Letter from Washington – Taxes, Blends, RINs, Jobs and “The Year of the Tree”

by Jim Lane (Biofuels Digest) ... (C)onsider this for now a Digested summary of the (Washington, DC) news you can use, as short as we can make it so that we return you to the business of building the bioeconomy that will, increasingly in the now and surely in the by-and-by, fund all this national political dyspepsia.

It’s a debate that mystifies Brazilians, Paraguayans and Argentines, since they’ve been running blends as high as 25 percent ethanol through cars made by the same manufacturers, and Petrobras and YPF, to name two, are still with us.

The issue turns around summer blends, which are different because it is the peak consumption and driving season and there are specific rules for formulation that, frankly, never contemplated E15 ethanol blends. So they needed to be updated to allow that same waivers that pertain to E10 ethanol — it’s really as simple as that.

The Trump Administration — the EPA in this case — has proposed rules that would allow for year-round E15 blending. But, as the Iowa Renewable Fuels Association admirably summed it up, EPA added “unrelated proposals to dramatically alter how RFS compliance credits, known as RINS, would be regulated.

IRFA Executive Director Monte Shaw commented “Loudly and clearly, I want to thank President Trump for directing the EPA to begin this process and to EPA leadership for including in this proposal many of the best pathways and justifications for allowing year-round E15 sales,” Shaw said.

IRFA said that he rule’s four proposals to radically alter RIN regulations would undermine the incentive to blend renewable fuels, “thereby breaking Trump’s promise to protect the RFS.” Shaw described one proposal that would put a time limit on how long retailers could hold RINs, essentially putting “a gun to the head of Iowa’s retailers” and forcing them to dispose of their RINs in a “fire sale.”

IRFA’s comments on the proposed EPA action “concluded by highlighting the damage small-refinery exemptions (SREs) inflict on the value of RINs and the effectiveness of the RFS. Shaw emphasized that with RINs sales recorded below 10 cents during large parts of the last seven months, “economic harm” exemptions from the RFS are clearly not justified.”

A lawsuit to watch

Meanwhile, the Advanced Biofuels Association filed a motion for a preliminary injunction to prevent U.S. Environmental Protection Agency Administrator Andrew Wheeler from granting any additional small refinery exemptions to release obligated parties from compliance with the Renewable Fuel Standard until the resolution of its pending lawsuit against EPA.

The background? “For the first time since the inception of the RFS, we are seeing reductions in U.S. renewable fuel blending, “and EPA’s actions are to blame,” says ABFA.

ABFA’s lawsuit against EPA challenges its methodology for granting these exemptions, arguing the Agency more than doubled the number of exempted refineries by illegally changing its petition review process behind closed doors. ABFA filed the motion with the U.S. Court of Appeals for the D.C. Circuit, where its current lawsuit is pending with briefing on the merits scheduled to conclude on June 12, 2019.

These new exemptions provide a financial windfall to refineries at the expense of biofuel producers and distributers. EPA is punishing the parties who have worked to increase the amount of renewable fuel blended into the United States transportation fuel supply as Congress intended by enacting the RFS first in 2005 and expanding it in 2007.”

The Tax Credit Debate

Friends of the biodiesel tax credit, now 16 months elapsed, are now highlighting not only the impact on states and companies, but the jobs. As Kurt Kovarik, Vice President of Federal Affairs with the National Biodiesel Board, stated, “With the on-again, off-again nature of the credit, biodiesel companies are forced to build the credit’s value into contracts – and hope that Congress extends the policy at the end of the year. Many companies have essentially priced their products at a loss for more than a year.”

NBB says that biodiesel provides more than 80,000 jobs across the United States and pays $3.8 billion in workers’ wages and benefits.

Over in the world of R&D: The TAC says it’s “The Year of the Tree”

Tax and energy policy aside, Washington is also home to the R&D agenda that powers the industry’s increasing competitiveness and the transformative applications that have also risen in nutrition, materials and health through industrial biotechnology. A massive $79 million R&D opportunity was released this week by DOE, for example.

Important changes are needed to reduce the risk of catastrophic fires and to respond to damage from insect infestations, hurricanes, floods and other natural disasters. New thinking is evolving for using the forests responsibly as a tool for reducing carbon emissions, for improving water quality and wildlife habitats, and for new uses of forest biomass for bioenergy and bioproducts. Transforming forest management will be a massive undertaking, involving many players: governments at all levels and in their multiple organizations; many different advocacy groups and collaboratives; universities and colleges; corporations from different sectors; and, concerned private citizens. It will be both centralized and de-centralized, with no one-size solution fitting all of the problems, because of America’s continental variations of geography, weather, culture, flora and fauna. In the end, this all is about rebuilding trust among all the different interests that necessary changes in forest management can and will be done responsibly for the multiple environmental services of forests: carbon mitigation; soil and water conservation; wildlife protection; recreation; new hope for embattled rural communities; and, new renewable energy advances. It is an opportunity for needed change that may never come again. This is why we deem 2019, The Year of the Tree. READ MORE