Capturing the Full and Unrealized Value of Biofuels — Market Mechanisms are Needed
by Ghasideh Pourhashem (Forbes) During the past decade, production of biofuels has gained momentum largely due to policies and mandates aimed at addressing energy security and climate change. … But if the right kinds of policies are in place, biofuel-generating facilities will have the opportunity to function profitably in the long run given the variety of co-products they can generate in addition to producing biofuel. Take, for example, biochar. It has the potential to improve agricultural productivity and environmental record by reducing water needs, serving as a carbon storage mechanism, and being an alternative to petroleum-based fertilizers.
A key point here is that the value of certain biofuels goes beyond their use as transportation fuels. Despite the attention given to biofuel policy and performance in the transportation market, far less attention has been given to the economic and environmental benefits of the co-products of biofuels. In fact, the fraction of the input feedstocks (such as parts of a crop or organic wastes) that is not converted to biofuel has economic value. For example, many biofuel facilities often burn the remains of the biomass to co-produce electricity.
Indeed, the examples above underscore that more efforts are needed to include positive externalities of bio-commodities in assessing the costs and benefits of biofuels. If these bio-commodities find their place in the market, they will create a significant additional revenue stream for biorefineries thus improving their bottom line. This in turn could permit the primary biofuel product to stay competitive with petroleum alternatives, and will allow the industry to remain competitive even when market forces drive down the price of oil.
Ideally, a more robust climate policy action such as a carbon tax would provide incentives for the development of improved biofuels and curb fossil fuel emissions.
Indeed, if, for example, bio-commodities such as biochar can remediate the problems associated with algal plumes caused by runoff from the commercial-scale application of nitrogenous fertilizers in the Midwest, the Gulf Coast fishing industry would certainly benefit, not to mention the environmental and ecosystem benefits that would emerge. At present, however, there are no market-oriented mechanisms in place to realize such an outcome. Such market mechanisms would go a long way toward reducing uncertainty around commercial viability, which would, in turn, help this infant industry to develop to the point where no external assistance is needed for biofuels to be competitive against conventional petroleum fuels. READ MORE
Estimating Chilled Investment for Advanced Biofuels Due to RFS Uncertainty: $13.7 Billion Shortfall in Investment During Delays in Rulemaking
(Biotechnology Industry Organization) The advanced biofuel industry has invested billions of dollars since 2009 to build first-of-a-kind demonstration and commercial-scale biorefineries around the world, even during a global economic recession. Cellulosic biofuels have reached commercial status, though not at the volumes envisioned in the Renewable Fuel Standard (RFS); at the same time, overall advanced biofuels have met the RFS goals every year (2010 through 2013) that annual volume obligations have been established, primarily through existing capacity for proven biofuel technologies. Instability in the administration of the RFS has hampered investment in new advanced biofuel technology and new feedstocks within the United States. Separating the investment impact of policy instability from the general economic recession and challenges of scaling up new technologies is the goal of this white paper.
To reach the 2015 RFS goal of producing 5.5 billion gallons of advanced biofuels (including 3 billion gallons of cellulosic and 2.5 billion gallons of advanced biofuel or biodiesel), bio-era estimated the need for 110 operating plants requiring $20.34 billion dollars in cumulative investment. As of April 2015, there are five commercial cellulosic biorefineries with a combined capacity of more than 50 million gallons within the United States and registered to meet the goals of the RFS, along with several pilot and demonstration plants. Additionally, there are 28 biorefineries generating cellulosic biogas with a combined annual capacity of approximately 80 million gallons.
The Environmental Protection Agency (EPA) was nine months late issuing the 2013 RVOs and is more than 17 months late in issuing the 2014 rule. Further, the agency has made cellulosic biofuel producers wait an average of 29 months (more than two years) for approval of production pathways. Currently, 29 companies have unresolved petitions filed with EPA and they have been waiting on average more than 32 months for resolution. A majority of an estimated $13.7 billion shortfall in investment for cellulosic and new advanced technologies should therefore be attributed to EPA’s delays in issuing timely rules.
Read the white paper (PDF). READ MORE and MORE (Biofuels Digest)
Excerpt from Biofuels Digest: 80,000 lost jobs through “EPA’s delays in rule making”, according to new analysis
BIO estimates that EPA’s delays in rulemaking have undercut the industry’s ability to create jobs by more than 80,000 direct jobs in operations and construction, and an additional 228,000 indirect jobs within the rural economy.
Following publication of the report, a letter was sent to US President Barack Obama, signed by RFA, National Corn, POET, DSM, Novozymes, Growth Energy, BIO, AEM, AEC, and Abengoa, stating that “the EPA’s proposal in 2013 was an enormous disservice to you and your legacy, Mr. President. Prior to the release of that proposal, we had asked to meet with the EPA, but were rebuffed. We would like to work with you to ensure that the mistake is not repeated. Let’s seize the opportunity to restart investment in advanced biofuels and fulfil the promise of the commonsense, bipartisan Renewable Fuel Standard.The letter can be read in full here. READ MORE
Tallow Industry Finds New Markets after Demand Slows in Key Market
By Olivia Garnett (ABC) After a lull in demand, Australia’s biggest market for tallow is slowly cranking up again.
Inedible tallow is rendered livestock fat and offal that demands big dollars in Singapore, where it is converted into biodiesel.
“It’s the pieces that are left over from the slaughter process,” executive officer of the Australian Renderers Association, Dennis King, said.
The United States is the major buyer of biodiesel, but changes to the US renewable energy credits system last year left a big gap in demand.
“After the elections, the rules changed. Renewable energy had to be from domestic production in the US to get access to those credits.
Besides its main use for biodiesel, other uses for tallow include soap manufacturing and animal feed, with markets opening up in countries such as Taiwan, China, Korea, Nigeria and Pakistan. READ MORE