The EPA conducted a Renewable Fuel Standard public hearing on Tuesday.
New soybean crush plants have started to spread across the countryside like a prairie fire during the past couple of years, as companies have seized on demand for soybean oil to produce biomass-based diesel and renewable diesel.
Then came EPA’s proposed multiyear Renewable Fuel Standard volumes for 2023 to 2025, acting like a cold splash of water on a burning-hot industry.
The proposed RFS calls for biomass-based diesel volumes below actual production for the next three years.
Farmers and biofuel industry representatives implored the EPA during a public hearing Tuesday to rethink the proposal they say will put such investments in jeopardy. The EPA has scheduled a second public hearing Wednesday.
Lafayette County, Missouri, farmer Garrett Riekhof said he fears the lack of RFS support of the industry will put at risk 1990s-era investments in biodiesel.
“Farmer investments still continue in several plants operating here today,” he said. “Missouri’s seven biodiesel plants, which collectively provide over $2 billion in economic impact from the state and support nearly 6,000 jobs, stand to lose under this proposal. That means our state’s rural economy and Missouri soybean farmers who rely on a strong commodity demand to support our livelihoods also come up short in this finalized proposal.”
Riekhof pointed to concerns about the future of Cargill-announced plans to build a new soybean-processing plant in southeast Missouri.
Once completed, the facility would process 62 million bushels of soybeans.
“The proposed RFS volumes could have a chilling effect on major plants such as this one,” Riekhof said.
“In terms of crush for every additional bushel of soybeans processed in the U.S., it increases supplies of protein, which are a primary input for our livestock operations. As a feedstock operator, increased soybean meal supplies keep my costs in check and improve our ability to provide affordable food both in the U.S. and to our export partner.”
U.S. biomass-based diesel production exceeded 3 billion gallons in 2021 and 2022, yet the EPA in its latest multiyear RFS, sets those volumes below already-achieved production through 2025.
The industry produced about 3.1 billion gallons in 2021 and about 3.2 billion gallons in 2022. Yet, the agency proposes setting volumes at 2.82 billion in 2023, 2.89 billion in 2024 and 2.96 billion in 2025.
Tennessee farmer and American Soybean Association member Alan Meadows said the RFS proposal is putting a chill on investments in soybean crush facilities.
“It no longer supports growth in the biomass-based diesel industry,” he said. “This is a logical concern. Biomass-based diesel is a fantastic option to lower greenhouse gas emissions, as it can be used as a drop-in fuel and diesel engines that remain hard to electrify in a very cost-effective way. The industry has supported economic development in rural areas and continues to support soybean farmers across the country. I would encourage EPA to reconsider this proposed renewable volume obligations for ’23 and beyond before publishing a final rule.”
Iowa farmer and Executive Director of the Iowa Biodiesel Board Grant Kimberly told the agency the volumes essentially pour water on burning-hot growth of crush oil capacity and biofuels expansion.
“Iowa has always been a leader in biodiesel production,” Kimberly said. “Major investments have occurred in feedstock infrastructure, like new soybean-crushing plants. EPA’s proposed volumes would put those in jeopardy. Iowa has 11 biodiesel plants, which have a proven history of generating economic growth and jobs while reducing the nation’s carbon footprint, also stand to lose under the proposal. Our state’s rural economy is Iowa soybean farmers who rely on stable commodity markets also come up short if this proposal is finalized.”
Kimberly said a recent study found Iowa’s biodiesel industry generated about $4 billion in economic activity in 2021 and sustains about 10,500 jobs.
EIA PROJECTIONS
Clean Fuels Alliance America CEO Donnell Rehagen told EPA it needed to take seriously biomass-based diesel and biodiesel production estimates from the U.S. Energy Information Administration.
The EIA’s short-term energy outlook projects a 500-million-gallon increase in biodiesel and renewable-diesel consumption for 2023. EIA also projects 2.4 billion gallons of added renewable-diesel capacity to come online by 2024 and calculates another 1.8 billion gallons of announced planned capacity.
“In addition to growing volumes above and beyond the proposed rule, the clean fuels industry is meeting and exceeding all the statutory factors that EPA is supposed to consider when setting BBD volumes,” Rehagen said.
“Increasing production of clean fuels through the RFS improves U.S. energy security, lowers diesel fuel prices and generates carbon emission reductions today that are necessary to meet future carbon environmental goals. Additionally, our members are generating new jobs, increasing economic opportunities for growers, fuel producers and other economic sectors.”
