IRFA Summit Focuses on Policy, Future Market Opportunities

January 26, 2022

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by Erin Voegele (Ethanol Producer Magazine) ... Monte Shaw, executive director of the Iowa Renewable Fuels Association, provided an overview of political and regulatory issues impacting the biofuels sector, stressing that Iowa’s biofuel industry is “fed up but fired up.”

The industry entered 2021 with renewed optimism, he said. “Vaccines were rolling out and it felt like we were turning the corner on COVID.” The Biden administration’s stated commitment to biofuels and the U.S. EPA’s announcement that it would rein in small refinery exemptions (SREs) added to the hopeful outlook. That optimism, however, began to fade as the year went on, Shaw said. The Delta and Omicron waves of COVID put economic recovery in question and supply chain issues are driving high inflation rates. “The RFS exemption denials did not come. The DC Circuit Court threw out year-round E15,” Shaw said. “The Biden Build Back Better bill rolled out with billions for electric vehicles (EVs) and nothing initially for renewables.”

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While the proposed RVO for 2022 is strong, Shaw called the proposed 2021 RVO disappointing and said the agency’s decision to reopen, and likely reduce, the 2020 RVO is dismaying. “And throughout the year from Washington, D.C., came an incessant drumbeat that electric vehicles were the only solution for our transportation future,” he said, thanking the Iowa delegation for standing united across party lines in support of biofuels.

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Shaw addressed the potential that carbon capture offers to biofuel and ag producers.

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Regarding the need for year-round E15, Shaw applauded Iowa Gov. Kim Reynolds for leading a Midwest effort to find a regional solution in the absence of federal action.

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Several speakers at the event discussed the significant opportunity offered by rapidly expanding demand for drop-in biofuels, such as renewable diesel and SAF.

Donnell Rehagen, CEO of Clean Fuels Alliance America, delivered a keynote address that discussed the substantial growth potential offered by SAF and renewable diesel. While federal policy in support of biofuels is incredibly important, Rehagen stressed that state-level policies also help to drive growth in demand for biofuels.

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Corporate policy is also expected to have a huge impact on demand for biodiesel, renewable diesel and SAF moving forward, Rehagen said, as companies like Amazon and Microsoft work to reduce supply chain emissions.

Steve Csonka, executive director of the Commercial Aviation Alterative Fuels Initiative, spoke about the potential of SAF during a roundtable on emerging markets.

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Ethanol can be used as a feedstock for SAF production, Csonka said, but stressed that ethanol used as a feedstock for SAF will need to have a low carbon index to ensure finished fuel has a carbon reduction of at least 50-60 percent.

Csonka also discussed the need for SAF to be both affordable and sustainable in order for the aviation sector to truely embrace the use renewable fuels.

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The IRFA plans to post full replays of the summit presentations to its YouTube page soon. READ MORE

With Strong Industry Margins, Iowa Ethanol Industry Looks for E15 While Pushing Back on EVs (DTN Progressive Farmer)

BIOFUEL LEADERS SEE POTENTIAL IN SUSTAINABLE AVIATION MARKET (Brownfield Ag News; includes AUDIO)

Washington still dragging its feet on biofuels (Iowa AgriBusiness Radio Network; includes AUDIO)

Reflections From The Hill (Ethanol Producer Magazine)

Excerpt from Ethanol Producer Magazine: I (Geoff Cooper, Renewable Fuels Association CEO and President) also think the industry understands that we have a vision for the future of ethanol production that’s progressive and exciting. Too many people are pessimistic about the future of ethanol and obsessed with the rise of electric vehicles and the possibility of less gasoline consumption. Yes, those are real issues—and we’ve analyzed them as much as anyone—but we continue to see a world of opportunity for ethanol.

I think we have really opened a lot of hearts and minds to the fact that ethanol’s future may not always be confined to being a motor fuel for light-duty vehicles. And last July when our members pledged to achieve a net-zero carbon footprint for ethanol by 2050, it got the attention of many others in the energy sector. They want to be part of that movement and so they joined RFA.

