Biofuels were in the news in late spring, when on May 29 the Environmental Protection Agency (EPA) released long-awaited renewable fuel blending requirements for 2014-2016 that sought to reconcile Congress’ original intentions for groundbreaking 2007 legislation to create a booming renewable fuels industry with the realities of fuel markets coming off the biggest U.S. economic downturn since the Great Depression.
While corn ethanol (conventional biofuel) producers have made the biggest headlines and loudest lobbying effort as EPA reduced blending targets from their original legislative levels, wood-based cellulosic biofuel developers and producers have flown under the radar for the most part as production facilities have taken longer to gain financing, build and commission.
A variety of players, from component and systems suppliers to R&D consortiums and cooperative ventures and others, are continuing to refine woody biomass-to-fuel technology at each step of the process. Meanwhile, industry and interest groups are working to develop a framework of government policy and market incentives to help build and sustain a thriving biofuels industry.
At the Advanced Bioeconomy Leadership Conference held earlier this year, Advanced Biofuels Assn. CEO Michael McAdams noted Congress’ intent back in December 2007, when the Energy Independence and Security Act (EISA) established the first renewable fuel volume mandate in the U.S. under the Renewable Fuel Standard (RFS).
Some members of Congress were looking to increase national security through energy security; some wanted to reduce fossil fuel usage; and others were more interested in rural job opportunities, McAdams said.
Yet despite varied Congressional motives, “There was near unanimous agreement that the ultimate prize of the RFS was to foster the development of advanced and cellulosic biofuel manufacturers who would use non-food feedstocks to produce next generation fuels,” McAdams said. He noted that initial RFS projections through 2022 actually capped conventional (corn) ethanol at 15 billion gallons annually while greatly expanding cellulosic and advanced biofuel projections.
The original—and overly exuberant—mandates included in the 2007 legislation had the total volume of renewable fuel in all categories required to be blended into transportation fuel growing from 9 billion gallons in 2008 to 36 billion gallons in 2022. Yet the mandates in the legislation soon proved unworkable in the market due to undeveloped biofuel production capacity and falling gasoline demand.
Within a year of the EISA’s passage in 2007, the U.S. entered its worst economic downturn since the Great Depression, which led in turn to reduced gasoline consumption and the realization that a “blend wall” made it impossible to meet renewable fuel blending mandates at current gasoline demand levels and approved ethanol blends (E10 at the time, now E15) for standard fuel.
According to a 2011 United States National Research Council report on the economic and environmental impacts of meeting the RFS requirements, while capacity to produce conventional biofuel (corn ethanol) was nearing the mandate, the capacity for cellulosic advanced (non-corn) biofuels was nowhere near reaching the levels required to meet blending mandates.
In November 2013, looking ahead to increasingly unreachable blending requirements as the EISA’s mandated numbers rose, the EPA sought to reduce blending requirements for 2014, leading to a firestorm of political posturing and lobbying from the corn ethanol industry and almost two years of EPA reassessment on the mandates.
After a lawsuit earlier this year forced EPA to release its blending requirements for 2014, 2015 and 2016, the agency did so on May 29. The numbers required for conventional biofuel (corn ethanol) blending were 13.25 billion gallons in 2014, 13.4 billion gallons in 2015 and 14 billion gallons in 2016. The 2014 and 2015 “mandates” reflect actual market usage, while 2016 represents a small increase—yet all are significantly lower than what was initially projected in the 2007 EISA legislation.
For cellulosic biofuels that utilize corn stover, grasses and energy crops as well as woody-based biomass, the 2014 mandated blending number released May 29 reflecting actual production is 330,000 gallons; 2015 is 106 million gallons; 2016 is 206 million. For advanced biofuels, which include ethanol and biodiesel and meet a stronger greenhouse gas emissions threshold and can come from a variety of feedstocks such as municipal solid waste (MSW) as well as woody biomass, EPA’s recent proposal called for 2.68 billion gallons in 2014, 2.9 billion gallons in 2015 and 3.4 billion gallons in 2016.
The year 2017 is left open because according to EISA language, any fuel category that comes in more than 20% below projections in two successive years may have future projections “reset” by the EPA to lower, more realistic levels.
“We’ve always supported using the right numbers to take the mystery out of it,” McAdams says, adding that the 3.4 billion gallons in 2016 shows confidence in continued growth and sends a signal to the financial market that (government policy) is staying behind an advancing cellulosic sector. “Particularly since the cellulosic sector has been slower to bring fuels to the market than people thought initially, but to show what we’re actually producing and carrying that forward is a positive signal,” he adds.