Kurt Kovarik, Clean Fuels Alliance America vice president of federal affairs, said EPA Administrator Michael Regan committed to increase availability of homegrown fuels and to put the RFS program back on track.
“With this proposal, however, EPA is failing to follow through on that commitment where the 2022 volumes were supposed to be a jumping-off point for growth in advanced biofuels,” Kovarik said.
“The proposed 2023 volumes return to the same flatline we experienced in prior years,” Kovarik said. “In the proposed rule, EPA acknowledges that 5.1 billion gallons of renewable diesel capacity has been announced or is already under construction. Yet, the agency has flatlined growth for renewable diesel and its advanced biofuel products.”
Kovarik said the RFS proposal also “dismisses the potential” for sustainable aviation fuel.
“Clean Fuels is once again frustrated that EPA has the wherewithal needed to determine current production, the knowledge of investments being made, and the resources to accurately determine feedstock availability, yet proposes a no-growth scenario,” he said.
ETHANOL EXPANSION
Ethanol interests testifying before EPA on Tuesday were generally in support of the RFS proposal, while refining interests called on the agency to back away from proposed growth in corn ethanol through 2025.
The EPA proposed corn-ethanol blending at 15 billion gallons for 2023 and to add a 250-million-gallon supplemental for 15.25 billion gallons. In addition, EPA would require 15.25 billion gallons to be blended in 2024 and 2025. The ethanol industry was particularly concerned that the agency would dial back on corn-ethanol volumes in favor of more advanced biofuels such as biomass-based diesel.
Several refining company representatives and workers told the EPA their operations are suffering from higher prices for renewable identification numbers, calling on the agency to dial back corn-ethanol RFS volumes to 13.9 billion gallons through 2025.
The agency has put forward an alternative approach in the new proposal to set corn ethanol below 14 billion gallons.
Brian Jennings, CEO of the American Coalition for Ethanol, said the agency’s corn-ethanol proposal was an “effective” requirement.
When it comes to advanced biofuels such as biomass-based diesel, however, he said the agency should reconsider its proposal.
“The advanced-biofuel blending targets are inadequate,” Jennings told the EPA.
“We encourage the agency to increase volumes consistent with capacity coming online. While the multiyear nature of the set rule provides obligated parties and other participants the certainty they need to plan for the future, EPA risks undermining that certainty by suggesting it may retroactively use its waiver authority to reduce blending levels established by this rulemaking. Moreover, we strongly oppose EPA’s so-called alternative approach to reduce conventional biofuel blending below 14 billion gallons for 2024 and 2025. The agency should clarify it does not intend to issue retroactive waivers or reduce these volumes.”
Jennings also called on the agency to use the U.S. Department of Energy’s Argonne National Laboratory GREET model when calculating ethanol’s greenhouse gas emissions profile.
Growth Energy CEO Emily Skor said the EPA proposal was “strong” but called on the agency to adopt accurate volumes for all segments of the biofuels industry.
“Moving forward, our opportunities for growth across both conventional and advanced biofuels are linked, so it is important that the proposed volumes reflect industry growth and innovation,” she said.
In addition, the EPA currently has a backlog of RFS pathway requests waiting for approval.
“We ask that EPA clear the backlog of pathway approvals for renewable fuels, including cellulosic biofuels from kernel fiber, advanced biofuels from corn oil produced at bioethanol wet mills, and bioethanol produced using carbon-capture technologies,” she said.
Geoff Cooper, CEO and president of Renewable Fuels Association, said that while his group supports the treatment of corn ethanol, there is concern about the advanced biofuels proposed volumes.
“As for biomass-based diesel and other advanced biofuels, we encourage EPA to carefully consider the information presented by stakeholders and ensure that the final volumes appropriately reflect future growth and investment,” he said during the hearing.
Cooper said the RFA also supports EPA’s approach to small-refinery exemptions. The Biden administration last year rejected more than 65 remaining SRE requests.
E-RIN CONCERNS
For the first time ever, the EPA proposes launching a new electric-RINs, or e-RINS program to promote the adoption of electric-vehicle technologies.
Biofuel groups and others called on the agency to separate the e-RIN proposal from the larger RFS proposal, while automobile industry representatives support the proposal as they expand electric-vehicle production.
Evan Belser, policy strategist and managing counsel at Ford Motor Company, said the company supports the proposal.
“While we encourage you to finalize the e-RINS proposal, Ford’s not waiting to lead the revolution,” he said.
Click here to see more...