Obama Unveils Plans To Boost Biofuel Market

First and foremost, the Environmental Protection Agency (EPA) has finalized a rule to implement the long-term renewable fuels standard of 36 billion gallons by 2022 established by Congress. Second, the U.S. Department of Agriculture has proposed a rule on the Biomass Crop Assistance Program (BCAP) that would provide financing to increase the conversion of biomass to bioenergy.

Finally, the President’s Biofuels Interagency Working Group released its first report – Growing America’s Fuel. The report, authored by group co-chairs, Secretaries Vilsack and Chu, and Administrator Jackson, lays out a strategy to advance the development and commercialization of a sustainable biofuels industry to meet or exceed the nation’s biofuels targets. Read the Growing America’s Fuel report.

“Now, I happen to believe that we should pass a comprehensive energy and climate bill. It will make clean energy the profitable kind of energy, and the decision by other nations to do this is already giving their businesses a leg up on developing clean energy jobs and technologies. But even if you disagree on the threat posed by climate change, investing in clean energy jobs and businesses is still the right thing to do for our economy. Reducing our dependence on foreign oil is still the right thing to do for our security. We can’t afford to spin our wheels while the rest of the world speeds ahead," President Obama said.

EPA has finalized a rule implementing the long-term renewable fuels mandate of 36 billion gallons by 2022 established by Congress. The Renewable Fuels Standard requires biofuels production to grow from last year’s 11.1 billion gallons to 36 billion gallons in 2022, with 21 billion gallons to come from advanced biofuels.

Increasing renewable fuels will reduce dependence on oil by more than 328 million barrels a year and reduce greenhouse gas emissions more than 138 million metric tons a year when fully phased in by 2022. Read the full Renewable Fuel Standard Program rule.

"This plan combines an appropriate appreciation for the importance of the existing biofuels industry with an understandable excitement for new technologies near fruition. A more coordinated effort from federal agencies together with the continuation of sound biofuels policies, such as extending existing incentives, will go a long way toward meeting and exceeding America’s renewable fuel potential," said Bob Dinneen, president of the Renewable Fuels Assocation (RFA). "We are pleased to see this plan address some of the concerns raised by cellulosic and next generation ethanol technology companies concerning federal loan guarantee programs. These loan guarantees must be made to work for cellulosic ethanol producers if this plan and the President’s stated goals are to be realized."

Reaction to Obama's plans, as well as EPAs decision from inside the biofuel industry for bioenergy has been mostly positive, though not without reservation.

“This is a much needed step toward building America’s clean energy economy, especially with the emphasis on advanced biofuels and direct substitute fuels like biobutanol that can leverage the existing liquid fuels infrastructure. Biobutanol is versatile and can be used as a drop-in fuel that is compatible with today’s automobile engines," said Rick Wilson, CEO of Cobalt Techologies.

Both Dineen and Poet CEO Jeff Broin however expressed concern over EPA's inclusion of rules regarding ethanol's international indirect land use change (ILUC) in the RFS. According to EPA’s modeling, corn-based ethanol achieves a 21% greenhouse gas reduction compared to gasoline when ILUC rules are included. Without ILUC, RFA said corn-based ethanol achieves a 52% GHG reduction. Cellulosic ethanol achieves GHG reduction of 72-130% depending upon feedstock and conversion process. All GHG reductions for ethanol exceed those mandated by the RFS2.

“EPA has correctly credited cellulosic and other next generation ethanol technologies with dramatic GHG improvements over gasoline,” said Dinneen. In addition, EPA rightly and justifiably adjusted some of its assumptions and modeling from its proposed rule to more accurately reflect the carbon profile of grain-based ethanol in the U.S. “These necessary corrections ensure that all grain-based ethanol will be eligible to meet the requirements and achieve the stated goals of the RFS, though continue to shortchange grain-based ethanol’s climate contributions,” noted Dinneen.

The RFA called IULC theories unproven and an unfair penalty leveled at U.S. biofuel producers to the advantage of imported ethanol and petroleum.

“We welcome the commitment of the President to continue growing the domestic ethanol industry. He correctly noted that producing home-grown ethanol creates jobs in America at a time America most needs them,” POET CEO Jeff Broin said. “However we are concerned that some pieces of the rules put out by EPA today run contrary to that stated effort. Although the international indirect land use change penalty has been lessened somewhat, EPA still relied on the disproven theory when all of the data shows that ethanol production continues to improve and isn’t requiring new land," Broin said.