The ethanol molecule is incredibly elegant and can serve as a building block for so much more, from aviation fuels to off-road, heavy transportation applications to becoming a feedstock for producing electrons that could ultimately power EVs. There’s a lot more we can do with this molecule. And we’ve got a tremendous infrastructure in place to produce it right now. We’re trying to help the industry find those new markets and new uses for products.

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We are not, however, wild about the EPA’s proposal for 2021, and we will stand against any reopening of the 2020 RVO.

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Cooper: The goal is to send a message to EPA that Congress is watching what the agency is doing with the 2020 RVO. With the Defend the Blend Act in both the House and Senate, Congress is reminding EPA that it was never their intent to allow EPA to go back in time and revise standards that have already been finalized. The proposed legislation, above all, sends a signal to EPA, and the administration that our friends on the Hill are watching and willing to legislate if they need to.

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Cooper: There are essentially two ways to achieve RVP parity for E10 and E15. One way is to give E15 the same 1-pound RVP waiver that E10 gets, which is what EPA did in 2019—an action that President Trump personally championed. Unfortunately, that is also the action that the D.C. Circuit Court overturned in July. So, for now, that door is closed.

The other way to establish RVP parity for E15 is to eliminate the necessity of the 1-pound waiver for E10. That’s what the governors are asking for guidance on, and that’s what RFA and five other trade groups have asked EPA to get started on—a rule to effectively lower the volatility cap for gasoline blendstock, which makes the waiver unnecessary for not only E10, but E15 as well.

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A legislative approach to resolving the RVP barrier is also possible.

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We can get ethanol to a zero CI, but we’ve got to have more vehicles to put that ethanol into in order to have the impact on reducing carbon emissions at a level that’s going to be necessary. E15 can help us get started, but we’ve got to go that next mile and get more FFVs out there. FFVs are hugely important to the future of the industry, and that’s why we continue to make it a priority to try to continue to restore some fairness in how automakers are encouraged, or incentivized, under fuel economy regulations to manufacture different alternative fuel vehicles. Right now, there is no incentive for automakers to make FFVs under current fuel economy regulations. But there are tons of incentives to make EVs. And if our goal is to reduce carbon emissions, there are lots of ways to do that. Let’s allow all fuels and vehicles that can reduce emissions to compete fairly, and lets reward those fuels and vehicles strictly based on the carbon reductions they achieve, not on what vehicle has the coolest commercial or celebrity endorsement.

Sens. Klobuchar and Ernst introduced legislation that would establish an alternative vehicle tax credit earlier this year. Unfortunately, it didn’t get wrapped into any legislation that has moved forward, but we see it as a football that could be picked up and run with in 2022.

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Cooper: When President Biden was campaigning, he came out with some very strong positions on the renewable fuel standard and small refinery exemptions, in particular. We liked what we heard from then-candidate Biden when he was campaigning. And when he got elected, he appointed people like Agriculture Secretary Tom Vilsack—a person we’re very familiar with and excited to see land back in that position—along with EPA Administrator Michael Regan, who said all the right things about the RFS in his confirmation process. In fact, shortly after this new administration took office, we saw EPA do a hard turn on small refinery exemptions. They really laid out a radical change in position on how they were going to be handling SREs, as early as March, but then we didn’t see anything. We were waiting for the administration to follow through on all those campaign promises during the first few months.

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There is just such a disproportionate focus on electrification and EVs, and one of the biggest challenges for us is just breaking through that noise to remind the administration—in particular Administrator Regan and Department of Energy Secretary Jennifer Granholm—that we have a fuel that is ready today, in large quantities, that can help the country meet its decarbonization goals. So our message to them is to take a fair, market-based approach to carbon reduction and allow ethanol to play a larger role. READ MORE