The People of America's Oil and Natural Gas Indusry

Questions Linger on RFS, Cellulosic Biofuel Mandate

Bob Greco

Bob Greco
Posted December 21, 2012

Nearing the end of the 2012 it’s worth noting that some things about the Renewable Fuel Standard (RFS) haven’t changed: Commercially available cellulosic biofuel still isn’t being produced, and the nation’s refiners still don’t know how much biofuel they’ll have to blend next year under the RFS mandate. Other than that, no worries, right?

In all seriousness the future for advanced biofuels is bright, and API members are some of the largest investors in ongoing efforts to develop them. But overoptimistic assumptions about the pace of biofuels’ commercialization have left us with unworkable mandates – in fact, mandates to use something that doesn’t exist.

That said, Agriculture Secretary Tom Vilsack has touted progress being made toward cellulosic biofuel production, citing this report from the Advanced Ethanol Council.  Unfortunately, the report is little more than a catalog of ongoing construction projects and, if anything, it’s damning with faint praise.  The advanced biofuels industry clearly is way behind schedule and losing ground with respect to blending mandates.

The reality is that worldwide there are just three “commercial scale” facilities that were to begin production before the end of 2012: KiOR (Mississippi), Ineos Bio (Florida) and Beta Renewables (Italy).  All have issued press releases recently saying they are beginning “start-up” – but to date none has claimed actual production of a transportation fuel.

At best the KiOR and Ineos production would total 20 million gallons in 2013. In reality it likely will be much less than that, given typical first-year start-up issues. Remember, RFS calls for 1 billion gallons of cellulosic ethanol to be blended into the fuel supply in 2013, and in 2014 it ramps up to 1.75 billion gallons. This enormous disparity between mandates and reality is just one of the reasons the RFS needs to be repealed.

Biofuel advocates have carefully avoided the huge and growing cellulosic gap for RFS mandates, as we have pointed out earlier.  Some cellulosic industry advocates claim that they are “closing the gap” between the mandates and actual capacity. The reality is the gap is continuing to increase each year.

For historical purposes, documenting cellulosic industry aspirations versus reality, we also note that in 2007 the Biotechnology Industry Organization (BIO) sent then-President Bush a letter asking to increase the cellulosic mandate for 2016 from 250 million gallons to 3 billion gallons 2016.  They got their wish – Congress actually bumped it up to 4.25 billion gallons – but the technologies have failed to develop. 

This gets back to our fundamental problem with the cellulosic mandate: Increasing mandates have not led to commercial production. Yet, refiners are continuing to pay non-compliance penalties – for, essentially, not using non-existent fuels. Go figure! Cellulosic fuels eventually will be produced commercially. And, again, oil and natural gas companies are some of the leading investors in them. But the mandates under RFS have not accomplished that goal.

Meanwhile, EPA missed the statutory deadlines for establishing RFS standards for next year. In a Dec. 19 letter API urged the agency to finalize the standards as quickly as possible. A new compliance year begins Jan. 1, but EPA has yet to even propose (not to mention finalize) renewable volume obligations for cellulosic, advanced and total renewable volumes for 2013 and for biomass-based diesel standards for 2014. API also said the agency should consider exercising its own authority under the Clean Air Act to waive cellulosic standards for 2012 – because, again, no commercial production was available.