nation’s renewable fuels sector while reducing our
reliance on imported oil.”

The Top Line Numbers

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Breaking the Blend Wall

The key? The EPA has essentially abandoned its previous attempt
to slow the adoption of renewable fuel by citing the oil
industry’s lack of infrastructure-building as a “supply
constraint”. Under the Clean Air Act, the EPA has authority to
waive down Congressionally-targeted volumes in the case of supply
constraints, which members of Congress said they intended to mean
a lack of renewable fuel production, rather than a lack of
infrastructure deployed by refiners to distribute renewable fuel.


Renewable fuel producers had contended that should refiners have
the ability to stall deployment of renewable fuels by not
deploying infrastructure, obligated parties would have gained veto
power over the Clean Air Act and Congress.

Biomass-based diesel numbers still below industry capacity

Under the new RFS rule, Biomass-Based Diesel standards would move
to 2.1 billion gallons in 2018 up from 2 billion gallons in 2017.
The Biomass-Based Diesel category – a diesel subset of the overall
Advanced Biofuel category – is made up of biodiesel and renewable
diesel, another diesel alternative made from the same feedstocks
using a different technology.

The new standards reflect modest growth in the standards but
remain below the more than 2.6 billion gallons of biodiesel and
renewable hydrocarbon diesel expected in 2016.

Figures substantially boosted from original proposal

The EPA substantially boosted volumes from the original proposals
issued earlier in the year. They were:

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Cellulosic fuels were essentially flat from the original
proposal, but advanced biofuels were boosted nearly 300 million
gallons and, overall, renewable fuel obligations were boosted 448
million gallons.

Reaction from the Stakeholders

Advanced Biofuels Association

Michael McAdams, ABFA President:
“We congratulate EPA on getting the RVO rule out ahead of
schedule. Like last year, it sends a clear signal to the market of
the federal government’s intention to stand behind the RFS
program. We are also happy to see the confidence and support of
the biomass-based diesel pool by continuing to recognize the fact
it is growing steadily. And, we welcome increases in both the
advanced and cellulosic pools. Those are truly the fuels of the
future that deliver the most significant contribution to
sustainability.”

Biotechnology Innovation Organization (BIO)

Brent Erickson, executive vice president of BIO’s Industrial
& Environmental Section:
“By abandoning its legally flawed reliance on general waiver
authority as a basis for departing from statutory biofuels volumes
requirements, EPA has sent a strong signal that it will support
the biofuels industry and grow advanced and cellulosic biofuel
production. BIO and its members welcome this change in course by
EPA; today’s rule adheres to Congress’s intent in enacting the RFS
statute and ends several years of instability in the RFS program.”
Read
More

National Biodiesel Board

NBB CEO Donnell Rehagen
“The real winners with this announcement are American consumers
who will now have access to even more cleaner burning, advanced
biofuels. These benefits extend far beyond the biodiesel industry,
supporting high paying jobs and clean air across the nation.
Though we are poised to top these numbers this year, growth in
advanced biofuels still sends positive signals to the
marketplace.”

“While NBB applauds the increased volumes, there is room for more
aggressive growth. The U.S. biodiesel industry can do more. The
production capacity and feedstock are clearly available as the
market is already topping these levels. We will work with the
incoming Administration to help them understand the benefits
provided by our growing domestic biodiesel industry and the
potential to support additional jobs and investment in rural
economies.”

Advanced Biofuels Business Council

Brooke Coleman, Executive Director
“Administrator McCarthy and her team deserve a lot of credit.
Administrator McCarthy said they would get the RFS back on track
and they did. It’s a strong rule across the board and moves the
conversation forward. We have moved past the imaginary blend wall.
The biofuels industry continues to innovate. The merchant refiners
saying they cannot comply with the RFS are now implementing
cost-effective changes at their refineries to blend more renewable
fuel. President-elect Trump will no doubt hear from a shrinking
group of RFS naysayers, but I think he understands that the RFS is
working, supports a strong manufacturing base across the country
and reduces our dependence on foreign oil. We are looking forward
to working with EPA and the next Administration on further
accelerating the commercial deployment of advanced biofuels.” Read
More

Renewable Fuels Association (RFA)

Bob Dinneen, President and CEO
“We can all be thankful EPA has raised the conventional biofuel
requirement to the 15 billion gallon level required by the
statute. The move will send a positive signal to investors,
rippling throughout our economy and environment. By signaling its
commitment to a growing biofuels market, the agency will stimulate
new interest in cellulosic ethanol and other advanced biofuels,
drive investment in infrastructure to accommodate E15 and higher
ethanol blends, and make a further dent in reducing greenhouse gas
emissions.” Read
More

