By Lauren M. Graham, Ph.D.
On March 23, 2017, the California Environmental Protection Agency’s Air Resources Board (ARB) announced the release of new carbon intensity pathways for fuels certified under the low carbon fuel standard (LCFS) using the CA-GREET 2.0 model. Of the 18 pathways approved in March, eight are first generation biodiesel carbon intensity pathways and four are second generation renewable diesel carbon intensity pathways. A pathway for biodiesel produced from used cooking oil has been provisionally certified, as well. The approved pathways can be used for credit reporting purposes beginning with reports for Q1 2017. The LCFS regulation aims to reduce the carbon intensity of fuels sold in California by 10 percent by 2020 in line with the California Health and Safety Code mandate to reduce greenhouse gases in California.
On March 23, 2017, the National Biodiesel Board (NBB) announced that an antidumping and countervailing duty petition had been filed with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) claiming that Argentine and Indonesian companies are violating trade laws by saturating the U.S. market with dumped and subsidized biodiesel. The petition was filed on behalf of the National Biodiesel Board Fair Trade Coalition, which represents the NBB and U.S. biodiesel producers. According to NBB, Argentine and Indonesian producers are selling their biodiesel in the U.S. at prices that are substantially lower than their costs of production, and government programs in both countries are providing illegal subsidies to their domestic biodiesel industries. Between 2014 and 2016, biodiesel imports from Argentina and Indonesia increased by 464 percent, which resulted in an 18 percent loss in market share for U.S. manufacturers. Both countries have previously been charged with violating international trade laws. Following NBB’s announcement, Senator Maria Cantwell (D-WA) released a statement urging DOC and ITC to give the suit every appropriate consideration and pledging to continue to work across the aisle to reform the biodiesel tax credit, so that it incentivizes the domestic production of clean, renewable biodiesel.
On January 17, 2017, Neste, a member of the Biobased and Renewable Products Advocacy Group (BRAG®), announced the rebranding of its “Neste Renewable Diesel” to “Neste MY Renewable Diesel,” and the updating of other names within the renewable products family to “Neste MY” brand names. Neste MY Renewable Diesel is a low-carbon drop-in renewable fuel that does not require vehicle modifications, and can be refueled into any blending ratio due to its compatibility with existing diesel fuels. Compared to conventional petroleum diesel, Neste MY Renewable Diesel enables up to 80 percent lower greenhouse gas (GHG) emissions throughout the lifecycle.
On October 19, 2016, EPA delivered the proposed Renewable Fuel Standard (RFS) volume standards for 2017 and biobased diesel standards for 2018 via proposed rule to the White House Office of Management and Budget (OMB). This proposed rule will increase the renewable fuel volume requirements as reported in the Biobased and Renewable Products Advocacy Group (BRAG®) post “EPA Releases Proposed Renewable Fuel Volume Requirements.” The proposed volume requirements are:
|Cellulosic biofuel, from 230 million gallons in 2016, to 312 million gallons in 2017;
|Advanced biofuel, from 3.61 billion gallons in 2016, to four billion gallons in 2017;
|Renewable fuel, from 18.11 billion gallons in 2016 to 18.8 billion gallons in 2017; and
||Biomass-based diesel, from two billion gallons in 2017 to 2.1 billion gallons in 2018.
These volumes would change the percentage standards to 0.173 percent for cellulosic biofuel, 2.22 percent for advanced biofuel, 10.44 percent for renewable fuel, and 1.67 percent for biomass-based diesel. The final rule is expected to be published in the Federal Register during December 2016.
On September 12, 2016, the Biodiesel and Renewable Diesel Incentive Extension Act of 2016
(H.R. 5994) was introduced to the House of Representatives and referred to the House Committee on Ways and Means. The bill was introduced by Representative Diane Black (R-TN), and would extend the $1 per gallon biodiesel and renewable diesel blenders credit, originally set to expire December 31, 2016
, through December 31, 2018
. The blenders tax credit of $1 was created in 2005 for biodiesel or renewable diesel used in qualified mixtures. The Advanced Biofuels Association (ABFA) has spoken out in favor of extending the tax credit
, with ABFA President Michael McAdams stating, "it is clear that the best chance for our industry to continue to have tax credit support at the federal level is for all of us to unite behind the existing blenders credit. Given the shortness of the year and the importance of certainty for the overall biodiesel industry, we simply owe it to all our members to give them the best opportunity to continue to have a tax credit in 2017
On September 13, 2016, Biobased and Renewable Products Advocacy Group (BRAG®) member Flint Hills Resources, along with Benefuel® Inc., announced the startup of the Duonix Beatrice biodiesel plant, and the first successful commercial-scale application of Benefuel's innovative ENSEL technology. ENSEL technology is capable of converting a range of lower cost feedstocks such as recycled cooking oil and distillers corn oil into high-quality biodiesel. Once fully operational, the Duonix Beatrice plant will produce approximately 50 million gallons of biodiesel annually. The plant has already made commercial sales of product that meets or exceeds ASTM specifications for biodiesel.
