On December 23, 2013, the U.S. Department of Energy (DOE) announced that it was ending its funding of BlueFire Renewable's cellulosic production facility project in Fulton, Mississippi. DOE took this action because the company reportedly failed to meet deadlines related to financing the project. This news comes as the cellulosic industry continues to be under attack for failing to live up to expectations under the federal RFS.
On December 12, 2013, Representative Scott Peters (D-CA), Chair of the House Algae Caucus, introduced H.R. 3758, a bill to extend the $1.01/gallon second generation biofuel producer credit and the special allowance for second generation biofuel plant property. These incentives are among several currently set to expire at the end of the year.
Members of the House and Senate have sent letters to the Chairs and Ranking Members of their respective tax writing Committees -- the House Ways and Means Committee and the Senate Finance Committee -- urging the extension of ten clean energy incentives as soon as possible. Biofuels and biodiesel incentives are among those identified in the letter as important to extend until any broader tax reform legislation is passed.
The House is currently out on its winter break and will not return until January. There are promising signs that the House and Senate will work to pass retroactive extensions of incentives for the biofuels industry when they resume legislative business early next year.
Currently, there are two nearly identical proposals before Congress to provide a business related tax credit for the production of renewable chemicals. S. 1267, the Qualifying Renewable Chemical Tax Production Act of 2013, was introduced on June 27, 2013, by Senator Debbie Stabenow (D-MI). The bill has one co-sponsor, Senator Al Franken (D-MN). H.R. 3084, a bill by the same name, was introduced on September 12, 2013. It currently has five bi-partisan co-sponsors, including Representatives Richard Neal (D-MA), Scott Peters (D-CA), Linda Sanchez (D-CA), Allyson Schwartz (D-PA), and Steve Stockman (R-TX). A copy of S. 1267 is available online. A copy of H.R. 3084 is available online.
Iowa Governor Terry Branstad (R), Lieutenant Governor Kim Reynolds, and State Secretary of Agriculture and Land Stewardship Bill Northey led an effort to send a letter to EPA requesting it to convene a field hearing in Iowa on the Agency's proposed 2014 RFS rule. The letter was signed by the entire Congressional delegation from Iowa. A copy of the letter is available online.
EPA's proposed 2014 RFS rule would reduce the 2014 statutory gallon requirements for cellulosic biofuels, advanced biofuels, and corn ethanol. Governor Branstad testified at EPA's recent hearing in Arlington, Virginia, on the proposed rule that it would have detrimental effects on the biofuels industry and rural economy in his state and other Midwestern states. The Iowa delegation expresses in the letter the same concern, and argues that EPA should hold a field hearing in Iowa to hear from Midwestern farmers and producers who could not attend the Virginia hearing and who would be disproportionally impacted by the proposed reductions.
On December 12, 2013, Senators Dianne Feinstein (D-CA) and Tom Coburn (R-OK) introduced the Corn Ethanol Mandate Elimination Act of 2013, which would eliminate the corn ethanol gallon requirements under the federal RFS, while leaving in place those under the law for cellulosic and advanced biofuels and biodiesel. The sponsors have argued that the RFS corn ethanol mandate, which increases to 15 billion gallons per year by 2022, should be removed to combat the recent increase in corn prices. The bill currently has eight bi-partisan co-sponsors, including Senators Richard Burr (R-NC), Susan Collins (R-ME), Bob Corker (R-TN), Kay Hagan (D-NC), Jeff Flake (R-AZ), Joe Manchin (D-WV), Jim Risch (R-ID), and Patrick Toomey (R-PA).
The corn ethanol industry has argued that the RFS has had negligible impact on corn supply and prices, and that recent increases in the price of corn are attributed to the corresponding increase in the cost of energy used to make and transport the commodity.
All sides of the federal Renewable Fuel Standard (RFS) debate had another chance to air their views on Wednesday at the Senate EPW Committee "Oversight Hearing on Domestic Renewable Fuels." Hearing details are available online.
Witnesses included representatives from EPA, DOE, industry, and major trade associations representing the oil and gas and biofuels industries. Their testimony was consistent with their previous actions and statements. For instance, EPA testified in support of its 2014 proposed RFS rule, which for the first time would reduce volumetric targets for all biofuels, including corn ethanol. The biofuels industry argued that the volumetric reductions in the proposed rule go too far, and that Congress should maintain the current version of the RFS law. In contrast, the oil and gas industry advocated that Congress act to repeal the RFS law.
