The Federal Aviation Administration (FAA) has announced that it will provide $40 million for a Center of Excellence (COE) on sustainable aviation fuel and the environment. The funds will be distributed in $4 million increments each year for the next ten years. Washington State University and the Massachusetts Institute of Technology will be leading the effort, and several other universities will be involved. For a full list of participants and more information on the initiative, please see a copy of FAA's press release, which is available online.
This announcement illustrates the federal government's important role in and commitment to facilitating the ongoing development and commercialization of U.S. biofuels. This year, the FAA and the U.S. Department of Agriculture (USDA) renewed their joint agreement to promote the development of aviation biofuels. They are aiming for one billion gallons of commercial aviation capacity by 2018.
USDA is continuing its work to promote the U.S. biofuels industry, which USDA Secretary Tom Vilsack believes helps bolster the U.S. agriculture sector and rural economy. On September 12, 2013, USDA announced that it will provide a total of $15.5 million to 188 advanced biofuel producers under USDA's Advanced Biofuel Payment Program, which was created under the 2008 Farm Bill (P.L. 110-234, the "Food, Conservation and Energy Act of 2008"). It is reported that through that program to date, USDA has provided $211 million to 290 biofuel producers. This federal support is an important component to efforts of producers in the still nascent advanced biofuels industry to get up and running. USDA's press release on this announcement is available online.
On September 6, 2013, EPA's Office of the Inspector General (IG) issued a report finding that the Agency does not meet the control standards for monitoring some of the new programs and activities designed to prevent and reduce instances of fraudulently generated RINs under the federal RFS. EPA's one-page report summary is available online and its 23-page full report is available online.
The EPA IG findings come at a vulnerable time for the RFS and its allies. Trade groups representing the oil and gas industry, among others, have called on EPA to modify the RFS in several ways, including to protect against RIN fraud. Those groups, as well as the National Biodiesel Board, worked with EPA to design a new plan to help protect against RIN fraud. EPA issued a proposed rule outlining the plan in February of this year. A copy of the proposed rule as published in the Federal Register is available online. The plan is expected to be completed soon.
The group of four House Energy and Commerce Committee Members tasked with examining ways to reform the federal RFS met this week for the first time since the August recess. The group was named by Committee Chair Fred Upton (R-MI) and includes Representatives John Shimkus (R-IL), Cory Gardner (R-CO), Lee Terry (R-NE), and Steve Scalise (R-LA).
Reportedly, the group is looking at potential proposals that could be released this fall. In general, the biofuels industry is working hard to advocate that the RFS is working as it was intended and the best course of action would be to leave the law in place as is to allow it to continue to drive investment in the industry. The next few weeks will be telling in terms of what, if any, proposals may be introduced or considered by the House of Representatives. There is no similar organized activity in the Senate. Senate Committee on the Environment and Public Works Chair Barbara Boxer (D-CA) has stated publicly, however, that she may hold a hearing on the RFS early this fall.
Congress returned from its August recess this week, and, as expected, the Republican leadership of the U.S. House of Representatives is looking toward passing legislation on the remaining nutrition portion of the Farm Bill, including $40 billion in cuts to food stamp programs over the next ten years. The bill could come up for a vote next week.
House Republican leaders, including House Committee on Agriculture Chair Frank Lucas (R-OK), have stated they do not wish to go ahead with a conference committee with the Senate to complete the next five-year Farm Bill until they pass the nutrition portion. In June, the House passed a "farm-only" Farm Bill, H.R. 2642, which left out funding for food stamps and other nutrition programs. A more comprehensive version of the Farm Bill containing $20 billion in cuts to nutrition programs was defeated in a previous vote mainly because several Democrats felt the cuts were too large, while several Republicans thought they did not go far enough.
Passage of a nutrition portion of the Farm Bill containing $40 billion in cuts may attract enough House Republicans to lead to a conference committee with the Senate to hammer out a final version of the next five-year Farm Bill, but it will not make those negotiations any faster or easier. In May, the Senate passed its version of the next Farm Bill, S. 954, the Agriculture Reform, Food and Jobs Act of 2013, which funds both farm programs and food stamps. S. 954 contains a strong energy title with nearly $900 million in mandatory funding and expanded eligibility for renewable chemicals. Senate Committee on Agriculture Chair Debbie Stabenow (D-MI), who is leading the Farm Bill effort in the Senate, has said that $40 billion in cuts is a "non-starter." In fact, she and other Democratic leaders in the Senate opposed the original $20 billion in cuts the House attempted to pass earlier this year. This disagreement will likely extend the Farm Bill conference committee negotiations beyond September 30, when the current version of the Farm Bill expires.
On Wednesday, September 11, 2013, the European Parliament voted 356-327 to cap conventional biofuels at six percent of the European Union's (EU) transportation fuel by 2020 due to food-versus-fuel concerns. It also voted to require that 2.5 percent of EU transportation fuel consist of advanced biofuels by 2020, and to target that fuel to contain a 7.5 percent ethanol blend. The legislation does not require that indirect land use change be taken into account until 2020. The proposal must now be approved by EU Member States.
