BioFuels Journal

by Jerry Perkins, editor, BioFuels Journal

Des Moines, IA—All indications are that the Environmental Protection Agency’s final renewable volume obligation (RVO) number will be larger than the agency first proposed last year, according to Michael McAdams, president of the Advanced Biofuels Association, which represents more than 40 advanced biofuels production and feedstock companies in Washington, DC.

But, McAdams added, the method that the EPA used in its decision to lower the RVO was not based on the intent of Congress when it wrote the Renewable Fuels Standard (RFS) that governs the use of biofuels.

Congress needs to step in and direct the agency to follow the statute as written, he said.

The lower RVO and the way the EPA acted when it proposed lowering the RVO has created uncertainty in the capital markets about the government’s commitment to its renewable fuels policies, McAdams stated.

That uncertainly has made it more difficult to raise the funds needed to finance the continued development of the biofuels industry, including the fledgling advanced biofuels industry that McAdams represents.

McAdams spoke Sept. 16 to the RIN Academy, a daylong conference in Des Moines, IA, hosted by EcoEngineers, an independent engineering and software company based in Des Moines that performs a wide range of services for the renewable fuels industry.

In an interview with BioFuels Journal after his speech, McAdams said that EPA Administrator Gina McCarthy, U.S. Secretary of Agriculture Tom Vilsack, and others in the Administration have stated recently that the EPA’s RVO for 2014 will be larger than what the agency’s initial proposal last year.

That was when the EPA proposed cutting the RVO, or the amount of renewable fuels that refiners and blenders are required to purchase annually for blending with gasoline.

As proposed by the EPA, the 2014 RVO for corn-based ethanol was reduced to 13 billion gallons from 14.4 billion gallons.

It also proposed cutting the advanced biofuels RVO.

Biofuels supporters inundated the EPA with comments opposing the cuts and urging the restoration of the RVOs that had been set by Congress.

Last month, after a lengthy delay, the EPA sent its final RVO number to the Office of Management and the Budget (OMB) for review. OMB has 90 days to respond.

“All the foreshadowing that we’ve seen from the Administrator of the EPA, the Secretary of Agriculture, and others in the Administration is that they are going to raise some of the (RVO) numbers, including the corn number,” McAdams said, “but they are going to continue to regulate the RVO based on gasoline consumption in the United States.”

Basing the RVO on the amount of gasoline consumed in the United States was not the intent of Congress when it approved the RFS, McAdams explained.

“That’s important because Congress directed the EPA to set its (RVO) targets based on specific numbers of gallons,” he said. “Nowhere in the statute is it written that the RVO should be based on the number of gallons of gasoline consumed in the United States.”

No matter what the EPA eventually decides, McAdams said, there will be more uncertainty concerning the future of the U.S. biofuels industry because of the likelihood that lawsuits will be filed against the EPA for the way it set the RVOs this year.

Uncertainty, he said, will mean less investment in the biofuels industry. “It will be hard for people to put their swimming trucks on when it’s cloudy outside,” he stated.

McAdams said Congress should step in and direct the EPA to administer the RFS as Congress intended but, he added, it is unlikely that anything will happen on Capitol Hill until after the mid-term elections this year.

“Congress adjourns on Friday (Sept. 19) and it’s unlikely we’ll see any action until after the election,” he said.

That means Congress will have to step in during a lame duck session after the elections, McAdams noted, and continue on into 2015.

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