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The 2013 Renewable Fuel Standard: A 10-Minute Guide

In Washington, the U.S. Environmental Protection Agency (EPA) issued its proposed 2013 Renewable Fuel Standards (RFS2).??The proposal will be open for a 45-day public comment period and EPA will consider feedback from a range of stakeholders before the proposal is finalized.

For 2013, the program is proposing to implement EISA’s requirement to blend more than 1.35 billion gallons of renewable fuels over the amount mandated for 2012.

The Proposed Standard

Here, we have given you the proposed 2013 RFS2 volumes, and the original 2013 targets set under the 2007 EISA legislation. We’ve also provided the final 2012 and 2011 numbers, so that you can evaluate the growth rate in each pool and in the overall Standard.

Note: RFS2 is nested, so the figures for Cellulosic biofuels and Biomass-based diesel are nested inside the overall Advanced Biofuels number — and in turn the Advanced biofuels pool is nested (alongside the corn ethanol target) within the overall Renewable Fuel Standard. 

It may sound complex, but it is designed that way so that shortfalls in one pool can be made up by expanding the targets in another pool. That’s why you have to be wary of people who flag a shortfall in one nested pool, for example, cellulosic biofuels. Any shortfalls are easily made up by sourcing qualifying advanced biofuels elsewhere.

The Cellulosic Standard

The EPA is being far more cautious this year on cellulosic biofuels. Though at least four commercial-scale facilities will have completed construction by the end of the year (Abengoa, Fiberight, INEOS Bio and KiOR), the EPA is projecting qualified fuel being produced for distribution at only two — INEOS Bio and KiOR.

Overall, the EPA is projecting that US cellulosic ethanol production capacity will be 49 million gallons by the end of the year, but that 14 million gallons will be produced, or 28.6 percent of capacity.

Speaking of Fiberight, CEO Craig Stuart-Paul advises the Digest that “We have now exceeded 1,000 hours uninterrupted at our integrated demo plant, and we are expediting engineering for Blairstown.” You can see video on the Fiberight website, here.

Corn Ethanol – Expect a Protest

Overall, expect a howl of protest from obligated blenders along the lines of “where are all the gallons of ethanol to go?”

However — here’s the problem. At standard 10 percent blending rates, you can put about 12-13 billion gallons of ethanol into the U.S. marketplace — it depends on exact gasoline demand.

In this year’s proposed standard, if biodiesel producers aren’t able to increase deliveries, the EPA has indicated that it expects sugarcane ethanol (which qualifies as an advanced biofuel, while corn ethanol doesn’t) to fill the gap between the 1.92 billion gallon biomass based diesel standard and the 2.75 billion advanced biofuels standard.

That means, you guessed it, more ethanol pouring into the marketplace.

Now, it’s not really a case of capacity problems. U.S. ethanol producers have 14.9 billion gallons of capacity. It’s a blending challenge, and to come extent a problem of pools, because corn ethanol does not qualify for the advanced biofuels pool because it does not meet the 50 percent reduction threshold.

The Sorghum Option

We covered this option earlier this month, here, in BioInvest Digest. There is an opportunity to convert certain ethanol assets to a combination of grain sorghum as a feedstock — and using biogas as an energy source — and meet the 50 percent emissions reduction threshold and qualify for the advanced biofuels pool, where sugarcane ethnaol also qualifies.

This doesn’t solve the blending challenge, but it does solve the pools problem. For economic reasons, the opportunity is likely to be limited to plants that are near a port, so that they can affordable move sorghum into the plant.

The Diesel and Biodiesel Option

The solution, of course, is more production on the diesel side — and it is possible that renewable diesel may well lend a hand. Already completed is the 75 million gallons Dynamic Fuels plant, and we are expecting completion on the Valero-Darling (Diamond Green Fuels) plant very shortly, with a capacity of 133 gallons.

Those gallons have a high energy density, equivalent to 1.7 ethanol gallons. A surge of renewable diesel from these plants, or from imports — and some added production from US biodiesel producers — could remove this problem.

That’s a distinct possibility. Industry produced 1.15 billion biodiesel gallons in 2012. The marketplace is not generally limited, yet, by a blend challenge, or lack of room in the pool. It comes down to affordable feedstock and affordable fuel — mandated volumes are one thing, but additional gallons must meet market requirements, not just regulatory ones.

The Biobutanol Option

Another potential solution – increased biobutanol production from Gevo. Under the Gevo ethanol-to-biobutanol conversion model, every gallon of biobutanol production (which safely blends at between 12.5 and 16 percent, depending on whom you speak with) takes 1.3 gallons of traditional corn ethanol off the market.

We’re not expecting much production from Gevo-converted facilities in 2013 — but longer term, especially when Butamax goes commercial as is expected in 2014, the conversion from ethanol to biobutanol could significantly ease pressure coming from the blending challenge.

The Passivity of Obligated Blenders

We have to say, some of the problems in implementing RFS2 comes from a form of brinkmanship practiced by obligated blenders.

Traditional industry — despite six years of advance notice that the 2013 standards were coming — has not built a single gallon of cellulosic biofuels capacity, and has installed very few (less than 3,000) E85 pumps, a handful of blender pumps capable of handling E20-E85 blends, and only a handful of E15 pumps are in operation.

In the case of other safety and emissions-related rules — and RFS2, which is administered by EPA and forms part of the overall Clean Air Act — there aren’t as many opportunities to cry poor if outside suppliers don’t build emissions-mitigating services.

Take waste disposal, for example — if your local municipality doesn’t build enough landfill capacity for you to dump your waste at, you are supposed to find other ways to handle your problem including but not limited to finding ways to dispose on your own property (e,g, via combustion). You can’t just dump trash on the street and ignore the trash laws, just because the country isn’t providing capacity for you.

The Bottom Line

The EPA looked at the volumes and slashed the cellulosic biofuels obligation — as expected — but didn’t back down one gallon on the overall obligation. The country will move forward and increase distribution of renewable fuels by 8.88 percent this year — and will, by yaer end, reach 46 percent of its intended 2022 target of 36 billion (ethanol equivalent) gallons of renewable fuels.

This article was originally published on Biofuels Digest and was republished with permission.

Lead image: Biofuel canister via Shutterstock

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