It’s Not Over Until It’s Over
As I sit down to write this column at the end of the first quarter, I am thinking about the success the biofuels industry already had this year, and the important issues we still must tend to. We were finally able to celebrate congressional passage of a five-year Farm Bill with a significant energy title backed up by mandatory funding of $881 million dollars over five years. The Farm Bill included authorizations and funding of programs such as the Biomass Crop Assistance Program and Rural Energy for America Program. New flexibility has been given to the USDA to operate the programs, and new opportunities have been created in the Biorefinery Assistance Program for advanced biofuels companies interested in leveraging their technologies for chemicals production.
Additionally, Congress reached a year-long deal on federal spending that provided substantial funding to the U.S. DOE’s Bioenergy Technology Office, and removed one of the last obstacles for the Defense Production Act’s Advanced Biofuels Production Project, allowing continued funding for deployment of drop-in fuels.
On the to-do list, our industry has several major issues outstanding. First is addressing the renewable fuel standard and the 2014 renewable volume obligations (RVO). The Advanced Biofuels Association continues to work every angle to encourage the administration to move the requirement for advanced biofuels as close as possible to the statutory 2014 mandate of 3.75 billion gallons. In addition, we have argued that the RVO numbers for the biomass-based diesel pool also should reflect the excellent production of 2013, approximately 1.7 billion gallons.
We suggested to the U.S. EPA that it would be helpful for them to complete pending rulemakings to approve new feedstock and fuel pathways under the Pathways II Rule before finalizing the RVO. This would bring new pathways for fuels such as butanol and biogas to market, making more gallons of compliant renewable identification numbers (RINs) available. Completing the Pathways II Rule before the RVO is important to allow EPA to correctly assess the expected production of qualified advanced biofuels. To do this in reverse may have the adverse effect of proposing a number that is too low. This would unduly reduce the value of the RIN program for those companies bringing new advanced and cellulosic gallons to the market.
ABFA also continues to support congressional efforts to sustain tax credits for biofuels. We believe in a "do-no-harm" approach and support proposals that, at a minimum, would retroactively extend the full suite of credits to assist in the development of second-generation and advanced biofuels. In a more perfect world, Congress would see the benefit of not only reinstituting these provisions for 2014, but also for 2015, as overall tax reform is not likely until after the next presidential election. However, achieving this will not be easy as Chairman Dave Camp, R-Mich.,of the House Ways and Means Committee, specifically allowed all of these provisions to lapse in his recently released tax reform draft. He has now put down a marker in the House that opposes biofuels credits and demonstrates that the industry will have to rely heavily on the U.S. Senate to make the case to restore these provisions.
In addition to advocating for these major issues, we continue to work with the EPA to see other pathways approved and to finalize the Quality Assurance Program. These efforts are technical in nature, but the impact they have in delaying new technologies from coming on line is significant. Recently, the EPA acknowledged that issues surrounding the pathways process must be dealt with, and suggested that over the next six months they would be reviewing and streamlining their process. As an industry, we should constructively work with the EPA to see that this becomes a reality as expeditiously as possible.
In conclusion, we are off to a good start with the Farm Bill and federal funding support for the U.S. DOE and defense biofuels initiative, but we need to double down our efforts in a hard, smart and tenacious way with the administration, EPA, and Congress, to see this year end with a stronger advanced and cellulosic biofuels industry.
Author: Michael McAdams
President, Advanced Biofuels Association