Ag, Biofuel Groups File RFS Comments

OMAHA (DTN) -- On the final day of the public comment period for the Renewable Fuel Standard, a number of agriculture and biofuel interest groups called on the U.S. Environmental Protection Agency to set the bar higher for cellulosic ethanol.

In comments sent to the EPA on Thursday, at least three of those groups called out the agency for originally proposing an increase in the cellulosic number, only to cut the number in a span of nine days in June during an interagency review.

EPA originally was prepared to set the cellulosic number at 384 million gallons for 2018, but instead settled on 238 million gallons.

In comments to the agency, the National Corn Growers Association said it was pleased the EPA set the conventional corn-ethanol volume at 15 billion gallons, but was disappointed on the cellulosic front.

"We are concerned with the proposed 73-million-gallon reduction for cellulosic fuel and the 40-million-gallon reduction for total renewable fuel, compared with the final 2017 volumes," NCGA said. "NCGA believes these proposed reductions do not reflect current biofuel production."

NCGA asked the agency to take a "more forward-looking approach" on the cellulosic and advanced biofuels volumes "to draw the continued investment and innovation needed to support the ongoing expansion of cellulosic and advanced fuel production."

CALLS FOR EXPANSION

Three biofuel interest groups all called for expanding cellulosic volumes, but to somewhat differing degrees.

The Renewable Fuels Association said in its public comments it was concerned the agency still continues to consider "demand-side factors" in setting the cellulosic volumes.

The RFA said taking that tack is "clearly barred" by a recent decision against EPA's actions on the RFS issued by the U.S. Court of Appeals for the District of Columbia last spring.

"We encourage the agency to adopt the intended approach of simply evaluating the physical supply of renewable fuels (and RINs) available to obligated refiners, blenders and importers relative to the statutory volume requirements," RFA said.

"Additionally, we are concerned by the new methodology adopted by EPA to assess the availability of cellulosic biofuels, and we believe the agency has erred by creating a backward-facing approach that will unnecessarily discourage investment in these emerging technologies."

The agency virtually eliminated any consideration of cellulosic ethanol produced by corn-ethanol plants using corn fiber.

"In closing, we strongly recommend that EPA finalize the RVO levels that were included in the initial draft proposal sent to the White House Office of Management and Budget for review in May 2017: 384 million gallons of cellulosic biofuel; 4.38 billion gallons of advanced biofuel; and 19.38 billion gallons of total renewable fuel," the RFA said.

In its comments to EPA, Growth Energy called on the agency to maintain the 15-billion-gallon total for conventional biofuels, while setting the cellulosic number at 377 million gallons.

In addition, the group asked the EPA to revise the cellulosic waiver credit program to "ensure that the volumes being produced are being used in the transportation fuel system."

Emily Skor, CEO of Growth Energy, said the RFS cannot be successful in years to come without providing a boost to cellulosic ethanol.

"(EPA) Administrator (Scott) Pruitt and the administration put forward a good, strong proposal to maintain the commitment to starch ethanol, but there is simply no reason to backpedal on moving the RFS forward with cellulosic biofuel," she said.

"With our comments, we are showing that we can continue the significant progress made by the RFS and that we can continue to grow the market for cellulosic biofuel."

In its comments to EPA, the American Coalition for Ethanol called on the agency to set the cellulosic number to "at least 380 million" gallons.

ECONOMIC BENEFITS

The group emphasized the "economic benefits" of the RFS and stated in its comments, "Congress directed EPA to take seriously the impact any reductions of RFS volumes would have on rural economies. When proposing RFS volumes, EPA, in consultation with the secretary of agriculture, must look at issues such as job creation, economic development, and commodity prices. EPA is bound by law to ensure it does no harm to commodity prices or the rural economy."

ACE also offered comments about the conventional biofuel level, the use of the general waiver authority in light of the recent D.C. Circuit Court decision, the potential of a future "reset" of the RFS, and the advanced and cellulosic biofuel levels.

BIOMASS BIODIESEL

In its comments, the National Biodiesel Board called on EPA to increase the advanced biofuel volume for 2018 from 4.24 billion gallons to at least 4.75 billion gallons and the biomass-based diesel volume for 2019 to at least 2.5 billion gallons.

"The industry has routinely surpassed the annual biomass-based diesel volumes and currently comprises the vast majority of advanced biofuel production (roughly 93%)," NBB said in its comments.

"Unfortunately, EPA's proposal would halt the progress of the biomass-based diesel industry and thwart Congress' intent to increase advanced biofuel production. For the first time, the proposed rule lowers the advanced biofuel volume from the previous year and does not increase the biomass-based diesel volume.

"The proposed rule sends a chilling message that EPA is not interested in promoting growth in biofuels in accordance with the RFS, which will discourage any future investment and cause a contraction in the industry. It will result in a blow to our country's energy security, a loss of jobs and wages of employees concentrated in rural areas, and a reduction in the income that American farmers receive for their crops and livestock products."

NBB said in its comments that the agency "does not contend that there is any obstacle to biomass-based diesel production greater than 2.1 billion gallons.

"To the contrary, it concedes that greater production is possible. EPA acknowledges that a volume of 2.5 billion gallons is 'reasonably attainable' in its analysis of advanced biofuels. In fact, the achievability of 2.5 billion gallons has already been demonstrated in practice because the industry has already exceeded that volume in 2016."

The American Soybean Association joined the NBB in calling for an increase in volumes for biomass-based diesel to 2.5 billion gallons for 2019, or an increase of 400 million gallons above the levels in the EPA proposal.

"Biodiesel has expanded markets for farmers and livestock producers and created new jobs and economic growth, particularly in rural America," Ron Moore, ASA president and Illinois soybean farmer, said in a press statement.

"The EPA and the administration are missing an easy opportunity to help the agriculture and rural economy. Given the many benefits that biodiesel provides, EPA should enthusiastically support higher, but easily achievable, volume targets for biomass-based diesel and advanced biofuels."

The ASA said as soybean oil supplies continue to grow, biodiesel is a key market outlet for those supplies.

"Biodiesel production creates a value-added market for the co-product soybean oil generated by the growing global demand for protein meal. Without growing markets for the oil, U.S. farmers will not be able to maximize the opportunities being created by protein demand," Moore said.

"Soybean farmers have met the increased demand for protein meal and done so with increasing efficiency and sustainability. Since 1980 U.S. soybean farmers have increased production by 96% while using 8% less energy; land use per ton of soybean production has decreased by 35%; and greenhouse gas emissions have decreased by 41% per ton."

CHICKEN CONCERNS

The National Chicken Council asked the EPA to cut back on the corn-ethanol volumes, citing concerns about rising corn feed prices, though the latest DTN National Corn Index was $3.02 as of Aug. 28.

"As corn users, NCC's members are substantially impacted by the Renewable Fuel Standard's impacts on the corn market and feed supply," the NCC said in its comments.

"NCC supports a responsible, balanced, and sustainable approach to the nation's fuel supply. As proposed, the RFS targets exceed the percentage of ethanol Congress envisioned being used in the fuel supply, create inappropriate artificial demand for corn in ethanol markets, incentivize inefficient overproduction of corn-based ethanol, and needlessly drive up corn prices for broiler chicken companies and other corn users who do not enjoy a large federal subsidy.

"NCC therefore encourages EPA to reduce conventional ethanol targets to a more appropriate level and to use EPA's waiver authority to ensure that use of corn for ethanol remains balanced with other important uses, including in broiler chicken production."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

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