This week, the National Advanced Biofuels Conference and Expo was held in Omaha, Nebraska. During the three-day conference, industry leaders presented on and discussed major issues facing the industry, from legal considerations to advancing the aviation biofuels industry, supply, and feedstock successes and challenges. During the conference, Michael McAdams, President of the Advanced Biofuels Association, and Joe Jobe, CEO of the National Biodiesel Board, discussed some of their current federal policy priorities and work. Both spoke about the importance of the federal RFS to the industry and stressed the need for industry to unite at this time when it is increasingly under attack.
McAdams addressed the work this year of the House Energy and Commerce Committee to examine and reform the RFS. He mentioned that Committee's two-day hearing this summer on the subject during which he testified on the importance of the policy. He stated his expectation that legislation to reform the RFS could be drafted and considered by the House of Representatives by mid-October. He urged everyone to contact their Members of Congress on behalf of the RFS, if their trade associations asked them to do so.
Jobe made similarly supportive statements of the RFS and the need for the industry to unite. In addition, he stated the importance to the biodiesel industry of not only the RFS, but of maintaining the biodiesel tax credit. He attributed both policies to the industry's recent substantial growth, and cited them as important to achieving the industry's new goal of making up 10 billion gallons of the fuel supply by 2022.
Also during the conference, on behalf of Agriculture Secretary Tom Vilsack, Rural Development Acting Under Secretary Doug O'Brien announced that the U.S. Department of Agriculture (USDA) is making payments to support the production of advanced biofuel. USDA is making nearly $15.5 million in payments to 188 producers through the Advanced Biofuel Payment Program. USDA remains focused on carrying out its mission, despite a time of significant budget uncertainty. This announcement is one part of the Department's efforts to strengthen the rural economy. The funding is being provided through USDA's Advanced Biofuel Payment Program, which was established in the 2008 Farm Bill. Under this program, payments are made to eligible producers based on the amount of advanced biofuels produced from renewable biomass, other than corn kernel starch. Examples of eligible feedstocks include but are not limited to: crop residue; animal, food, and yard waste; vegetable oil; and animal fat. Through the Advanced Biofuel Payment Program and other USDA programs, USDA is working to support the research, investment, and infrastructure necessary to build a strong biofuels industry that creates jobs and broadens the range of feedstocks used to produce renewable fuel. More than 290 producers in 47 states and territories have received $211 million in payments since the program's inception. It has supported the production of more than three billion gallons of advanced biofuel and the equivalent of more than 36 billion kilowatt hours of electric energy.
Renewable fuel and chemical company Aemetis, Inc. announced this week that EPA has approved its Renewable Fuel Standard (RFS) pathway to produce ethanol using grain sorghum and biogas with the Company's existing Combined Heat & Power system to generate D5 Advanced Biofuels Renewable Identification Numbers (RIN). This announcement means that additional fuel will qualify to fulfill the annual renewable volumetric targets under the federal RFS statute. It comes as EPA is preparing its proposed RFS volumes for 2014, which the Agency indicated it would likely reduce from those set in the statute to adjust for supply and the impending ethanol blendwall.
Aemetis' press release on the announcement is available online.
Renewable chemicals are emerging at a fast pace, paving the way for new, innovative, and sustainable biobased products. The renewable chemicals’ market is estimated to reach $83.4 billion by 2018 in applications ranging from transportation and agriculture to textiles and cosmetics. In addition to all the elements great companies need to succeed -- a great product, a great brand, inspiring leadership, and vision -- biobased product companies need to understand how the U.S. Environmental Protection Agency (EPA) occupies a virtual seat at their management table, whether or not they know it.
An article by BRAG in the August 2013 issue of Industrial Biotechnology, available online, lays out the regulatory challenges the Toxic Substances Control Act (TSCA) presents to biobased and renewable chemical products and the rationale behind the formation of BRAG. Through strategic insight into regulatory and legislative issues, collective advocacy on Capitol Hill and before EPA, education and training opportunities, and hands-on guidance from a deep bench of TSCA legal and scientific policy experts, BRAG is removing obstacles to commercialization for its members.
While in Brazil last week, U.S. Secretary of Energy Ernest Moniz stressed the importance of biofuels as part of President Obama's Climate Action Plan to reduce greenhouse gas emissions. To this end, Secretary Moniz called for greater partnership between the U.S. and Brazil on biofuels. Significantly, it was reported that Secretary Moniz stated that the U.S. Environmental Protection Agency (EPA) has the authority and ability, and will continue to consider imports when EPA sets the annual renewable volume obligations (RVO) under the federal Renewable Fuel Standard (RFS). This statement is important and signifies that EPA could continue to allow imported Brazilian sugarcane ethanol to meet annual RFS requirements.
As we recently reported, the U.S. Chamber of Commerce's Export Green Initiative continues plans for an upcoming trip to Brazil September 30-October 2, 2013, to encourage an increased relationship between that country and the U.S. on biofuels. Representatives from the Renewable Fuels Association (RFA), the trade association representing the Brazilian sugarcane industry (UNICA), and the Advanced Biofuels Association, along with 15 companies that produce biofuels in the U.S., are expected to attend the trip. More information is available online.