The ENSEL technology uses a solid catalyst that combines esterification of high free fatty acid feedstocks and transesterification of triglycerides into a single step, which eliminates waste, improves process efficiency, and expands feedstock options. The product is further enhanced by an upgraded, backend distillation process that removes additional impurities which, when used on high free fatty acid feedstocks such as distillers corn oil, produces a higher quality biodiesel with superior cold weather performance. In addition to producing 50 million gallons of biodiesel, Duonix Beatrice is expected to produce a variety of coproducts such as glycerin, which can be used as a food additive and as a compound found in a number of medical, pharmaceutical and personal care products.
On August 24, 2016, Brazil's government announced that it would not be extending a tax break on ethanol sales that is due to expire in December 2016. During the 2015 Paris Climate Accord, Brazil pledged to increase cane-based ethanol and biodiesel to nearly 18 percent of its total energy mix by 2030, requiring an increase in annual ethanol production from 30 billion liters in 2015/2016 to 50 billion liters in 2030. The loss of the ethanol tax break prevents biofuel from being cost competitive with gasoline, and will severely impede the ability of ethanol and biodiesel to make up a larger percentage of Brazil's energy mix. Elizabeth Farina, head of the cane industry association Unica, stated that this change will push cane mills to switch from biofuel to sugar production. Two days after the announcement that Brazil would not be renewing the ethanol tax break, Brokers INTL FCStone predicted that the top cane growing region of Brazil would produce 4.7 percent less ethanol in the 2016/2017 crop than it did in 2015/2016.
On May 18, 2016, the U.S. Environmental Protection Agency (EPA) announced a proposed increase of the renewable fuel volume requirements under the Renewable Fuel Standard (RFS) program for all biofuels in 2017 and biomass-based diesel in 2018. While both the renewable fuel volume requirements and the proposed percentage standards are increases from previous years, the volume requirements for cellulosic biofuel, advance biofuel, and renewable fuel still fall short of the volumes proposed for 2017 under Section 211 of the Clean Air Act. The proposed volume requirements are:
- Cellulosic biofuel, from 230 million gallons in 2016 to 312 million gallons in 2017;
- Advanced biofuel, from 3.61 billion gallons in 2016 to 4 billion gallons in 2017;
- Renewable fuel, from 18.11 billion gallons in 2016 to 18.8 billion gallons in 2017; and
- Biomass-based diesel, from 2 billion gallons in 2017 to 2.1 billion gallons in 2018.
These volumes would change the percentage standards to 0.173 percent for cellulosic biofuel, 2.22 percent for advanced biofuel, 10.44 percent for renewable fuel, and 1.67 percent for biomass-based diesel. A timely passage of the RFS volumes is of great importance to the biofuel industry, as any delays can create uncertainty for investors and harm industry progress. The rule is open for comment through July 11, 2016, and EPA intends to issue the final rule by November 30, 2016. Comments may be submitted at www.regulations.gov via Docket ID No. EPA-HQ-OAR-2016-0004.
On March 23, 2016, Bloomberg BNA Daily Environment Report announced that EPA signed a final rule exempting manufacturers of six biodiesel chemicals from reporting processing and use information under the Chemical Data Reporting (CDR) rule under Section 8(a) of the Toxic Substances Control Act (TSCA). In 2014, BRAG filed a regulatory petition to exempt the chemicals, requesting the same exemption that EPA currently provides to manufactures of petroleum-based versions of the chemicals. The rule was originally issued as a direct final rule in February 2015 before being withdrawn due to a single comment. This final rule is consistent with the original proposed rule that was issued on July 22, 2015, and applies to manufacturers of:
- Fatty acids, C14-18 and C16-18 unsaturated, methyl esters (Chemical Abstracts Service (CAS) No. 67762-26-9);
- Fatty acids, C16-18 and C-18 unsaturated, methyl esters (CAS No. 67762-38-3);
- Fatty acids, canola oil, methyl esters (CAS No.129828-16-6);
- Fatty acids, corn oil, methyl esters (CAS No. 515152-40-6);
- Fatty acids, tallow, methyl esters (CAS No. 61788-61-2); and
- Soybean oil, methyl esters (CAS No. 67784-80-9).
As with all the chemicals currently afforded partial exemption status, the biodiesel chemicals would no longer be eligible for the partial reporting exemption if they were to become the subject of a TSCA Sections 4, 5(a)(2), 5(b)(4), or 6 rule (proposed or final), an enforceable consent agreement, a Section 5(e) order, or relief granted under a civil action under Section 5 or 7. BRAG is pleased that EPA was able to complete the rulemaking process in time for the CDR reporting cycle starting in June 2016. The partial CDR exemption will save manufacturers about two weeks of time that would typically be spent preparing processing and use data for Form U.
On February 16, 2016, Agriculture Secretary Tom Vilsack responded to two recent reports on ethanol and renewable fuels. The first report was published by USDA and is on "2015 Energy Balance for the Corn-Ethanol Industry," and the second report comes from the University of Missouri Food and Agricultural Policy Research Institute (FAPRI) and is a "Literature Review of Estimated Market Effects of U.S. Corn Starch Ethanol." Both studies demonstrate the growth of the United States' renewable energy industry with improved ethanol and biodiesel production resulting in doubled renewable energy production and a reduction in foreign oil imports. The energy used to produce corn has fallen as well, which has made the production of ethanol more efficient so that "more energy is being produced from ethanol than is used to produce it, by factors of 2 to 1 nationally and by factors of 4 to 1 in the Midwest." Both studies point towards a solid future of growth and innovation for the U.S. renewable energy industry.