Nat'l Biodiesel Board says RFS proposal thwarts Congress' intent

By The National Biodiesel Board | August 31, 2017

On Aug. 31, the final day to submit comments to U.S. EPA on its latest Renewable Fuel Standard proposal, the National Biodiesel Board formally called for higher volumes of advanced biofuels and biomass-based diesel. Representing more than 150 members and 64,000 jobs, NBB submitted comments on EPA’s proposal on the advanced biofuel standard for 2018 and the 2019 volume for biomass-based diesel under the RFS.    

“NBB is extremely concerned with the proposed rule’s unprecedented cut to the advanced biofuel volume and freeze in the biomass-based diesel volume,” said Doug Whitehead, chief operating officer at NBB. “Both of these proposals run counter to Congress’ objectives to promote the growth of biofuels that provide American jobs, reduce emissions and enhance U.S. energy security. EPA cannot enact its own policy when Congress has spoken, so we look forward to working with the EPA on addressing these concerns.”    

Biomass-based diesel has been a great success story of the RFS. Assisted in its development by the market incentive from both the biomass-based diesel and advanced biofuel volumes, the biomass-based diesel industry has grown to support more than 64,000 jobs throughout its supply chain. The industry also provides benefits to American farmers and livestock producers by creating demand for the surplus oils from commodity crops and reducing the price of soybean meal.  

The industry has routinely surpassed the annual biomass-based diesel volumes and currently comprises the vast majority of advanced biofuel production (roughly 93 percent). Unfortunately, EPA’s proposal would halt the progress of the biomass-based diesel industry and thwart Congress’ intent to increase advanced biofuel production. For the first time, the proposed rule lowers the advanced biofuel volume from the previous year and does not increase the biomass-based diesel volume.  

“The proposed rule sends a chilling message that EPA is not interested in promoting growth in biofuels in accordance with the RFS, which will discourage any future investment and cause a contraction in the industry,” NBB wrote in its comments. “It will result in a blow to our country’s energy security, a loss of jobs and wages of employees concentrated in rural areas, and a reduction in the income that American farmers receive for their crops and livestock products.”    

NBB suggests the proposal’s volumes be changed more in line with Congressional intent. In its comments, NBB calls on EPA to increase the advanced biofuel volume for 2018 to at least 4.75 billion gallons and the biomass-based diesel volume for 2019 to at least 2.5 billion gallons*. Doing so is necessary to effectuate Congress’ intent to “create incentives to increase renewable fuel supplies and overcome constraints in the market” and to respect EPA’s methodology from its own past rules. Raising the advanced biofuel volume to at least 4.75 billion gallons is an increase that could be achieved so easily by the industry that there is no nonarbitrary justification for EPA to set the volumes lower.  

An agricultural and biofuels model designed by World Agricultural, Economic, and Environmental Services demonstrates that a 4.75 billion gallon volume could be readily achieved with minimal effects on RIN prices and feedstock prices—the two primary potential impacts EPA has described in its proposed rule. Anything below an advanced biofuel volume of 4.75 billion gallons would both disregard Congress’ express objective of promoting growth in advanced biofuels and significantly harm those who have relied on EPA’s prior rules that set the advanced biofuel volume based on “reasonably attainable” levels. 

As for the biomass-based diesel volume, EPA does not contend that there is any obstacle to biomass-based diesel production greater than 2.1 billion gallons; to the contrary, it concedes that greater production is possible. EPA acknowledges that a volume of 2.5 billion gallons is “reasonably attainable” in its analysis of advanced biofuels. In fact, the achievability of 2.5 billion gallons has already been demonstrated in practice because the industry has already exceeded that volume in 2016.   

And any increase in the biomass-based diesel volume from the proposed rule would have significant and concrete benefits in terms of jobs, agricultural income and energy security. When the benefits that Congress sought can be achieved by the industry, EPA cannot choose to ignore them based on its own policy preferences.   

There has been no reduction in capacity or infrastructure that would indicate the biomass-based diesel industry cannot continue the sustained growth it has already achieved. To the contrary, the biomass-based diesel industry has demonstrated that it can rapidly innovate and grow when the volumes under the RFS provide a sufficient market incentive. 

Thus, EPA is not being forced to stop increasing the advanced biofuel or biomass-based diesel volumes based on new developments suggesting that further increases are not possible. Instead, the agency is choosing to step away from the intent of the RFS based on its own preferences. There is no justification to do so when the biomass-based diesel industry has been consistently meeting annual volumes and furthering Congress’ objectives in the RFS.    

NBB will continue to work with EPA to address these concerns and to raise the volumes in the final rule expected this fall. 

*Editor’s Note: These figures are slightly lower than NBB’s volume suggestions provided to EPA at the Aug. 1 hearing, down from 5.25 billion gallons for advanced biofuels and 2.75 billion for biomass-based diesel. 

 

 
 
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