Growth Energy

Emily Skor, CEO:
“We are pleased that the EPA’s rule finally achieves the statutory
volume for conventional biofuel as called for by Congress. The
Renewable Fuel Standard is our country’s most successful energy
policy. It continues to inject much needed competition and
consumer choice into the vehicle fuels marketplace. It enables
greater consumer adoption of cleaner biofuels that displace toxic
emissions and reduce harmful emissions, while creating American
jobs, spurring innovation and lowering the price at the pump.” Read
More

American Coalition for Ethanol (ACE)

Brian Jennings, Executive Vice President
“As more ethanol was blended with record-high consumption of
gasoline this year, ACE urged EPA to increase the 2017 implied
conventional biofuel volume to the statutory level of 15 billion
gallons and we are very pleased EPA has agreed to do so. For the
last couple of years, EPA has unfortunately sided with oil
companies and refiners instead of rural voters to ‘ride the
brakes’ on RFS blending volumes, relying on excuses such as the
make-believe E10 ‘blend wall’ and lower gasoline use to reduce
renewable fuel use below statutory levels. But we are supportive
of the move to increase volumes for 2017 without a ‘blend wall’
excuse. U.S. gasoline use is expected to rise again in 2017, so
increasing RFS volumes will help restore some confidence to the
rural economy and reassure retailers that it makes sense to offer
E15 and flex fuels like E30 and E85 to their customers.”

“Nevertheless, we remain opposed to EPA’s misapplication of the
RFS general waiver authority to use ‘infrastructure constraints’
as an excuse to limit renewable fuel use below statutory levels
for 2014, 2015, and 2016, which is why we are party to Americans
for Clean Energy et al. vs EPA, a lawsuit pending in the U.S.
Court of Appeals for D.C. We look forward to the Court taking up
our case early in 2017 and deciding in our favor.”

National Corn Growers Association

Wesley Spurlock, farmer and President:
“Today the EPA moved in the right direction by increasing the 2017
ethanol volume to statute. This is critical for farmers facing
difficult economic times, as well as for consumers who care about
clean air, affordable fuel choices, and lowering our dependence on
foreign oil.” Read
More

Renewable Energy Group (REGI)

Daniel Oh, CEO
“While our industry has shown that higher volumes of biomass-based
diesel can and will be produced and consumed, this final rule
elevates the growth trajectory for our cleaner, lower carbon
intensity advanced biofuel,” said Daniel J. Oh, President and
Chief Executive Officer. “Biomass-based diesel will continue to
lead the way. We appreciate the support of those at the EPA, many
others throughout the Administration and our bi-partisan champions
on Capitol Hill who all helped make this possible.”

Novozymes (NVZMY)

Adam Monroe, President, Americas
“Since its inception, the RFS has created more than 357,000
good-paying American jobs that can’t be outsourced. These workers,
and the biofuel they produce, have helped us all breathe easier by
reducing toxic emissions and protecting people’s health. They’ve
also led America to a resurgence in American manufacturing,
reducing our dependence on foreign oil. The RFS is a key reason
America is achieving its economic, health and climate goals.”

“Novozymes has 1,200 employees in the United States and has
invested hundreds of millions of dollars in biofuel technology
development, putting scientists to work finding ways to turn
biomass into biofuel, and building facilities like our $200
million enzyme manufacturing plant in Blair, Nebraska. We made
these investments because the Renewable Fuel Standard is strong,
stable and clear. With today’s decision, it remains that way.”

POET

Jeff Broin, CEO:
“The grain ethanol industry is ready and able to meet its
obligation under the Renewable Fuel Standard, and today’s rule
from the EPA reflects that reality. I commend the EPA on holding
firm to the letter of the law despite enormous pressure from oil
interests. These numbers reflect the intent of Congress in making
homegrown, renewable biofuels a sizable portion of our
transportation fuel supply.” Read
More

The Bottom Line

With the proposal, the EPA ensured that only one turkey will be
on the table this Thanksgiving — the actual Thanksgiving Day
turkey, and no evidence of an RFS turkey in sight.

Jim Lane is editor and publisher  of Biofuels Digest where 
this article was originally published
. Biofuels Digest is the most widely
read  Biofuels daily read by 14,000+ organizations.

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