Risk Has Arrived for RFS Advanced Pool
by Michael McAdams (Biomass Magazine/Advanced Biofuels Association) On Oct. 4, the U.S. EPA published a Notice of Data Availability soliciting input on lowering the renewable volume obligation (RVO) mandates even further than the proposed 2018 volumes released this summer.
Let me be clear, NODA spells disaster for our entire industry, and put simply, must be completely defeated.
Not often does something so one-sided come across my desk, even in this line of work. The NODA is littered with footnotes referencing the RVO comments from the American Fuel & Petrochemical Manufacturers and Valero. The document requests comments on how much the advanced pool should be reduced, given changing market conditions and “economic harm” that could potentially occur in the future. The three principal assertions are: the definition of “domestic supply” only applies to what is physically produced in the U.S.; biodiesel supply in the U.S. will shrink due to pending trade cases; and the expiration of the biodiesel blenders credit has further reduced the amount of domestically produced supply, consequentially raising the price of biodiesel, and making it uncompetitive with cheap diesel prices.
First, and most importantly, these arguments ignore the underlying objective of the RFS statute. The RFS sought to increase the availability of environmentally sustainable fuel in the gasoline and diesel pools. There is simply no debate to be had that the RFS seeks to increase the amount of fuels providing GHG reductions, yet the administrator is seeking to drop the mandates lower than the volumes actually blended in the previous year.
Second, regarding the impact of the tax credit, we have continued to see solid production of biodiesel throughout 2017. In fact, as of Sept. 1, the industry has already generated more than 2.4 million RINs, and is on track to produce more RINs and gallons than either the 2017 or ‘18 RVO requirements.
Third, as for the antidumping case, the markets are already adjusting to the possibility of reduced gallons flowing from Argentina and Indonesia. Instead, European gallons are shipping to the U.S. East Coast to offset the reduction.
Under the current system, everyone wins: the producers, the fuel marketers, and, most importantly, consumers. Under EPA’s proposal, the only winners will be the merchant refiners who have not invested to comply with the RFS in the first place. The losers will be the producers and marketers who did make these investments, as well as the environment, since fewer sustainable fuels will end up available on the market.
This is an ill-conceived proposal originated by (EPA Administrator Scott) Pruitt. READ MORE
Ethanol groups optimistic but cautious about RFS numbers (Iowa AgriBusiness Radio Network; includes AUDIO)