EPW Committee Members weighed in with their divergent views during their opening remarks and throughout the hearing. For instance, Committee Chair Senator Barbara Boxer (D-CA) stated that she sees no need for Congress to act given the inherent regulatory flexibility contained in the existing law, and since EPA has sought to address industry concerns about the blend wall in the proposed rule. On the other end of the spectrum, Senator John Barrasso (R-WY) stated that EPA's action demonstrates that the RFS is not working and that Congress should act to repeal it.
On December 11, 2013, the U.S. Departments of Agriculture (USDA) and Navy announced that as part of their joint "Farm-to-Fleet" initiative, the acquisition of biofuel blends will be included into regular Department of Defense domestic solicitations for jet engine and marine diesel fuels. The Navy will seek to purchase JP-5 and F-76 advanced drop-in biofuels blended from 10 to 50 percent with conventional fuels. Funds from USDA's Commodity Credit Corporation will assist the effort.
The Navy and USDA plan to hold an "Industry Day" to explain the effort on January 30, 2014. A copy of the USDA press release on the announcement is available online.
In 2011, DOE, USDA, and the Navy announced a joint $510 million effort to help promote the commercialization of domestic advanced drop-in biofuels for military and commercial use. The Navy and DOE have been challenged with securing their portion of the funding through the appropriations process. Several in Congress have criticized the cost of the biofuels compared to traditional sources of energy. Under the initiative announced this week, the Navy will expect that drop-in biofuels will be available for less than $4 per gallon by 2016, making them competitive with traditional sources of fuel.
Renewable energy company Sapphire Energy, Inc. and Phillips 66 have entered into a joint development agreement designed to promote and facilitate the commercial production of Sapphire's algae-based crude oil, which will be made into fuels. According to Sapphire's press release describing the agreement, "the companies will work together to collect and analyze data from co-processing of algae and conventional crude oil into fuels. The goal is to complete fuel certifications to ready Sapphire Energy's renewable crude oil, called Green Crude, for wide-scale oil refining." Further, "under the agreement the companies will expand Sapphire Energy's current testing programs to further validate that Green Crude can be refined in traditional refineries and meet all of the Environmental Protection Agency's (EPA) certification requirements under the Clean Air Act." A copy of the press release is available online.
On November 29, 2013, EPA published its proposed rule on "2014 Standards for the Renewable Fuel Standard Program" and a "Notice of Receipt of Petitions for a Waiver of the Renewable Fuel Standard." Copies of the proposed rule and notice published in the Federal Register are available online, and online. Comments on both are due by January 28, 2014.
BRAG's coverage of the pre-published versions of the proposed rule and notice is available online.
On December 5, 2013, EPA held a public hearing in Arlington, Virginia, on the proposed rule. The Agency heard from more than 140 stakeholders from every side of the RFS debate, including public officials and farmers, as well as company executives and trade associations representing the corn, biofuels, and oil and gas industries. Witness testimony was generally consistent with previous public comments.
For instance, representatives from the oil and gas industry expressed concern that the proposed rule does not go far enough. They argued generally that even with the proposed reductions to all renewable fuel volume obligations (RVO), the E10 blend wall could still be breached, which would force a restriction in gasoline availability and higher prices at the pump for consumers. A representative from the Union of Concerned Scientists pointed out that EPA should place more emphasis on the market potential of E85 as a solution to the blend wall concerns and option to help meet the statutory RFS RVOs. Representatives from the biofuels industry argued that EPA should revise the proposed rule and include higher RVOs more consistent with the RVO targets included in the RFS statute for 2014. They argued these revisions are needed to protect ongoing investment in the further development and commercialization of U.S. biofuels, especially advanced and cellulosic biofuels.
The Society for the Commercial Development of Industrial Biotechnology (SCD-iBIO), an affiliate of the Society of Chemical Manufacturers & Affiliates (SOCMA) and Biobased and Renewable Products Advocacy Group (BRAG™) strategic partner, held its 2nd International Forum in Philadelphia on November 11, 2013. The focus was "Commercializing Global Green: Markets from the Value Chain Perspective" and the program included symposia on the Automotive, Advanced Biofuels, Cleaning and Personal Care, Packaging, Adhesives, Sealants, and Coatings markets. Marcel Lubben, Vice President of Bio-based Chemicals & Materials of Royal DSM, delivered the keynote speech. In keeping with SCD-iBIO's mission of expanding the understanding of basic principles of commercial development, attendees learned about natural capital and explored the impact of shale gas on the industrial biotechnology industry. SCD-iBIO established a committee on nomenclature and standards in conjunction with the American Society for Testing and Materials (ASTM), as well as its own education, planning, and benchmarking committees.