RFS Roundup: Advanced Cellulosic Industry Group Breaks with Industry on RFS

On March 11, at the Advanced Bioeconomy Leadership Conference in Washington D.C., Advanced Biofuels Association President Michael McAdams broke with the “Don’t Mess with the RFS” mantra that has been the collective industry response to EPA’s 2014 proposal to lower the volumes of renewable fuel required by the Renewable Fuel Standard (RFS).  Overall, the ethanol industry has maintained that the RFS is working as intended, and that the Administration already has the tools needed to fix any issues with the law.

For the first time, at Wednesday’s conference McAdams conveyed the sentiment of his members that the RFS is now only working for some sectors of the bioeconomy, namely first and second generation fuels that are now reaching commercial levels. Representing 3rd generation biofuels producers such as algae, drop-in fuels, and renewable chemical companies, McAdams said his group is changing course and calling on Congress to amend the RFS, commenting “in order to achieve such changes, the RFS needs to be amended legislatively… So I am announcing today that ABFA, at the instruction of our members, will actively seek to reform the program.”

In his speech, McAdams outlined three changes his group is promoting in an attempt to provide certainty to the companies he represents.  They include a minimum value for cellulosic Renewable Identification Numbers (RINs), which identify each volume of renewable fuel, and can be sold and traded as compliance credits.  The second is an extension of policy certainty beyond 2022 (the current sunset date on the RFS), and the third is requiring blenders to purchase existing cellulosic fuels, instead of buying waiver credits.  McAdams commented that advanced biofuels are “still a critical part of the solution to finding more sustainable, lower carbon alternatives to provide the energy our world needs.”

Others in the industry have been wary on approaching lawmakers for legislative changes.  Indeed, EPA’s much maligned delay of the 2014 and 2015 renewable fuel volumes, as well as low gas prices, has some on Capitol Hill cooling towards the efficacy of the statute.  Despite these issues, industry groups maintain that the EPA has all the tools necessary to address the issues that McAdams outlines. Indeed, the issues of the ‘blend wall’ and increasing volumes of renewable fuel beyond 10 percent (E10), are due to infrastructure challenges, not overall production levels. According to Growth Energy CEO Tom Buis, “by opening up the RFS for legislative changes, you are opening a can of worms that will only create further uncertainty for the industry, which is the last thing biofuel producers of any kind need.”

The ideological divide on the RFS among the biofuels industry has grown deeper as some fuels begin to reach commercial production levels while the more advanced fuels are still in development phase. Some would argue that the advanced sectors of the industry have suffered the most due to RFS uncertainty, with investors already looking towards developing and building commercial plant for these advanced technologies abroad, where there is a more favorable outlook for their prospects. Meanwhile, corn ethanol producers are already a valued part of the refining process, providing cheap octane to gasoline in the form of E10.

Representatives of other sectors of the biobased economy were quick to state that the view of ABFA and McAdams does not represent the industry as a whole, with Novozymes president Adam Monroe commenting that ABFA “does not represent even the majority of advanced biofuels producers.” Time will tell what effect, if any, this rift between sectors of the biofuels and bioproducts economy will have on the political process surrounding the RFS.    

For more information see: 

For Next-Generation Biofuels, Time to Strengthen the RFS, ABFA 

Advanced Biofuels Group Would Reopen RFS, Domestic Fuel