A hat tip to my friend Jessica Robinson over at the National Biodiesel Board for pointing out this great article from Biofuels Digest. As the U.S. Environmental Protection Agency (EPA) has proposed lower targets for the 2014 Renewable Fuel Standard, proponents of biodiesel are wondering why their green fuel is targeted a 20 percent reduction.
Let’s review the background on biodiesel and renewable diesel. There’s no blend wall in sight, production volumes have been growing fast, prices have been relatively stable, and because it provides a market for soybean oil, it reduces prices for ranchers and poultry farmers who use the soybean meal as animal feed.
Here are answers to your questions regarding biomass-based diesel and the proposed 2014 and 2015 standards.
Q: What is EPA’s stated method and target?
A: In the draft EPA document that is floating around the industry — which the Digest has reviewed — the EPA writes that it aims to “Base advanced volume on availability of advanced biofuels but considering the blendwall” by [setting} the advanced volume at the sum of the cellulosic standard, the BBD standard and all available volumes of non-ethanol advanced.” EPA adds that it intends to “Maintain biomass-based diesel std at 1.28 Bgal; since BBD is nested within the advanced biofuel standard, any excess volumes above 1.28 bill gal can compete with other advanced biofuels. There is limited availability of other advanced biofuels, which generates opportunities for biodiesel production above 1.28 bill gal to help meet the advanced biofuel standard.”
Q. What is the proposed “higher volume” available within the advanced biofuel standard?
A. EPA has proposed that this pool be reduced to 2.17 billion RINs for 2014 and 2015.
Q. How many biodiesel gallons would it take to fill up those gallons and RINs?
A. Remember, the biomass-based diesel target is the only one expressed in actual gallons, as opposed to ethanol-equivalent gallons, or RINs. Accordingly, a biomass-based diesel standard of 1.28 billion gallons would be expected to generate somewhere between 1.92 billion and 2.1 billion RINs, depending on how much renewable diesel is produced within that target (renewable diesel generates up to 1.7 RINs per gallon, compared to the 1.5 RINs per gallon of biodiesel).
Q. So, how much practical room did the EPA leave for excess production in the proposed 2014 and 2015 standards?
A. A range between of 70,000-250,000 RINs, which translates to between 41,000 and 166,000 gallons, per year.
Q: Does EPA think that excess biodiesel production is possible?
A: On page 8, EPA writes: “We intend to propose that the BBD volume for both 2014 and 2015 be maintained at 1.28 bill gal,” but notes “there is reason to think that some BBD volumes above 1.28 bill gall are possible in 2014 (- biodiesel could each 1.7 bill gall in 2013).”
And with more biodiesel capacity expected to come online to meet even higher requirements, the article concludes with probably the best Q & A of all:
Q. More energy independence?
Q. Cleaner air?
Q. Reduced CO2 emissions?
Q. So why doesn’t the EPA simply get on with it?
A. Good question. We hope they will.