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Far-reaching Impacts of Biointermediate Feedstocks on the Biodiesel Industry

The issuance of U.S. EPA's proposed REGS rule has spurred many questions about what the final rule will look like, and what it will mean for the biodiesel industry. The final definition of biointermediate feedstock will have a significant impact.
By Karyn Jones | January 06, 2017

The U.S. EPA’s proposed Renewables Enhancement and Growth Support rule, published in the federal register Nov. 16, proposes a wide-range of regulatory and compliance changes that affect the renewable fuel standard (RFS) and the entire range of renewable fuel types. Most notably, EPA has proposed additional registration and compliance regulations around “biointermediate” feedstocks that will have far-reaching impacts on feedstock suppliers and the biodiesel industry as a whole.

What Is a Biointermediate Feedstock?
REGS states that a biointermediate feedstock is an approved feedstock (such as soybean oil, canola oil, waste oils/fats/grease, etc.) that is processed in such a way that it is “substantially altered” at a different location than the biofuel plant where it is ultimately processed into renewable fuel. EPA provides an example where cellulosic biomass (such as woody material) is converted into pyrolysis oil at one facility and then transferred to the biofuel facility for final processing into a renewable fuel. The conversion of woody material into a pyrolysis oil constitutes a “substantial alteration” and, since this conversion occurs upstream from the renewable fuel facility, it is considered to be a biointermediate feedstock. Processing the woody material into pyrolysis oil at the biofuel facility would not make the oil a biointermediate feedstock.

What Isn’t in the Definition?
While REGS states that a mere “form change” to renewable biomass is not considered to be a “substantial alteration” and does not create a biointermediate, the list of approved types of form changes is limited and does not encompass all feedstock industry processing activities. Approved processing methods listed in the REGS rule include chopping, pressing, grinding, filtering, degumming, drying and adding water. Omissions to this list include heating, solvent extraction, bleaching and deodorizing.

Early in 2016, EPA contacted key industry stakeholders, including EcoEngineers, to weigh in on the draft REGS rulemaking. During these conversations, EPA had indicated that any chemical processing activities—including heating, solvent extraction, bleaching and deodorizing—would be treated as a substantial alteration and would result in a biointermediate feedstock. It is interesting to note that these discussions about chemical vs. physical processing are not included in the proposed REGS rule and examples of chemical processing were omitted from the approved form change list.
 
Potential Impact on Feedstock Suppliers, Biodiesel Producers
The final definition of biointermediate feedstock will have a significant impact on the feedstock supplier and biodiesel production industry. Soybean and canola oils undergo refining with chemicals to create a refined, bleached, and deodorized (RBD) oil prior to entering a biodiesel plant. Used cooking oil (UCO) and tallow suppliers often heat the feedstock in order to remove impurities to produce a refined used cooking oil or choice white grease for sale to a biodiesel plant. Since EPA omitted discussion of these types of processing activities in the REGS rule, it is unclear whether these feedstocks classify as a biointermediate. This distinction is important to biodiesel producers since processing biointermediate feedstocks is prohibited under current regulation and could result in invalid RINs.

Under the proposed REGS rule, each biointermediate feedstock supplier must register their facility with EPA, maintain product transfer documents and batch-specific recordkeeping, and participate in a mandatory Quality Assurance Program during the interim period immediately following the final rulemaking. Depending on the definition of biointermediate in the final rule, biodiesel feedstock suppliers, including soybean and canola crush plants, UCO aggregators and animal tallow processors may find themselves subject to these additional compliance requirements if they want their feedstock to be used to produce RIN-generating biodiesel. 

More clarity is needed in this regulation in order for the biodiesel industry to feel secure about its regulatory compliance. While it is unlikely that EPA’s intent is to regulate the entire biodiesel feedstock industry through REGS, the omission of key types of established industry processing from the proposed rulemaking is concerning. EPA is seeking industry comment on this proposal through Feb. 16. The biodiesel industry should support current feedstock processing practices through their comments to this proposal. You can submit your comments, identified by Docket ID No. EPA–HQ– OAR–2016–0041, at http://www.regulations.gov.

Author: Karyn Jones
Senior Regulatory Consultant, EcoEngineers
515-985-1268
kjones@ecoengineers.us

 
 
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