Journey to the Center of the Renewable Fuel Standard

by Jim Lane (Biofuels Digest) The pressure has risen to 30 atmospheres and the temperatures are rising into the hundreds of degrees. You think: “I’m in a dream, on a journey to the center of the earth.” But, in fact, you are in DC, working at EPA on the Renewable Fuel Standard for 2014. The source of all the heat and pressure? The irresistible force of renewable fuels innovation crashing into the immoveable object of the oil lobby.
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...(H)ere’s a Digest Five-Minute Guide to the issues before them — and, more importantly, before the country.
Q: What’s the underlying issue?
A: In the original Energy Security & Independence Act, the 2014 Renewable Fuel Standard was supposed to call for 14.4 billion gallons of corn ethanol and 3.75 billion gallons of advanced ethanol.
The oil industry says there is no place for the fuel to go. They’ve hit an E10 blend wall. They can’t distribute any more — in fact, more like 9.7 percent is their limit. The API is calling for 12.55 billion gallons of corn ethanol. Above that, they say, the cars won’t tolerate the fuel.
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Long story short, the biofuels industry says that as much as 16.2 billion gallons of corn ethanol (including old credits), can be handled in terms of supply to the market.
Q: Who’s right?
A: If you picked a number in the middle, around 14.4 billion gallons of corn ethanol, you are.
That’s a reasonable expectation from E10 blending, E85 sales and use of old credits. Meaning there’s no need to mess with the intended RFS gallonage right now, really — as it pertains to corn ethanol.
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Q. Speaking of Butamax, where does biobutanol fit into the equation?
A. Butamax adds: “Drop in biofuels, such as biobutanol, provide an opportunity to further reduce the amount of E85 and, therefore, FFV’s needed to achieve the RFS targets while staying within the capabilities of the existing vehicle fleet and infrastructure. A 16% blend of butanol in gasoline (Bu16) offers consumers the same fuel economy as E10 while generating twice the number of RINs per gallon as E10.
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Q. E85 – is it price competitive?
A. Yep. If the fuel is priced 50 cents or more per gallon below gasoline.
On an energy-content basis, drivers save using E85 compared to conventional unleaded fuel (E10).
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Q: How’s the free market for ethanol?
A: As we detailed earlier in the Digest, the Iowa Renewable Fuels Association released the first month of sales data for E15 and E85 in Iowa following its September 16 reintroduction. Averaged across all fuel blends, ethanol accounted for roughly 25 percent of the retailers’ gasoline sales. This level of ethanol sales far exceeds the scheduled RFS levels for years to come.
Q: What about 3.75 billion gallons of advanced biofuels. A recently circulated proposal from EPA wants to slash that number to 2.1 billion gallons. Is that the right number?
A: The correct answer is 2.75 billion gallons.
Q. Why?
A. The biodiesel industry expects to produce between 1.5 and 1.7 billion gallons next year — that counts for 2.25 to 2.55 billion gallons under RFS’s math (biodiesel gets credit for higher energy density). There is more than 700 million gallons of renewable diesel capacity around the world, installed — that produces, in RFS math, up to 1.4 billion additional gallons.
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Q: At the macro level is that the only issue?
A: No. It’s this. As the Advanced Ethanol Council’s Brooke Coleman notes, “All these options (E15, E85, more biodiesel, more renewable diesel) are compliance paths for the oil industry to utilize. They are telling the President that they can’t do it. In reality, it’s that they don’t want to do it.
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Ethanol is a dollar cheaper than gasoline and the oil companies are refusing to use it. What happened to their fiduciary responsibility to their shareholders?” READ MORE and MORE (Butamax) and MORE (Platts) and MORE (Advanced Ethanol Council/Biotechnology Industry Organization) and MORE (DomesticFuel.com) and MORE (Ethanol Producer Magazine) and MORE (Biodiesel Magazine) and MORE (National Biodiesel Board/Biodiesel Magazine) and MORE (Des Moines Register) and MORE (FuelFix.com) and MORE (Renewable Fuels Association) and MORE (Biomass Magazine) and MORE (Renewable Fuels Association (on "Dear Colleague" letter from House to EPA))