Ag Policy Blog

Cellulosic Ethanol Appeals to President for RFS Fix

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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For months companies developing advanced biofuels like cellulosic ethanol have made it known that if the U.S. Environmental Protection Agency continues to sway from the original Renewable Fuel Standard law those companies would go outside the United States to develop technologies.

With RFS volumes set to come out this fall on a multi-year proposal from EPA, the industry is taking it to the next level this time sending a letter directly to the president this week.

During a conference call with reporters Wednesday, company representatives called on the president to stand behind his rhetoric on climate by forcing EPA to stay the course on the original RFS law. The statute calls for a total of 36 billion gallons of biofuels by 2022, including some 21 billion gallons of cellulosic ethanol and other advanced biofuels.

Indications are EPA is standing by its proposal that would essentially send cellulosic ethanol development companies overseas for future development.

In the letter to President Barack Obama Wednesday, the companies signing the letter said doubt about the RFS has put a chill on nearly $14 billion in investment in the United States -- although the fuels are greenhouse gas friendly and fit into the administration's climate goals.

"As leaders in the advanced and cellulosic biofuels industry, producers of the lowest carbon fuel in the world, we are writing to express our serious concerns about modifications your administration is proposing to make to the Renewable Fuel Standard," the letter said.

"As a general matter, we commend your commitment to addressing climate change, and look forward to continuing to work with you to create innovative solutions to reduce GHG emissions. We stand behind your recent declaration that Americans are innovators by nature, and your statement that 'there should be no question that the United States of America is stepping up to the plate,' as we head into pivotal climate talks in Paris later this year.

"However, our industry is also dealing with the reality that on May 29 your administration re-proposed to insert a loophole into the RFS -- a Clean Air Act program that is the most aggressive U.S. climate policy enforced today -– that would allow oil companies to avoid their obligations under the law. As you know, the point of the RFS was to require oil companies to buy and sell an increasing amount of renewable fuel to address the fact that the oil industry would otherwise use its market position to cut off market access for competitors and thereby smother investment in cellulosic ethanol and advanced biofuels that have the lowest carbon footprint in the world.

"And yet, for the first time in RFS history, EPA is proposing to change the rules in the middle of the game to allow challenges related to the 'distribution' of renewable fuel by oil companies –- i.e. the oil industry's refusal to buy and distribute low-carbon, renewable fuel and its willingness to block brand-licensed gasoline retailers from selling higher renewable content blends under their branded canopy -– to be cause for waiving the RFS on a year-to-year basis.

"Such a provision would gut the core concept behind the law. From an investment perspective, billions of dollars of private capital flowed into U.S. biofuel projects -- in the face of an historic global recession -– largely because the RFS was seen as breaking the chokehold the oil industry has on fuel distribution and market access."

The companies said RFS implementation was predicated on a "market-based system of credits" much like cap-and-trade supported by the administration.

"The point of the RFS was to reward those who made the investments necessary to use more renewable fuel," the letter said. "Parts of the oil industry refused to do so starting in 2013, and now they're being rewarded.

"If the final rule includes distribution waivers, the global market signal will be that your administration is backing away from its support of the most transformative U.S. energy and climate policy on the books today, and one that is widely regarded to be the best cellulosic and advanced biofuels policy in the world."

Christopher Standlee, executive vice president of global affairs for Abengoa Bioenergy, a company starting cellulosic ethanol production at a plant in Hugoton, Kansas, said during a conference call his company is shifting away from the United States for its next series of plants. The company is planning to build plants in Brazil and France.

Read the letter here, http://tinyurl.com/…

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