2017 Wrap-Up: Maintaining the Status Quo
by Michael McAdams (Advanced Biofuels Association/Biomass Magazine) Last year was among the most active and interesting years we’ve seen in the biofuels space. The industry has confronted multiple challenges over the past 12 months, culminating in meetings between senators supportive of the oil industry, and President Trump to discuss the future of the RFS program. In the end, we managed to preserve the status quo with the 2018 renewable volume obligations (RVOs) set at 19.29 billion gallons, essentially the same level as 2017.
This summer, the D.C. Circuit Court of Appeals determined that EPA erred in its interpretation of “adequate domestic supply” and required EPA to grant the corn ethanol industry the full congressional statutory mandate of 15 billion gallons for 2016 and beyond.
On the RFS front, both the Senate and House of Representatives took steps to discuss legislative RFS reform. Though neither chamber produced a comprehensive bill this year, we expect significant progress in early 2018 to find a solution to the RVO process, and address the cost of the ethanol RINs.
First and foremost, we finally put to bed the effort to shift the RFS’s point of obligation from the refiners to the blenders.
“In evaluating this matter, EPA’s primary consideration was whether or not a change in the point of obligation would improve the effectiveness of the program to achieve Congress’s goals. EPA does not believe the petitioners or commenters on the matter have demonstrated that this would be the case.”
Our second victory was in beating back the proposals outlined in EPA’s Oct. 4 Notice of Data Availability pertaining to the volumes proposed by the agency in July for the 2018 RVOs. This document asked for comment on reducing the proposed RVOs generally, and in particular, the biomass-based diesel pool.
The industry quickly unified and mobilized to beat back this proposal with help from five Midwest senators, numerous representatives, several governors, and various biofuels trade associations. Our industry’s swift and definitive response to the NODA led to U.S. EPA Administrator Scott Pruitt releasing a letter in which he pledged his support for the RFS, and pulled back on the suggestions outlined in the NODA. In the end, EPA set the 2018 RVOs in line with the original July proposals. Furthermore, although the cellulosic volume for 2018 was reduced compared to last year’s number, it was increased from the agency’s July proposal, rewarding additional cellulosic production that has come online in 2017.
This year’s focus on tax reform has left Congress with little time to work on its tax extenders. Our industry’s four primary tax credits—the biodiesel and renewable diesel, second-generation, and alternative fuels mixtures credits—are a part of the package of provisions that expired in 2016.
In early 2018, we must be ready for an intensified effort to address unresolved concerns about the costs associated with RFS compliance. READ MORE