Farmers, biofuel producers and, now, several U.S. senators who back the production of renewable fuels say the Environmental Protection Agency is putting the renewable fuels industry in a state of uncertainty.
They say the problem is that the agency is nearly three years behind schedule in proposing “renewable volume obligations.” That part of administrative rules set the minimum number of barrels of renewable fuel that must be available to consumers in a marketplace where the majority of pumps and service stations are owned by petroleum companies.
In short, the rule guarantees a market for a certain amount of renewable fuels, a fact that has caused critics to label the program corporate welfare. Without the guarantee, some biofuel producers have closed shop, and availability at the gas pumps has not grown.
Standing along-side other farm-state senators with an interest in growing the biofuels industry, U.S. Sen. Dick Durbin, D-Ill., told a news conference late last week, “I’m a big fan of this administration as you can probably guess, being my former colleague from Illinois is now our president, but there’s no excuse for what we’ve been going through for the last two and a half to three years,” Durbin said. “It’s time for a decision. How can you build an industry, how can you make capital investments, how can you create jobs with so much uncertainty?" he asked.
Durbin said the biofuels industry is critical on several basic levels: "It's how we move forward toward energy independence, it's how we clean up our environment, and in our part of the world, it's how we create jobs, some 5000 in the state of Illinois."
American success story
Kent Englebrect, biodiesel trade manager for Archer Daniels Midland in Decatur, Ill., called biodiesel an American success story. “In 2005, and in 2007, Congress took steps to ensure that renewable fuels would have a permanent place in the American landscape. We answered that call. We made the investments. And today in the U.S., ADM produces more than 200 million gallons of biodiesel per year at four facilities using soy and canola as feed stocks.”
Englebrect said those facilities directly support 1,000 jobs and have created stability and opportunity for “countless American farmers.” The Renewable Fuel Standard, he said, has driven down the costs of transportation fuel for drivers at the pump and serves as a check against price volatility in the oil markets. “With favorable economics, a reliable renewable fuel standard, 2014 was poised to be a breakout year for biodiesel until the 2014 RVO (renewable volume obligation) intervened." The lack of new obligation levels due to the delayed rule, combined with the expiration of the biodiesel tax credit said Englebrect, forced ADM to “cease or slow production at all of our facilities.”
Ann Steckel, vice president of federal affairs for the National Biodiesel Board, said EPA’s delay in proposing a new rule under the Renewable Fuel Standard program, with increased volume has caused “very detrimental” impacts to the biodiesel industry. “We’ve seen about 54 plants across the country either idle or go into bankruptcy because EPA has not put out the rules and the volume requirements for biodiesel in the timely fashion that they were supposed to.”
She said the Jefferson City-based group is urging the EPA to continue to “grow the biodiesel market by a few hundred million gallons every year.” With biodiesel being pumped into about 2 percent of all cars and trucks across the U.S., Steckel said, there’s plenty of room for growth and diversification of the diesel market.
Steckel also argues that such growth and diversification is good for consumers, both in terms of pump price and the environment. “We’re an advanced biofuel. We reduce greenhouse gas emissions by at least 50 percent so it’s a win, win for everyone,” she said.
Illinois has the capacity to produce more than 160 million galls of biodiesel said Durbin. “But the industry won’t grow when there’s no market certainty. The EPA should act quickly to put forth robust RFS (renewable fuel standard) requirements for 2014 and beyond. Further delays risk our nation’s energy independence, our environment, and rural America’s economic future.”
The EPA was supposed to set the 2014, renewable volume obligations by the end of 2012, but failed to do so, meaning the agency is now late in finalizing levels for 2014, 2015 and 2016. Yearly increases are based on levels for the previous year – which is why the renewable fuel industry still needs levels set for 2014.
For its part, the EPA announced that it plans to have a new rule proposed by June 1, with limits set through 2017. It says that rule should be finalized by Nov. 30.
Presidential politics
The issue of renewable fuels has already been raised by at least one candidate for president. In March, U.S. Sen. Ted Cruz, R-Texas, a state with a significant amount of its economy based on petroleum, told a gathering of Republicans and leaders in agriculture that he does not support the federal government imposing production standards for renewable fuels. He said the practice amounted to “corporate welfare.”
